Archive for December, 2007


Interview with Steven Bartlett, CEO of Coffee Republic


Reuters interview with James Muirhead

LONDON, Dec 19 (Reuters) – Coffee Republic said on Wednesday it expected to be cash flow positive in early 2008 as first-half like-for-like sales rose 4.2 percent and it reduced its losses by 30 percent.

The coffee bar and deli franchise chain has doubled its number of outlets to 86 in the last nine months.

It said it made a loss of 895,000 pounds in the six months to Sept. 23, as revenue fell by almost half to 2.8 million pounds after franchising a number of its coffee shops.

Recently installed financial director James Muirhead, told Reuters that the UK market remained tough, with concerns lingering over a general retail slowdown and spiralling resource costs.

With milk costs rising around 40 percent alone, Muirhead said the firm would pass the rises onto its franchisees, and it was targeting positive cash flow by early next year and would be fully profitable on a pretax basis by March 2009.

Despite the price and consumer worries, Muirhead said signs for UK growth were good after the firm secured a contract to sell coffee in 73 Cineworld Cinemas.

He added it was dealing with “400 to 500 applications a month for franchise start-ups”.

Outside of the UK, the company is looking at expansion in booming Indian cities, following in the footsteps of larger rivals Costa Coffee and Starbucks.


Interim Results September 2007

• LFL growth: 4.2%
• Cineworld: 73 ‘Co-brand’ locations to open in the UK in early 2008
• ‘Co-brand’ locations: 27 in operation
• New franchised bars: 17 (including 5 converted from ‘Company owned’)
• Overseas Expansion: 8 countries contracted.

Interim September 2007 results


Deal with Cineworld


Coffee Republic wins deal with Cineworld UK. 73 Cinemas UK wide to have ‘Coffee
Republic Served Here’.

Coffee Republic announces that agreement has been reached with Cineworld
UK to roll out its ‘Coffee Republic Served Here’ concept to all 73 Cineworld
sites in the UK.

The role out of these concessions will begin in early 2008.

Commenting, Steven Bartlett, CEO, said:

‘We are delighted to be in partnership with such a major leisure business as
Cineworld UK and I believe that our 2 brands complement each other perfectly.
This is a major step for us in our strategy of rolling out our ‘Coffee Republic
Served Here’ concept with major national chains’


Write up on



Spilling the beans
Coffee Republic is taking espresso cafés to the next level with the roll out of its new deli concept

Coffee Republic has re-invented itself in the face of a growing market of coffee shops in the UK – with new branding and a new deli concept.


The old brown and white facade has been replaced with a new red and black retro look that has a larger impact on the consumer.

The chain has transformed its menu, introducing a larger range of tea, hot chocolate, milk shakes and fresh food options. And they promise fast service from a friendly, well-trained team.

“We’re trying to drive footfall and enhance the customer experience,” says James Muirhead, finance director. “The black and red identity was created about a year ago and the idea is the whole estate will be black and red by the end of December.

“The franchisees don’t want to spend money and sometimes we have to say it’s worth doing. We’ll only have five company-owned stores, while currently we have nine, but we’re looking to franchise those. We’re focusing on the franchise route because a franchise company with money on the line tends to have better sales. The average uplift is 25 per cent in sales and one outlet was 100 per cent when it switched over to franchise ownership.

“It’s been a bumpy ride, but we’re very clear on where we’re going now.”

And that is away from focusing predominantly on coffee. The new menu has a new ‘Chill-o-Chino’ menu, which includes fruit freezers, iced drinks and various shakes, from classic to more unusual varieties, such as Rolo Shake and Jaffa Cake Shake – to appeal to the kids market. There is also a full range of smoothies, yoggies and juices.

In addition, Coffee Republic has introduced a large tea menu. “You have to go to a hotel in this country for a nice cup of tea,” says Muirhead. “So we’re bringing in tea that comes in a pot and different types of tea.”

