Caffè Nero says growth is ‘steady’ but coffee prices are likely to rise | Hospitality industry

Caffè Nero will continue to open new stores in the UK and abroad but has warned that coffee prices will continue to rise due to the war in Iran and rising staff costs.

The family company, which purchased Washington DC-based Compass Coffee with 15 stores to turn it into its main brand, aims to open up to 30 stores in the UK this year and 50 to 70 more stores in the other 10 countries where it operates.

Gerry Ford, who founded Caffè Nero in 1997 and remains the majority shareholder, said the business, which has 1,151 outlets worldwide employing 11,000 people, was outperforming larger rivals Starbucks and Costa. Starbucks is closing outlets in North America, and Coca-Cola, which owns Costa, recently abandoned sales plans after losses mounted and sales at established stores dropped.

Ford claimed that these brands grew too quickly and were subject to numerous management changes.

“We’ve been more consistent in what we’re trying to do. We haven’t had a huge growth spurt. We’re moving at a steady pace,” he said. “We can expand faster or slow down. We have more flexibility because we’re not trying to hit a quarterly reporting target. We can plan longer term.

“We don’t want to take over the world. We need to move according to our own rhythm.

“We never wanted to suffer the consequences of trying to be everywhere for everyone.”

After purchasing Nottingham’s 200 Degrees for around £9m in October 2024 and acquiring Wales’ Coffee#1 and former Tesco-owned operator Harris +Hoole in recent years, the business has been expanding these brands alongside its eponymous chain.

However, Caffè Nero’s plans for further acquisitions have been delayed for at least a year as the group completes a recent series of acquisitions that have led to higher borrowing and related financing costs.

In the year to May 2025, sales increased by 13% from £519.8 million to £587.6 million. However, finance costs rose to around £78m from £69m the previous year, due to higher interest rates and more borrowing to finance acquisitions, while pre-tax losses rose from £34m to £41m.

At the end of the year the company had debts of £481 million; this was up from £428 million the previous year; Another £42 million was in a facility due to be repaid in December.

Ford says underlying profits have increased by a fifth and new acquisitions have brought in new sources of profit and sales as well as increased debt.

Growth continued last year; Sales in the UK rose 7% to £185.4 million in the six months to November. This growth was driven by 5% growth in established outlets, helped by new products such as iced matcha drinks and pistachio-flavored croissants.

He said Caffè Nero will keep some of its new brands out the door, while the parent company helps with ingredient purchasing and back-office operations but leaves each chain’s management “to continue” on operations and expansion.

“The industry has incurred a lot of costs in recent years and this means that we will open fewer stores in a year. If these costs did not come, we would probably open more stores.”

He says increases in business rates and the cost of employing people in the UK have contributed to the rise in coffee prices; This increase tripled between the end of 2023 and the beginning of last year, partly due to the impact of the climate crisis affecting crops in key growing regions such as Brazil and Colombia.

Today, the price of Arabica coffee remains almost double the price in 2023.

“I’ve been doing this job for 29 years and the price of coffee goes up and down. It went up 18 months ago but hasn’t dropped much,” he said.

“It has fallen slightly in the last three months. We are over the worst and purchases… will be more reasonable and normal. This will be very welcomed by us.”

But Ford said this was unlikely to lead to a fall in the price of a cup of coffee as other costs, including energy, fueled by renewed conflict in the Middle East, remain high.

He warned that prolonged disruption could push the price of a cup of coffee back up. The average latte across all UK chains is already £3.76, up 35% in the last five years, according to World Coffee Portal.

“Usually prices go up but not down. We’ll see as the year progresses,” he said.

Caffè Nero started in 1997 when Ford, an American who studied in England and started his career working at a private equity firm after studying at Oxford University, bought a handful of coffee shops in London and created the Italian-influenced brand.

The group now has more than 650 outlets in the UK; Türkiye is the second largest market with 112 sales points, followed by Poland with 93 sales points. The acquisition of Compass Coffee brings the total number of outlets in the U.S. to 60 and adds a new coffee roasting facility to support more coffee shops.

“We won’t end up with 5,000 stores, but there’s a lot of white space in independent premium,” Ford said. “No market is saturated.”