Caffè Nero looks for acquisitions to speed expansion

Caffè Nero, the stock market-listed coffee-bar chain, is eyeing several smaller operators to speed up its expansion plans.

The group, which aims to increase the number of its 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 London orbital, 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.

It is still unclear, however, what Caffè Nero's intentions are towards loss-making rival Coffee Republic. Ford declined to comment on whether the group intended to increase its 10.5% stake, which it acquired last month, making it Coffee Republic's third largest shareholder.

Caffè Nero, which almost doubled the number of stores from 61 to 108 in the year ended 31 May, saw a pre-tax loss of £1.5m. However, this was an improvement on last year's loss of £1.9m.

Turnover for the year increased by 70% from £15.6m to £26.6m with like-for-like sales up by 2%. Food accounted for 35% of sales.

Ford said that, despite speculation that the industry is becoming saturated, he expected the next six months to show "very strong" growth for the company, particularly outside London.

by Christina Golding