Credit crunch eats into sales at Coffee Republic

Coffee Republic's sales dipped significantly over the summer months as the economic climate worsened, the company announced today.

While like-for-like sales for the six months to the end of September only fell by 0.2%, comparative sales for the first quarter to June 29 had been 2.5% up, signalling a significant downturn in the last three months.

Unveiling a trading update ahead of its Annual General Meeting, the company said the fall in sales "reflected a toughening climate", but added that it had begun to reverse the trend with more aggressive sales and marketing activity.

Coffee Republic also revealed that it has cut losses by nearly 40%, thanks to more income from franchises, head office cost controls and the success of its concession deal with cinema chain Cineworld.

The company, which currently operates 195 outlets including nine outside the UK, added that growth plans, both in the UK and abroad, remain "encouraging" despite the economic slowdown.

Meanwhile, McDonald's today revealed it has no immediate plans to roll out its McCafe coffee bar chain in the UK despite its success in continental Europe.

Speaking at the Allegra Strategies European Coffee Symposium in London, Vicki Fuller, head of McCafe at McDonald's Germany, said the company wanted to expand from 800 to 1,000 outlets by the end of next year - but not in the UK.

McDonald's UK will instead continue to focus on improving the coffee offer in its traditional restaurants, she added.

Coffee Republic to consolidate after rapid growth >>

Coffee Republic to be served at cinemas >>

Greene King signs Coffee Republic franchise deal >>

UK coffee market set to double over the next 10 years >>

McDonald's lauded by RSPCA in Good Business Awards >>

By Daniel Thomas

E-mail your comments to Daniel Thomas here.