Caffe Nero

1.1 Introduction

In the year 1969, Gerry Ford, the founder of Caffé Nero wanted to bring high quality Continental-style espresso bars to Britain. He wanted it authentically Italian serving high quality coffee and food in a customer friendly atmosphere. In 1997, five stores were opened in London and in 1999 several other branches were opened outside London. By the fourth quarter of year 2000 it had 31 outlets. Company had won British Design Council Award for Company Identity which means Caffé Nero became best brand in United Kingdom.

It was also listed as 20th in Europe’s 500 fastest growing Companies listings both in 2004 and 2005, Furthermore Caffe Nero also won the Coffee Bar Sandwich Retailer of the Year award and Ford was announced as Entrepreneur of Year.

Gerry Ford is responsible for the general management, strategy, Growth and branding at Caffé Nero. Caffe Nero’s authentic Italian Cafes selling gourmet coffees and deli products has clearly differentiated it from its other rivals in the market. According to Allegra’s annual reports on markets has given Caffe Nero top position for coffee quality, atmosphere and service.


The Entrepreneur 23 July 2008 Cited 08/09/2009

Currently Caffe Nero owns over 360 Stores and become UK’s most recognised and admired food and beverages brand.

Ref: Caffe Nero website

1.2 Growth Strategy:

Caffe Nero growth is a good example of a customer care operation strategy in action, its vital process focus and a critical activities starting from the acquisition of select coffee beans to their delivery of goods and services to the customers to delight customers. Caffe Nero strategy goes beyond the actual services and its goods it offers customers the organisation determine customer needs and they commit themselves to meet the customer requirement and continue improvement for all levels of organisation.

Since inception the company has consistently embraced a growth strategy that involves opening new stores and acquiring existing ones from their competitors. It is now the UK’s third largest speciality coffee chain behind Starbucks and Costa Coffee.

Caffé Nero currently operates more than 360 shops in major cities and towns in the UK. Organisation intends to increase the number by opening new stores in large cities as well as in small markets. Caffe Nero has policy to operate all of its stores under Caffe Nero name but also maintaining the food and Coffee standards all across the chain. Jeffrey Covell (1992)

Initially, to improve their ability to expand, an initial public offer (IPO) was carried out in March 2001 when it had only 53 stores and this raised £9 million from the London Stock Exchange. It was the 4th biggest in the market trailing Starbucks, Costa Coffee and Coffee Republic. It raised the number of stores to 108 shops by the March 2002 by opening new stores and acquiring Aroma stores from McDonalds. This made it the 3rd largest coffee house in the UK. In August 2002, it secured £7 million to finance its expansion with the expectation that it would generate enough profits to self finance its expansion. It currently opens on average one store per week. (

Source; Numis Securities Research / Caffe Nero

Caffe Nero also considers moving into other markets in the world like in India. More than 450 years old and located on the Deccan plateau in the southern part of India, Bangalore is today the most cosmopolitan of all major cities. Its pleasant climate when compared to the hot tropical climates of most other Indian cities has made it the ideal destination for immovable multinational .being the it capital of India and one of the biggest IT hubs in Asia has led to Bangalore’s population becoming the cross-section of people from not only different parts of India but also all over the world, this has also led to the average Person in Bangalore, India having greater exposure to international trends in shopping and lifestyle .the resulting boom in the retail and the lifestyle market has let Bangalore also being called the pub and plaza city of India, these international spending habits of the public make Bangalore the ideal city for Caffe Nero to open there first outlet in India.

Once opened, this new outlet would offer the customers a complete range of products which was previously not available in India. This would provide a launch pad from which to increase its presence in the Indian market by opening other stores in other Indian cities.

Part 2

2.1 Operations Manager’s Job and responsibilities

Part 3

3.1 Operations Strategy

Operation strategy of the company is concern with the individual process and it includes the transformation process that includes the whole business. Organisation’s operational strategy clearly reflects its total strategy throughout the company. Operations strategy deals with changing competitive environment to make sure organisation meets its current and future challenges.

Operation strategy includes long term and short term operations decision to corporate strategy and it help in developing capabilities which the firm needs to have to be competitive. Operation strategy specifies how operations implements corporate strategy and help to build a customer driven firm. Operation strategy needs corporations to understand what the customer wants. Customer wanted the product that is reliable, inexpensive, and can be delivered within a short period of time.

The operation strategy provides the corporate with the direction that serves as the framework for carrying out all the organisation functions it specifies the business that the company will do, isolates new opportunities and threats in the environment and identifies company’s growth.

Part 4

4.1 Use of Technology

In spite of having opened 200 branches in eight years and 360 stores till now, Caffe Nero lacked appropriate technology help to analyse business performance and maximise successes. E.g. managers would have to fax daily takings to head office where it was manually entered into spreadsheets. According to David Radburn (Head Of Business Systems Cafe Nero) “We were quite behind when it came to technology to help us manage the business”.

This made it difficult to spot trends of products and of each branch as well as streamlining the accounting process. An electronic point of sale (EPOS) was introduced to be able to provide Caffe Nero’s management with moderate amounts of information. Eventually, they decided to roll out a business intelligence system to help understand trends and predict future sales. Management decided to use Cognos Business Intelligence and Management (BI) Solution which would enable the Board to access reports showing company wide information. Key performance indicators such as product wastage, sales by products and store, staff performance would then be available to area managers and senior management for action where needed. Ref: Cognos Report by TAHOLA

Benefits derived from this system include greater visibility of sales information for trend analysis allowing managers to make timely actions like increasing or decreasing food orders depending on whether a particular week has been good or bad. More information provided by the BI solution would increase understanding of product, staff and store performance to enable appropriate staffing and product information is availed about the busiest periods in the cafe which help with forecasting staffing requirements. It would also allow better monitoring of product wastage and opening hours to cater accordingly. E.g. if a particular product keeps on being thrown away, such information would enable only required a amounts of that product to be ordered to minimise wastage and lost money.

Congas Business Intelligence solution helps in deciding on the best hours of opening each store by tracking customer traffic at any given point of the day. This ensures customer satisfaction by ensuring that sufficient staff is available to serve customers which is the basic philosophy of Caffe Nero. Wastage was also been monitored closely through this system, resulting in flexible working as well as declining the opportunity of losing money. Staff development and recognition is also possible by identifying their individual performance as well as store performance in terms of sales. Thus the use of technology in an organised manner resulted in the company to perform at their best levels and achieve their goals.


The Entrepreneur 23 July 2008 (Cited 08/09/2009)

Caffe Nero website:

(Cited 08/09/2009)

Numis Securities Research / Caffe Nero September 2005 (web: www.

Numis Securities Ltd Cheapside House 138 Cheapside London EC2V 6LH

(Cited on 09/09/2009)

Jeffrey Covell (1992), Caffè Nero Group PLC. International Directory of Company Histories Volume 63, St. James Press

Cognos Report by TAHOLA (web:

(Cited on 14/09/2009)


Martin Lindström (2005) Brand Sense, Kogan Page Limited

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