Caffe Nero is looking to acquire another 27 sites by the middle of 2003, and may snap down on a small coffee shop operator to achieve its ambition.

The company's chairman and chief executive, chairman, Gerry Ford, said: "We're looking at several possibilities with smaller companies wanting to exit the market, but we are being very choosy."

"Now is a good time to open new outlets. There might even be further consolidation in the sector, with casualties for some weaker brands."

Caffe Nero, which wants to have an estate of 300 sites by 2006, said that it had identified between 10 and 15 potential sites, one as far afield as Southport. A lack of coffee outlets outside the M25 is encouraging Caffe Nero to focus its efforts away from London.

Ford said he expected to see "very strong" growth for the company the next six months, particularly outside London, despite reports of saturation in the coffee bar market.

At its current size, Caffe Nero believes it has critical mass to meet expectations that it will become profitable at the pre-tax level this financial year.

The chain, which now has 108 locations in the UK, plans to expand in northern Europe once its UK portfolio reaches 150.

Ford refused to comment on Caffe Nero's position regarding Coffee Republic, in which it holds a 10.5% stake.

Industry commentators have suggested that Caffe Nero, or Easy Group, with which Caffe Nero operates a store in Kensington, West London, may buy the ailing chain.