Coffee shop brand set to extend into self-serve market
Costa owner Whitbread launched its push into the self-serve coffee market with the acquisition of Coffee Nation for £59.5m.
The company, which also operates Premier Inn hotels, will use the purchase to develop a new brand called Costa Express and said it hoped for 3,000 such bars in the UK over the next five years. Coffee Nation has 900 self-serve sites, including at Tesco stores and Moto and Welcome Break services stations.
They differ from typical hot drink vending machines because they use fresh milk and freshly ground coffee. Whitbread chief executive Andy Harrison said: "Customers increasingly want great tasting coffee on the go, which makes the self-serve coffee market very attractive."
The leisure group's Costa arm is one of the UK's largest coffee shop brands with more than 1,200 outlets, as well as a further 650 sites overseas. It is on track to open 300 stores in the current financial year and new figures show it increased total sales by 28.5% in the 50 weeks to February 17.
Like-for-like sales were also up by 7.9% but this rate slowed to 3% in the final 11 weeks of the period as Costa faced tougher comparatives with a year earlier. Across the group like-for-like sales increased 3.9% in the 11 weeks, compared with 6.7% for the wider 50-week period.
The company, which employs 40,000 people every month, is buying Coffee Nation from Milestone Capital, Investec and members of the existing management team.