Caffe Nero eyes smaller operators to speed up expansion

Caffe Nero, the independent coffee-bar chain, is eyeing several smaller operators to speed up its expansion plans.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

The group, which aims to increase the number of shops from 108 to 138 in the next 12 months, is targeting companies with 10 to 25 sites and is seeking areas outside the M25, said chairman, Gerry Ford.

"We're looking at several possibilities with smaller companies wanting to exit the market, but we are being very choosy," he said.

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Ford: "being very choosy"

It is still unclear, however, what Caffé Nero's intentions are towards loss-making rival, Coffee Republic. Ford declined to comment on whether the group intended to up its 10.5% stake, which it acquired last month, making it Coffee Republic's third largest shareholder. Â Caffé Nero, which almost doubled its number of stores from 61 to 108 in the year ended 31 May, recorded a pre-tax loss of £2.67m, an improvement on last year's loss of £2.75m. Â Turnover for the year increased by 70% to £26.6m, from £15.6m in 2001 with like-for-like sales up by 2%. Food accounted for 35% of sales. Â Ford said that despite speculation that the industry was becoming saturated, he expected the next six months to show "very strong" growth for the company, particularly outside London. Â The first two months since the year-end had been "encouraging", said Ford, with like-for-like sales showing single figure growth and revenues increasing by more than 65% year-on-year. Â Ford said the Aroma coffee shops it bought from McDonald's for £2.15m in April were a "helpful contributor" to the increases and were now trading 21% above their pre-acquisition figures.