After Expanding Into US With Acquisition Of Compass Coffee, Caffè Nero Says Growth Will Be Steady But Prices Will Rise – CoffeeTalk

Caffè Nero aims to expand its number of stores both in the UK and internationally, despite foreseeing an increase in coffee prices due to various factors, including the ongoing war in Iran and rising staffing costs. The family-owned business recently acquired Compass Coffee, which consists of 15 stores in Washington DC, and is planning to open up to 30 new outlets in the UK and between 50 to 70 overseas this year. Gerry Ford, the founder and majority shareholder, noted that Caffè Nero is outperforming larger competitors such as Starbucks and Costa, the latter of which has recently faced significant financial challenges.

Ford attributes Caffè Nero’s successes to its deliberate growth strategy, emphasizing steady expansion instead of rapid growth, which he believes has led to issues for larger brands due to mismanagement and inconsistent strategies. He expressed a desire for Caffè Nero to grow at its own pace without the pressures of quarterly targets, allowing for long-term planning.

Recent acquisitions, including those of Nottingham’s 200 Degrees and Coffee#1, are aimed at expanding Caffè Nero’s brand portfolio, although further acquisitions are on pause for at least a year to allow the company to manage its increased debt and finance costs, which have risen substantially due to higher interest rates related to borrowing for these acquisitions.

In the financial year to May 2025, Caffè Nero reported a 13% increase in sales to £587.6 million, but pre-tax losses widened to £41 million, influenced by rising finance costs which increased from £69 million to nearly £78 million. The company’s debt also rose from £428 million to £481 million, with significant repayments due soon.

Caffè Nero has seen consistent growth in the UK market, with a 7% increase in sales driven largely by new offerings such as iced-matcha drinks and pistachio croissants. Ford indicated that while the company is absorbing higher operational costs, including business rates and staffing expenses, its ability to open new stores in the future could be limited.

He also provided insights into the coffee market, noting that despite some recent decreases in coffee prices, the costs associated with production, such as energy prices linked to geopolitical tensions, may hinder a reduction in consumer coffee prices. The average cost of a latte in the UK has risen significantly over the past five years, further complicating the pricing landscape.

Since its inception in 1997, Caffè Nero has grown substantially, with over 650 locations in the UK and significant operations in countries such as Turkey and Poland. The recent acquisition of Compass Coffee has bolstered its footprint in the United States to 60 locations and introduced a new coffee roasting facility. Ford concluded by highlighting the potential for growth within the premium coffee market, stating that it is not saturated and there remains ample opportunity for expansion.

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