Cooks Coffee Company [AQSE:COOK], the Aquis-listed coffee shop chain has set an ambitious target to more than triple its retail footprint in the UK to 300 stores within 10 years.
The New Zealand-based coffee house currently has 62 stores in the UK and 16 in Ireland, with a global footprint of more than 100 stores under the Esquires Coffee brand. Cooks listed on Aquis in 2022 and is also listed on the New Zealand stock exchange [NZE:CCC].
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Although many will not have heard of Cooks, especially with the omnipotence of Starbucks NASDAQ:SBUX, Costa Coffee (part of the Coca-Cola Group), and Caffè Nero, Esquires is the sixth largest coffee chain in the UK. Its recently appointed Irish CEO Aiden Keegan is planning to change that and become a significant high street player in the UK.
Reorganising its retail footprint
Cooks also operates franchises under the Esquires brand in Portugal, the Middle East and Pakistan, although last year the group placed its 11-outlet, Triple Two café subsidiary into administration with the company saying: “Triple Two was growing rapidly before the Covid-19 pandemic and had shown continuing momentum in FY22 […] However, in recent times, this momentum has not been able to be maintained and the business has been adversely impacted by the current market environment.” The prevailing issues behind Triple Two’s underperformance relate back to the fallow period for UK retail during the Coronavirus pandemic and the geographical locations of its outlets. Cooks appointed RSM UK Restructuring Advisory LLP as administrators to Triple Two. The Esquires franchises are unaffected by the Triple Two process.
The coffee shop operator prides itself on its CSR credentials, building a business, in its own words of: “ethical coffee chains with community spirit”. Cooks was founded in 2008 and acquired the Esquires brand which was an operating Canadian business and since has grown through acquisition, as well as finding potential sites and developing them organically. The company hopes its next stage of development will be similarly twin-tracked, building a “house of brands” as well as identifying new locations – or acquiring smaller coffee chains – and building up the company’s high street presence organically.
Cooks hope that it will pass 98 stores in the UK by next March and then look to open 25 new stores per annum across the UK and Ireland. The company has to date targeted stores in suburbs and market towns, as opposed to city centres, citing the post-Covid changes in working practices with many workers spending less time in the office, concentrated in a city centre, meaning traditional footfall has fallen in CBD locations – part of the rationale for pulling the plug on Triple Two, which was very city centre-focused.
Coffee culture remains strong
Nevertheless, coffee culture remains strong in the UK – unlike many pub chains that are still in recovery mode, not getting back to pre-Covid numbers before being clobbered by a cost-of-living squeeze exacerbated by increasing costs brought on by the War in Ukraine. The strength of coffee (no pun intended) has been reflected in Cooks’ numbers.
In its latest trading update Cooks reported sales for Esquires outlets up 23.7% year-on-year for the first ten weeks of the new financial year, with the seven weeks leading up to 17th June reporting average aggregate sales of more than GBP0.6m a week, beaten only by pre-Christmas sales in 2023.
The company has spent through the recession, opening five new Esquires cafes and saw sales increase period-on-period 30.1% from its Esquires brand, of which the UK and Ireland franchises make up 89.3% of global sales and 98.4% of the group’s revenues.
In its latest results, published last month to end-March, the company reported revenues of NZD4.7m (GBP2.3m). Cooks opened trading for the week (24th June) at 12.5p. Over the year-to-date the company’s stock is down 16% and over one-year is down 39%. The company has a market capitalisation of GBP7.35m.
Coffee culture is here to stay in the UK, and although currently the market is dominated by a few mega brands with global reach, consumers are increasingly looking for quality and character and an ambitious brand like Cooks believes it can appeal to new consumers.
Despite facing challenges with its Triple Two business, Cooks Coffee is betting big on the future of coffee in the UK. With a focus on suburban locations, strong sales growth, and a commitment to ethical sourcing and community spirit, Cooks positions itself as a distinctive player ready to carve out a larger slice of the British coffee market.