Going gets tough for Madisons Coffee

Coffee bar operator Madisons says it needs to be "lean and mean" to successfully navigate the current economic climate.

Chief executive Gareth Lloyd-Jones said the company was being very careful with money in the present situation and was trying to save as much cash as possible. Although he said the company had not cut any jobs, Lloyd-Jones said it would not be replacing all staff who left the group.

Madisons needs to generate cash to "ride out the messy trading environment we are experiencing at the moment," said Lloyd-Jones.

The company is selling its London coffee outlets to market leader Starbucks. The group has already completed the sale of four of the eight outlets, with a further two expected by the end of the month.

Lloyd-Jones said Madison had decided to sell the outlets because it knew it wouldn't be the biggest coffee shop operator in London. "If we wanted to compete [with Starbucks] we would have to open another 90 shops" he said.

Earlier this year Madisons announced a franchise agreement for the Richoux restaurant chain in the Middle East. The group has also exchanged contracts for another franchise deal in the United Arab Emirates.

Lloyd-Jones said the events of 11 September and the subsequent attacks on Afghanistan had not affected Madisons' plans to develop Richoux in the Middle East.

"These events will finish and it will become a popular place again," he said.

Madison today announced its results for the 12 months to 24 June. Despite a 52% increase in turnover to £14.6m, up from £9.6m in 2000, the group made a pre-tax loss of £3.6m, compared with last year's pre-tax loss of £1.7m.

Lloyd-Jones said the near future was going to be tough. "We are all going into the busiest time of our year," he said. "I'd be as happy as pie if everything was great by Christmas, but I think its going to be a longer haul than that."