Caffè Nero

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Caffè Nero Group Ltd.
TypePrivate company limited by shares
IndustryCoffee shops
HeadquartersLondon, England, UK
Number of locations
Increase 1,017 (2019)
Key people
ProductsEspresso based coffees
Frappé
Tea
Savoury and Sweet goods
RevenueIncrease £227.9 million GBP
Number of employees
Increase 5,000
SubsidiariesHarris + Hoole
Coffee#1
Aroma Coffee
Websitewww.caffenero.com

Caffè Nero is an Italian-influenced coffeehouse company headquartered in London, England. Founded in 1997 by Gerry Ford, currently the company runs more than 1000 coffee houses in eleven countries: the UK, Ireland, Sweden, Poland, Cyprus, Croatia, Turkey, the UAE, Oman, and the United States. In 2009 Caffè Nero bought and opened its own coffee roastery in Battersea, south London, which supplies the coffee to all its coffee houses worldwide.

Caffè Nero Ltd is majority owned, through a chain of intermediary companies, including UK-based Nero Group Holdings Ltd and Luxembourg-based Rome Intermediate Holdings Sarl, by Gerry Ford.[citation needed] During the COVID-19 pandemic, the company successfully dismissed a hostile takeover attempt.[1]

History[edit]

In 1997, Gerry Ford led a small group of investors in the purchase of 5 London coffee outlets.[2] Gerry Ford subsequently completely redesigned those units, introduced gourmet coffee/a new fresh food menu and brand identity, thereby establishing the Caffè Nero brand as recognized today.[3][4] At the same time the signature coffee house blend – Classico – was introduced, and has gone on to receive awards for its quality. The Classico blend is still served in every store today.[5][6]

Café in Warsaw, Poland, where it is branded as 'green Caffè Nero'

In March 2001 Caffè Nero joined the London Stock Exchange under the symbol CFN. In early 2007, the company was the subject of a management buy-out by the newly formed Rome Bidco Ltd and taken private.[7] Since 2007, the company expanded to Turkey in 2007, the UAE in 2009, Poland in 2012, Cyprus in 2013, and Ireland and the United States in 2014, Croatia in 2017, Oman in 2018 and Sweden.[8]

In 2013, Caffè Nero's coffee was rated best tasting among five major UK brands by experts at the independent consumer magazine Which?[9]

In June 2016, the Caffè Nero Group completed the purchase of the Harris + Hoole brand from Tesco which consisted of 43 sites,[10] and in January 2019 the Group expanded further by completing the purchase of the majority shareholding of the 100 strong coffee chain Coffee#1 located in Wales, South West England and the Midlands from SA Brains.[11] The deal gave Caffe Nero a 77% majority stake in the business. Then in February 2022, Caffe Nero completed the full acquisition of Coffee#1 by buying the remaining 33% of the business from SA Brains.[12]

In 2020, like many businesses in the hospitality sector, Caffè Nero suffered from poor trading conditions because of the COVID-19 pandemic. Due to the second lockdown in November 2020, the company proposed entering a company voluntary arrangement with its creditors.[13] Mr Ford's hope being that successful renegotiation of rent agreements with landlords, and a reduction in overall costs, would enable the company to rebuild its business when the pandemic ends.[14][15] The CVA vote by creditors held on 30th Nov 2020 was successful, with more than 90% of creditors voting in favour.[16] The CVA was approved the day after Caffè Nero confirmed it had rejected an unsolicited takeover approach from Mohsin and Zuber Issa, stating that the brothers had "clear intention" to disrupt the CVA "as a precursor to opportunistically acquiring the company at a later date."[16][17][18] The brothers are behind the EG Group.

In September 2021, the high court dismissed the challenge against the CVA, brought by a landlord with the backing of the Issa brothers, with Mr Justice Green ruling that the company had "acted in good faith, in accordance with their professional duties and reached a perfectly reasonable decision that it was not in the best interests of the creditors to postpone the CVA Process”.[19][20]

In January 2022, Caffe Nero completed a refinancing process worth £330m to give it a platform for future growth and development as well as the ability to resume its new store opening programme as the business continued its recovery from the effects of the Pandemic.[21][22]

Controversies[edit]

Caffè Nero has not paid any corporation tax in the UK since 2007 on sales of £2 billion and has been subject to ongoing criticism,[23] although the BBC has reported that "there is no suggestion that Caffe Nero has done anything illegal" and that "Caffe Nero has previously rejected accusations that its complex corporate structure involving various holding companies is designed to avoid corporation tax."[23] Paul Monaghan, chief executive of the Fair Tax Mark campaign group, said the firm's tax arrangements were “parasitic” and “insulting to the intelligence of the British people”.[24]

A handful of the company's stores have either had planning permission controversies and/or enforcement action taken. One town accused Caffè Nero of "bully-boy tactics"[25] following the opening of several stores in the United Kingdom without the required planning permission. However, all 11 stores where there have been planning permission issues have subsequently been granted planning permission.

