Caffè Nero Forecasts Further Coffee Price Hikes Despite Steady Growth
Caffè Nero, the family-owned coffee chain, has issued a warning that the price of a cup of coffee is likely to continue rising. This forecast comes as the company navigates global disruptions, including the war in Iran and escalating staffing expenses. Founder Gerry Ford emphasized that while the business is expanding steadily, these external pressures are feeding through to consumer costs.
Expansion and Acquisitions on Pause
The chain, which recently acquired the 15-store Compass Coffee in Washington DC, plans to open up to 30 new outlets in the UK and 50 to 70 more internationally this year. However, Ford announced a temporary halt to further acquisitions for at least a year. This pause allows the group to absorb recent purchases, such as Nottingham's 200 Degrees and Wales' Coffee#1, which have increased borrowing and finance costs.
In the year to May 2025, Caffè Nero reported a 13% rise in sales to £587.6 million, but pre-tax losses widened to £41 million due to higher finance costs. Debt levels climbed to £481 million, up from £428 million the previous year. Despite this, Ford highlighted that underlying profits grew by a fifth, with new acquisitions contributing to revenue streams.
Outperforming Rivals with a Focused Strategy
Gerry Ford, who founded Caffè Nero in 1997, stated that the chain is outperforming larger competitors like Starbucks and Costa. He attributed this success to a consistent and measured growth approach, avoiding the rapid expansion and management changes that have plagued rivals. "We have been more consistent in what we are trying to do. We have not had massive growth upswings. We are going at a steady pace," Ford explained.
The company's flexibility, free from quarterly reporting pressures, enables long-term planning. Ford added, "We don't want to take over the world. We need to move to our own rhythm." This philosophy extends to managing its portfolio of brands, where each chain operates independently while benefiting from shared back-office support.
Rising Costs and Market Challenges
Coffee prices have surged in recent years, with Arabica coffee now almost double its 2023 cost. Factors include climate crises affecting crops in Brazil and Colombia, alongside rising business rates and employment expenses in the UK. Ford noted that while coffee prices have slightly decreased in the past three months, other costs like energy remain high, exacerbated by Middle East conflicts.
He warned that prolonged disruptions could push coffee prices up again. The average latte in the UK has already increased by 35% over five years to £3.76. "Typically prices go up but not down. I expect as the year goes on we will see," Ford remarked, indicating that consumers should brace for potential further hikes.
Global Footprint and Future Outlook
With over 650 outlets in the UK, Caffè Nero continues to expand globally, with Turkey and Poland as key markets. The acquisition of Compass Coffee brings its US presence to 60 stores and adds a roasting facility to support growth. Ford sees ample opportunities, stating, "No market is saturated at all," but emphasized a focus on premium, independent positioning rather than mass saturation.
As the hospitality industry absorbs rising costs, Caffè Nero's strategy balances expansion with financial prudence, aiming to sustain growth while navigating an increasingly challenging economic landscape.
