Cooks Coffee Company is looking to grow its market share by acquiring complementary, synergistic brands, executive chairman Keith Jackson tells MCA.
The Esquires and Triple Two Coffee operator is gearing up to list on London’s Aquis Stock Exchange, a process that is expected to be completed early in November.
Jackson expects outlet expansion to be accelerated in the medium term, as Cooks looks to close the gap on number three UK coffee shop operator Caffe Nero.
He says the New Zealand-based company has a differentiated offering from high street rivals, and sees plenty of opportunity to expand – despite a tough economic climate.
“We’re aware that the environment is somewhat challenging,” he says. “But we believe the hospitality and cafe industry has shown significant resilience throughout the covid period
“The results achieved at an industry level and by our company are very encouraging. We think investors will see an opportunity. Hospitality is something people look to in challenging times. It’s a small treat in many ways.
“We’re very confident by our future pathway, we see great growth opportunities. People think there’s a lot of cafes in the UK, but by international standards of cafe per head, there are still significant opportunities.”
Cooks yesterday announced a planned £1.5m fund-raising in conjunction with the brand’s proposed admission on the Aquis Stock Exchange.
With Cooks already listed in New Zealand, listing on Aquis offers a fast-track process to listing in London.
“For us, the timeline is almost as important as cost. Also flexibility,” he said on the attraction of Aquis over other markets.
“The ball’s in play, if you want to put it that way.”
Cooks acquired the global rights to Esquires in 2013 (excluding Australia and New Zealand), focusing on operations in the UK and Ireland. The brand has a family-oriented neighbourhood offering with sit-down food.
Triple Two was acquired in June 2020 and has an offering that is “complementary” to Esquires. Founded in 2016, Triple Two is aimed at a younger consumer base with more grab and go food. It continues to be run day to day by its founder and MD David Hodgetts.
“One brand can’t appeal to all customers, so by having a house of brands with common values and common vision we can build quite a good business,” Jackson says.
Esquires is run as a master franchise, with a regional development structure, and operators looking after specific regions, while Triple Two is smaller and still growing.
“It makes sense to have local people in local regions, who know the real estate and customers. They can grow faster than a corporate could.”
“The benefits of franchising is it’s capital light, you can move quickly - provided you have the right people.”
Cooks has plans to increase its number of outlets by 10% by March 2023, part of plans to reach 120 stores globally.
In the UK & Ireland it currently has 70 outlets, which makes it the fourth largest coffee shop operator in the UK – though still just 1% of the branded market.
This means there is a long way to go before Cooks catches up with third placed operator Nero, which has more than 800 UK outlets.
“We want to bridge that gap - not that we’ll achieve that straight away. But we see a big opportunity to grow our business, to try and keep building that uniqueness.
“What you tend to get with Nero and Costa, one is quite like the next one. With our offering we tend to localise quite a lot, reflecting the local environment, local people running them.
“Our strategy is to grow our existing business, acquire complementary synergistic brands - and potentially look at supply chain integration, which can make sense at scale.
“We definitely see an opportunity to add other brands in different segments of the market.”
Speciality coffee has seen plenty of market activity, with Blank Street Coffee recently acquiring Over Under, and Black Sheep and WatchHouse continuing to roll out.
Jackson adds that Cooks shares a lot of the same vision as these speciality operators, albeit they are in different segments of the market.
“We think people are looking for innovation, particularly younger consumers,” he adds.
“People are looking for that something different and interesting, something that’s fun and good value.”
