The coffee shop group says it will return to a ‘typical’ rate of annual outlet expansion following strong trading for its Caffé Nero, Coffee#1 and Harris + Hoole coffee chains
Caffè Nero Group achieved 69% revenue growth in the 12 months ended 31 May 2022 | Photo credit: Louise Parks CC BY-SA 4.0
Caffè Nero Group is planning to open over 90 new stores globally following a return to ‘normal’ trading levels last year.
The London-based coffee shop group, which operates the Caffé Nero, Coffee#1 and Harris + Hoole coffee chains, said gross sales reached 100% of 2019 levels in the UK by the end of 2022 but varied across its nine international markets.
Caffè Nero Group closed its most recent reporting period, the 12-months ended 31 May 2022, with 875 Caffè Nero stores worldwide, including its Nero Express travel hub kiosks, alongside 101 Coffee#1 outlets and 40 Harris + Hoole sites.
The group, which said it would ‘typically expect to open 70-90 new sites worldwide in a year’, only opened 23 stores during its last fiscal year due to ‘government restrictions and the need to preserve cash’.
Outlet growth in 2023 is expected to primarily concern its eponymous Caffé Nero brand, but Caffè Nero Group also highlighted specialty coffee chain Harris + Hoole as having ‘strong potential alongside Caffé Nero’.
Founded in 2012, Harris + Hoole returned to profitability during the reporting period and currently has 40 stores across the UK.
In January 2023 Caffè Nero posted strong trading across the UK for the first six months of its 2023 financial year, covering the six months ended 30 November 2022, boosted by new delivery and retail partnerships.
The London-based coffee chain said UK sales grew 17% year-on-year to reach £150m ($186m), averaging 104% of pre-pandemic levels.
Coffee#1, which principally operates across Wales and the south west of England, reported trading at 120% of pre-pandemic levels in January 2023 and has opened nine new stores since May 2022.
Reporting on the 12 months ended 31 May 2022, Caffè Nero Group achieved 69% revenue growth to reach £349m ($419m).
The group’s largest market, the UK, contributed sales of £315m ($378m), with Turkey and the US showing strong year-on-year revenue growth of 86% and 78% to reach £12.8m ($15m) and £17.8m ($21m) respectively.
However, despite reporting total operating profit growth of 128% to reach £30m ($36.5), Caffè Nero Group reported a loss of £15m ($18m).
The group attributed this to the outbreak of the omicron Covid-19 variant in December 2021 which it said ‘paused the progress of growing sales’. Sales across the UK had increased from 60% to 90% of pre-pandemic levels following the NHS vaccine roll-out, but dropped as trading restrictions were put in place until March 2022.
Caffè Nero is the UK’s fourth largest branded coffee chain, behind Costa Coffee, Greggs and Starbucks. Coffee#1 is the seventh largest and one of only eight with more than 100 outlets.
World Coffee Portal research forecasts the total UK branded coffee shop market will surpass 10,200 outlets next year and exceed 11,600 outlets by 2028.