After successfully emerging from the challenges of the pandemic and now trading above pre-Covid levels around the world, UK-based Caffè Nero Group is forging ahead with a focus on premium coffee experiences across its international store portfolio, e-commerce channels and retail partnerships. The group’s CEO Gerry Ford speaks to World Coffee Portal about why quality is Caffè Nero’s greatest asset during the cost-of-living crisis, embracing new opportunities and why the brand will always maintain its independent coffee house ethos
Gerry Ford, CEO and Founder, Caffè Nero Group | Photo credit: Caffè Nero
What are the biggest challenges for coffee shops to navigate in the year ahead and how will Caffè Nero address these?
Every business and coffee house is facing significantly rising costs and Caffè Nero is no different. We’re seeing extensive inflation, which means significant rises in ingredients and energy costs, and wages for our people will also continue to rise. So, we have a strong focus on taking out extra costs in our business to mitigate those rises and an acceptance that we may have to see some price rises in store.
We are also witnessing contracting consumer disposable income, meaning customers have less readily available cash and are being careful where they spend it. So we need to make sure the quality of what we’re selling and the service we are providing remains premium so that we can continue to attract customers.
At the same time, we need to cope with the well documented shortage of labour in our sector. This means that as well as running a stronger recruitment drive than ever before, our focus must be on retaining and developing our existing employees. If we can retain our best people, our business is stronger and we have fewer positions to recruit for.
“We managed to retain most of our people during the pandemic, which gives us stability and strength to emerge from the Covid crisis”
Has the rising cost of living influenced Caffè Nero’s market positioning and strategy?
Honestly, no it hasn’t. Since I founded Caffè Nero in 1997, we have always focused on a premium experience. By that I mean a premium coffee product, premium food, a differentiated store design and personalised service.
The nature of how we manage our business means that we won’t be compromising those key things. Despite having stores all over the world, we’re still a family-run independent business. We’ve just developed the key pillars of our business to scale. We buy our green beans directly from small coffee farmers, we roast our own beans in our own roastery, and our coffee buyers and master roasters and blenders have spent their whole lives perfecting their craft.
We started off as a local independent coffee house and now we are maintaining that same ethos as we expand around the world.
Caffè Nero is now trading above pre-pandemic levels in the UK, what have been some of the most important learnings for the business coming out of this tumultuous period?
It’s encouraging, and we’re actually trading above pre-pandemic levels around the world. It’s been a long road to get here, but the response and reaction from our customers has been great since the heaviest pandemic conditions lifted.
In terms of learnings, a key component is to always have tight controls and never have too much excess in your business so you can pivot easily. We have been very strict with ourselves in that area and it’s meant we could react quickly to some of the market conditions we’ve been faced with.
Secondly, it’s important to realise people are your most valuable asset. We managed to retain most of our people during the pandemic, which gives us stability and strength to emerge from the Covid crisis. Adherence to top coffee quality and retaining great people are our two most important focuses.
Caffè Nero expanded its delivery offer across the UK with a new Deliveroo partnership in November 2022 | Photo credit: Caffè Nero
How important will diverse sales channels, including digital, retail partnerships and retail packaged products, be for Caffè Nero in the year ahead?
We’ve always had an extremely high-quality roasting facility with huge expertise and people who have spent their lives buying and roasting coffee. During Covid we tapped into that expertise. With all our stores forcibly closed, we began producing and packaging our coffee for our ‘Coffee at Home’ range. Customers couldn’t come to us, so we made sure our coffee could get to them.
Post Covid, consumer behaviour has shifted. Our stores are still hugely popular and will remain brand ‘showcases’ for those who prefer the coffee house experience, but we also want to make sure we can be there for our customers wherever they want to enjoy Caffè Nero’s products – whether that’s delivery or ‘Coffee at Home’.
Are there any international markets that will be of particular focus for Caffè Nero in 2023? If so, how and why?
We’re already in 10 international markets and there are huge opportunities across all of those territories. Our focus will be on North America and Europe, as we already see massive demand for our products in those markets.
Gerry Ford founded Caffè Nero in 1997. The coffee house group remains a family-owned and operated business, but has since grown to over 1,000 stores across 10 countries.
Caffè Nero currently operates more than 620 stores across the UK.