Starbucks and Caffè Nero gear up for UK expansion

High street coffee chains are ramping up their post-pandemic expansion plans as trading returns to normal levels, with Caffè Nero and Starbucks both set to launch almost 200 sites between them.

Nero Group, the parent company of the Caffè Nero, Harris + Hoole, Coffee #1 and Aroma coffee chains, said it was “cautiously returning” to a roll-out programme of “over 90 stores worldwide” in 2023.

It marks a return to typical expansion rates, as Caffè Nero would expect to open between 70 to 90 global stores in a normal year.

Caffè Nero’s growth had been disrupted by the pandemic, which saw it open just 19 sites in 2021 and 20 new stores in 2022.

The boost in planned openings comes after the group reported that sales in May 2022 reached 100% of pre-Covid levels. Revenue for the year to 31 May 2022 increased by 69% to £349.1m compared to £206.5m over the previous 12 months.

Pre-tax earnings also showed signs of recovery, moving from a loss of £16.7m to a loss of £7.6m over the same period.

Nero Group added: “All brands and territories are now returning to a more typical level of openings as trading returns to normal levels.”

Starbucks has also announced plans to open 100 stores in the UK, putting an end to rumours that circulated last July that the brand was looking to sell its UK business.

The US-based chain said its latest expansion drive would target key cities and drive-thru sites.

The strategy forms part of a £30m investment in Starbucks UK, which will also see existing company-operated stores renovated over the next three years.

Total revenue for the coffee chain jumped 37% last year to £449.3m.

The group reported “strong footfall recovery” in suburban and retail park sites while office, travel and inner-city locations were boosted by a return of commuters towards the end of the year.

Duncan Moir, president of Starbucks Europe, Middle East and Africa, said: “Whilst we are cautious about the macro-economic environment, we will continue to invest to grow the region this year. We plan to open over 100 new stores in the UK and 300 new stores in EMEA, to continue this growth momentum.”

Meanwhile, coffee chains are also boosting staff wages, with both Costa and Pret A Manger set to increase pay above the National Living Wage rates from 1 April. It will be the third pay rise across both companies over the past 12 months.