In May 2015, the company said that they will stop serving milk from farms in Gloucestershire's badger cull areas. On 29 May 2015, the company said: "Caffè Nero has instructed its partners supplying to stores which are situated around the cull zone areas to supply milk from farms outside of the zone."[26] On 7 July 2015, rats were videoed scurrying along the floor and counter in their Donegall Square West unit in Belfast, despite having previously been awarded a four out of possible five star rating by inspectors from Belfast City Council. Having been notified of the incident, the store was closed for a full investigation and has subsequently reopened; the source of the infestation was an adjacent disused building.[27] A 2017 study by the BBC found trace amounts of faecal bacteria in Caffè Nero's iced drinks, alongside those of Starbucks and Costa Coffee.[28]

In June 2018 Polish State Sanitary Inspectorate and media reported 63 adults and 10 children having been poisoned (21 of whom were hospitalized) after eating salmonella-contaminated cakes served in a number of Caffè Neros in Warsaw, Cracow and Wrocław.[29][30]

See also[edit]

References[edit]

  1. ^ Walsh, Dominic. "Judge rebuffs Asda owners Mohsin and Zuber Issa in their bid to buy Caffè Nero".
  2. ^ "Caffè Nero takeover deal completes returning the b..." The Caterer. 19 January 2007.
  3. ^ Cave, Andrew (5 April 2014). "Caffe Nero founder Gerry Ford has chutzpah - you need it if want to take a European coffee chain to America" – via www.telegraph.co.uk.
  4. ^ Walsh, Dominic (26 February 2018). "Caffè Nero records like-for-like sales growth" – via www.thetimes.co.uk.
  5. ^ "Caffe Nero enters the retail market". MCA Insight.
  6. ^ "Situation Analysis of the Caffè Nero Group Ltd". www.ivoryresearch.com.
  7. ^ "Caffe Nero agrees to management buyout". Reuters. 7 December 2006 – via uk.reuters.com.
  8. ^ "Caffe Nero to open 80 new international sites in 2019 | Article | Xpress Recruitment". www.xpressrecruitment.com.
  9. ^ "Which coffee shop chain serves the tastiest coffee?". Which.co.uk. 11 July 2013. Retrieved 9 May 2014.
  10. ^ "Caffè Nero acquires Harris + Hoole brand from Tesco". 23 June 2016.
  11. ^ Gyton2019-01-31T08:28:00, Georgi. "A taste of things to come?". MCA Insight.
  12. ^ https://www.bighospitality.co.uk/Article/2019/01/30/Caffe-Nero-buys-majority-stake-in-Coffee-1 https://bakeryinfo.co.uk/finance/caffe-nero-owner-buys-remaining-stake-in-coffee1/664464.article
  13. ^ "Caffe Nero lenders and landlords brace for launch of CVA plan".
  14. ^ "Covid: Caffè Nero seeks help after pandemic 'decimates' trading". BBC News. 13 November 2020.
  15. ^ "Caffè Nero chief: We never meant 'pay no rent to landlords'".
  16. ^ a b "Landlords approve Caffe Nero CVA after company rejects takeover offer". December 2020.
  17. ^ "Caff Nero CVA includes 5m 'survival' fund to". 3 December 2020.
  18. ^ "Landlords approve Caffe Nero rescue deal". December 2020.
  19. ^ "Judge Rebuffs ASDA Owners Mohsin And Zuber Issa In Their Bid To Buy Caffè Nero". The Times. 29 September 2021.
  20. ^ "High Court dismisses legal challenge to Caffe Nero restructuring". The Caterer. 30 September 2021.
  21. ^ Walsh, Dominic. "Issa brothers' hopes denied by Caffè Nero refinancing".
  22. ^ "Caffè Nero completes £330m debt refinancing as it looks to grow".
  23. ^ a b "Caffe Nero accused over tax affairs". BBC News. 6 May 2014.
  24. ^ Hall, Mark Reynolds and Macer (12 March 2018). "Caffe Nero ROASTED for paying little or no tax despite selling £2bn of coffee". Express.co.uk.
  25. ^ "Planners say 'no' to Caffè Nero in Skipton (From Craven Herald)". Cravenherald.co.uk. 15 December 2011. Retrieved 9 May 2014.
  26. ^ "Caffè Nero bans 'badger cull' milk after animal rights threats". Gloucester Citizen. 1 June 2015. Archived from the original on 3 August 2015. Retrieved 1 June 2015.
  27. ^ "Caffè Nero Council visit after rats filmed". BBC News. 5 August 2015.
  28. ^ Davis, Nicola (28 June 2017). "Faecal bacteria found in ice from Costa, Caffè Nero and Starbucks". The Guardian.
  29. ^ "Sanepid: 73 przypadki zachorowań, w tym 10 dzieci". warszawawpigulce.pl. 11 June 2018.
  30. ^ "Komunikat nr 4: Zatrucie pokarmowe w sieci kawiarni Green Caffe Nero" (PDF). pssewawa.pl. 11 June 2018.

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