Archive for September, 2007


Share tip: The Independent


Edited by James Moore

Published: 25 September 2007

Our View: Buy

Current price: 2.8p (+ 0.1p)

Investors could be forgiven for running a mile at the mere mention of the name Coffee Republic. The company has, after all, spent 12 years charging two quid for a cappuccino and yet failed to make money out of it.

Those with an appetite for a punt might care to take a fresh look at the company. Yesterday, it announced a franchising deal with Paris Group, a major retailer operator in the Gulf, which will see the company’s shops springing up in many of the more exciting parts of that booming region such as the United Arab Emirates, Bahrain, Qatar and Oman.

Franchising is new chief executive Steven Bartlett’s prescription for what has been ailing this company, which has long struggled against the other chains in the UK. And the deal with Paris looks a good one. It gives the company an upfront fee, royalty payments, and, crucially, full brand approval.

Bartlett says more are in the pipeline both in the UK and abroad and believes the company should go cash positive before too long. He will understand that investors – who have listened to sweet words from Coffee Republic and been burned before – might feel once bitten, twice shy.

To be fair, he put his money where his mouth is when the company tapped the market for £1m in March, and he might have found a formula to turn this long-time ugly duckling into a swan. Based on that, it is worth tucking a few of these shares away to see if he has. Buy.


Banker to the baristas: James Muirhead joins Coffee Republic

After a rapid rise through club chains focused on exercise and dance, James Muirhead is moving to the place where you can sit around and talk – but with his new employer diversifying rapidly into fresh formats and other countries, there’s more to his new job than shaking up and selling the coffee.

James Muirhead takes over on 21 September as FD of Coffee Republic, and is expected to join the board by the end of this year. Muirhead originally worked as an accountant with PricewaterhouseCoopers, qualifying in 1998, before entering the leisure and hospitality sector with companies including those running the Esporta health club and Tiger Tiger night club chains.The 36-year-old joins Coffee Republic at a time which CEO Steven Bartlett admits are “exciting and challenging”, with an intensifying battle for market share not only among other coffee outlets (including relentless globaliser Starbucks), but also from other café chains including the revitalised McDonald’s that have added coffee and related snacks as part of their menu diversification. Having innovated within the original concept, pioneering the decaffeinated and skimmed-milk versions of espresso and cappuchino, and re-launching tea, the company is now seeking to stay ahead of mass-market rivals in non-coffee complements by developing a “fresh food offer with truly fast service” that will take it into Pret-a-Manger and EAT territory.


Franchise agreement signed with Paris Group for UAE, Bahrain, Qatar & Oman

Coffee Republic has reached a franchise rights agreement with fashion group Paris Group for UAE, Bahrain, Qatar and Oman.The agreement gives Paris Group the right to develop Coffee Republic delis and recruit franchisees to operate in the areas.

The first outlet is due to open in November in Muscat, Oman, with a second site in Dubai currently under construction.

The deal brings the total number of countries under international franchise agreements to six, with strong interest from other parts of the world and further announcements expected in the coming months.


New book shop for Chertsey


In search of a good read, book-lovers in Chertsey will no longer have to travel to Staines or Woking.

Same Day Books will open in Guildford Street in the first week of September after more than fifty years since the town’s last bookshop was closed.

In a venture that is a first for the town, alongside specialist coffees and paninis, the bookshop-cum-coffee shop will sell bestsellers and paperbacks.

Tristan Chippington, manager said: “We want to integrate the coffee shop with the bookshop and blur the edge between the two.

The manager also said: “There’s going to be several sofas throughout the store and we’re hoping it will be a real success.

The manager added: “There isn’t anywhere you can sit down and have a coffee in Chertsey at the moment.”

With shops in Sussex, Hampshire and Cobham, Same Day Books is a small chain.

The company’s fifth shop is located in Chertsey and the franchise to sell hot drinks and snacks is held by the brand Coffee Republic.

Mr Chippington said his company is attracted to the town by the recent investment in Chertsey, such as the Phoenix Plaza and retail units at the end of Guildford Street.

He said: “We chose Chertsey because we think it’s a town that’s on the up and there’s a lot of potential here.

He also said: “Hopefully we can encourage other businesses to come here – I’m incredibly confident about that. We don’t want it to be a staid bookshop – we want to be part of the community and use some of the space we’ve got here for events and things like that.”

Inside a white picket fence, with bright green astro turf and clouds painted on the ceiling, a children’s area has already been created and the shop looks set to add a new dimension to shopping in Chertsey beginning with the forthcoming book signings.

Mr Chippington said: “We’re hoping to attract customers from across the board.”


Franchising: a good bet for success

News that the entrepreneurs behind the Coffee Republic franchises have recorded a 15 per cent rise in sales is a welcome boost to would-be entrepreneurs and franchisees.

But according to a recent NatWest and British Franchising Association survey, would-be business operators should act fast as the franchise industry is already booming: growing twice as fast as the UK economy.

Tom Bridgford is the head of the International Franchising Group at the international law firm, Hammonds. He said, “There has been an extraordinary hike in turnover according to the survey which states that the franchising sector has grown ten-fold since the 1980s to nearly £11 billion.”

Franchising became a popular business model in the 1960s and the 1970s and is a way for a company, which already has a successful product or service, to allow other businesses to operate under its brand.

Bridgford continues, “Buying a business off the shelf has always had a reputation as a less aggressive form of business but now its image is increasingly being shaken off as it emerges as one of the key sectors in the UK economy.”

The popularity of franchising comes from the fact that it is a tried and tested way of doing business which allows brand owners to grow their businesses with relatively low capital investment. In addition it offers the opportunity to secure distribution for products or services faster than would be the case if the franchisor had to train its own employees and develop its own internal organisation.

“In our experience franchisees are often investing their own money which means that they are usually very committed and motivated to growing the businesses aggressively. As a result the growth offered can be far quicker than more traditional methods of expansion and offers the additional benefit of less capital risk. In our experience the key building block of any successful franchise is to build a relationship based on trust between the franchisor and franchisee from the outset,” adds Bridgford.