Caffè Nero will continue to open new stores in the UK and abroad, but has warned that coffee prices are likely to continue to rise as the war in Iran and higher staff costs carry over.
The family business, which has just bought Compass Coffee from 15 Washington DC-based stores to make it its flagship brand, aims to open up to 30 stores in the UK and between 50 and 70 more this year in the other 10 countries in which it operates.
Gerry Ford, who founded Caffè Nero in 1997 and remains its majority shareholder, said the 1,151-store company, which employs 11,000 people worldwide, was outperforming bigger rivals Starbucks and Costa. Starbucks has been closing stores in North America and Costa owner Coca-Cola recently abandoned sales plans after losses mounted and sales fell at established stores.
Ford suggested that those brands had expanded too quickly and had undergone multiple management changes.
“We’ve been more consistent in what we’re trying to do. We haven’t had big spikes in growth. We’re going at a steady pace,” he said. “We can expand more quickly or slow down. We have more flexibility by not trying to hit a quarterly reporting target. We can have longer-term planning.
“We don’t want to dominate the world. We need to move at our own pace.
“We never wanted to suffer the consequences of trying to be everywhere for everyone.”
After buying Nottingham’s 200 Degrees for around £9m in October 2024 and snapping up Wales’ Coffee#1 and former Tesco-owned operator Harris +Hoole in recent years, the company is expanding those brands as well as its eponymous chain.
However, Caffè Nero’s plans to make further acquisitions are on hold for at least a year as the group absorbs its string of recent acquisitions that have led to higher borrowing and related financial costs.
In the year to May 2025, sales rose 13% to £587.6m from £519.8m. However, pre-tax losses rose to £41m from £34m as finance costs rose to almost £78m from £69m a year earlier due to higher interest rates and more borrowing to finance acquisitions.
At the end of the year, the company had £481m of debt, up from £428m a year earlier, with £42m in credit due to be repaid in December.
Ford says underlying profits have increased by a fifth and that new acquisitions bring new sources of profits and sales, as well as increasing debt.
Growth continued last year with UK sales rising 7% to £185.4m in the six months to November, led by 5% growth in established outlets, helped by new products such as frozen matcha drinks and pistachio-flavoured croissants.
He said Caffè Nero will keep several of its new brands above the door, while the parent company helps with ingredient purchasing and back-office operations, but leaves each chain’s management to “do everything possible” to operate and expand.
“The industry has absorbed a lot of costs in recent years and all that means is that we will open fewer stores in a year. If those costs were not there, we would probably open more.”
It says trade rates and increases in the cost of employing people in the UK have only contributed to the rise in coffee prices, which tripled between the end of 2023 and the beginning of last year, driven in part by the climate crisis that has affected crops in major producing regions such as Brazil and Colombia.
Today, the price of Arabica coffee is still almost double what it was in 2023.
“I’ve been doing this for 29 years and the price of coffee goes up and down. Eighteen months ago it went up and it didn’t really go down,” he said.
“In the last three months it has gone down a little. We have overcome the worst and purchases… will be more reasonable and normal. That will be very welcome for us.”
However, Ford said this is not likely to lead to a reduction in the price of a cup of coffee, as other costs remain high, including energy, which the conflict in the Middle East is only increasing again.
He warned that a prolonged outage could drive up the price of a cup of coffee again. The average latte in the UK across all chains is already £3.76, up 35% over the last five years, according to World Coffee Portal.
“Normally prices go up but they don’t go down. I hope that as the year progresses we will see it,” he said.
Caffè Nero began in 1997 when Ford, an American who studied in the United Kingdom and began his career working for 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 over 650 outlets in the UK, with Turkey being its second largest market with 112 outlets, followed by Poland, where there are 93. The acquisition of Compass Coffee brings the total number of outlets in the US to 60 and adds a new coffee roasting facility to support other coffee shops.
“We’re not going to end up with 5,000 stores, but there’s a lot of white space as an independent premium,” Ford said. “No market is saturated at all.”