The final part of the new concept is the deli. “Our point of difference to Costa and Starbucks is that their food is pre-made and sent out. Our deli food is freshly prepared on site, including made-to-order sandwiches.”

The company is now looking for further sites both inside and outside the UK. “Our focus is 50 stores for the next year and 500 stores in the UK in the next five years,” Muirhead says. “Landlords are really excited as this is something different. They may want to introduce something new and the retro look has a real impact.”

Coffee Republic is already doing well. CEO Stephen Bartlett first approached the company with an interest in a franchise. “There was a shareholder revolt that I led and they made me a CEO,” he says. “We’ve been in a year and turned the company on its head. It’s a very strong iconic brand. Countries abroad think we’re the Starbucks of the UK, so being listed on the stock market helps.

“In 12 years the company has never made a profit, which is why there was a shareholder revolt. We expect to go cash positive just before or just after Christmas.”

In fact at one motorway service station where Coffee Republic’s identity replaced a Costa, the figures have increased by 30 per cent.

“Going forward, we’ve identified railway kiosks, shopping centre cafés on turnover-related rents and the high street,” adds Bartlett, who, despite all the new menu options, also believes Coffee Republic should know everything there is to know about coffee and would like to see its stores selling other brands in addition to its own, including Starbucks.

“Our coffee has always won awards,” he says. “So we won’t change our home brand, but we’ll bring in fair trade and organic, and we want to be a special coffee trader. We’ll have coffee of the day or coffee of the week and customers will be able to buy special imported coffee.”

Tim Hance of Leslie Furness, letting agent for Coffee Republic, says the company is looking for mall café locations. He adds: “We’re in discussion with Land Securities, Westfield, Hammerson, Grosvenor and Capital Shopping Centres.” Coffee Republic is planning to open a further four stores before Christmas.


Coffee Republic in talks with local firms for India entry


UK-based Coffee Republic Plc. is in talks with eight Indian companies to appoint an India franchisee that will bring the coffee chain to India as it looks to expand outside its home market.

It hopes to finalize the deal in the first quarter of next year. The company is currently studying whether it should enlist a single “master franchisee” for India or have four different franchisees in the country’s four different regions, Peter J.F. Breach, chairman of Coffee Republic, said. “We haven’t decided…we might do one (franchisee) or four,” Breach said.

Breach declined to name the Indian companies Coffee Republic is talking to but said two of them are real estate firms and one is a “large” company. The company plans to open up to 500 outlets in India in the first five years and add another 250 stores in the five years after that, Coffee Republic executives said. The company hopes to roll out its first stores in the second quarter of 2008.

On Monday, Dubai-based Landmark Group tied up with Gloria Jean’s Coffees to operate nationwide franchisee stores of the Australian firm. Landmark’s hospitality unit, Citymax, plans to invest about Rs40 crore to open 90 Gloria Jean’s outlets throughout the country in the next four years and will scale up operations to 500 stores in the next 10 years.

According to industry estimates, India currently has about 1,200 coffee outlets, and people in the industry expect the number to more than double to 2,500 in the next four years. Currently, business through coffee bars in the country is a Rs500-600 crore a year market but this is expected to triple in the next five years. “It’s (the market) growing exponentially,” Breach said. “It’s an enormous market that is growing rapidly.”

India’s coffee bar culture is barely a decade old and while it has home-grown chains such as Barista Coffee Co. and Café Coffee Day, it is also home to some overseas chains such as Costa Coffee and Coffee Bean & Tea Leaf . A youthful population, a booming economy and rising incomes are translating into more business for coffee bars. Café Coffee Day and Barista, which was acquired in March by Italian firm Lavazza Spa, operate around 700 outlets between them.

Meanwhile, Coffee Republic is in talks with Bangalore-based Coffee Board to assist the UK company to add some Indian coffee varieties to its portfolio in the country, Breach said.