Store Expansion Helps Caffe Nero Boost Profits

Posted on 16 October, 2013 by Kirsten Kennedy

While many areas of the leisure industry, pubs in particular, continue to struggle with falling sales and rising business rates, cafes and coffee shops are presently riding the tide of a high consumer demand. Chains such as Costa and Starbucks are now firm staples of the high street, and manage to boost profits by opening outlets in motorway service stations to cash in on a constant consumer footfall.

In fact, new store openings have been cited as the major factor in Italian chain Caffe Nero’s successful financial year. The group managed to achieve a rise in pre-tax profits of just under 11 per cent in the year to May, amounting to a total of £21.1 million.

Furthermore, like for like sales climbed by 2.8 per cent bringing total sales to £204 million. This marked an increase of 10.7 per cent from the previous year, which is a hugely positive step in an uncertain market.

In light of these impressive results, the chain has revealed plans to open a further fleet of stores across the country in the coming 12 months, adding to the 39 store increase achieved in the financial year just past. By May 2013, Caffe Nero owned and operated 519 commercial properties throughout the UK, so the addition of a prospective further 45 during this financial year will bring the chain’s total UK store portfolio to over 550 by May 2014.

In a statement released to the press, Caffe Nero said; “The directors continue to believe there are strong growth prospects in the UK branded coffee bar market and intend to continue the rapid roll out of the Caffe Nero concept around the country.”

Caffe Nero eventually plans to control 750 stores across the UK.

Do you think rapid expansion will continue to yield favourable results for Caffe Nero, or has stiff competition from rivals such as Costa and Starbucks, along with a number of independent competitors, brought the UK market to the brink of becoming flooded?




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