Cooks Coffee Company Limited (AQSE:COOK) Executive Chairman Keith Jackson caught up with DirectorsTalk to discuss what the business does, driving sales volumes, store expansion, progress of Esquires and Triple Two Coffee and what investors can expect from the company in 2023.
Q1: Cooks Coffee recently dual listed on the Aquis Growth Market in London, as well as being listed on NZX in New Zealand, can you just remind people of what the business does?
A1: It is a business that has got a group of brands and is building a brand based on community spirit and ethical trading and we have a number of cafes around the world. We’re particularly focussing on the UK and Ireland, and today we’ve got 70 cafes amongst the two brands in the UK; 50 Esquires stores and 20 Triple Two stores and we have 15 in the Republic of Ireland.
Q2: As mentioned, the company recently released a trading statement in which stated strong sales growth, could you tell us more about that?
A2: In the calendar year to the end of December, we showed 41% sales growth, relative to 2021, and we made the comparison to other industries leaders who have recently published results and we’re almost double that level of sales. So, we’re very pleased with that, it’s built out of both same store growth and new store expansion.
The overall market has just seen some research from Allegro which has come out just over the last few days and that showed the total market growing at 12% but that the industry has not yet recovered to 2019 levels. Indeed, our own performance relative to 2019, we’re more than 30% ahead with the Esquires brand which was trading in 2019 so we’re very pleased with the growth that we’re seeing in the UK market.
Q3: Could you talk to us about the business’ focus on driving sales volumes through its existing estate and your plan on a store expansion programme?
A3: We’re very focussed on growing same store volumes and that’s really done by obviously good offering, we believe we’ve got an extremely good coffee offering which is pretty important for a coffee chain. We also have a very good food offering so we’re looking to build complimentary food offerings in our cafes.
Obviously, we’re looking to expand the store numbers, this calendar year we’ve already opened our first café in Northamptonshire, we’re looking to open another one on Wednesday of this week. Within the group, within the UK, we expect another 8 stores to be opened by the end of March so we’re really on quite an aggressive growth plan.
We’ve got a very good pipeline of new stores coming up for the balance of the calendar year, obviously some of the timings are a little bit more difficult to predict but we’ve got a lot of interest from franchisees, we’re very happy with the performance of the stores and we’ve got a strong pipeline going forward.
Q4: How are things progressing with both Esquires and Triple Two Coffee?
A4: So, the Esquires is a bigger chain, it’s been around for longer. It started in Canada in 1993 and came to the UK just after 2000, it’s got 50 stores and it’s growing at a very good rate so that’s going very well.
Esquires is a very well established brand, particularly focussed on neighbourhoods and suburban areas so it’s benefitting from working from home, benefitting from the very good food and coffee offering that we believe we offer in the cafes. We’re also building upon the franchise system whereby all of the stores are run by franchise people who have got their own investment in the stores, they’re very keen obviously to make that work and are members of the local community.
So, that philosophy is the same with Triple Two which is a younger brand, it started in 2016 in Swindon and that’s been growing very very rapidly so we’re very pleased with the growth of Triple Two.
It’s got a slightly different consumer offering which is targeted at younger people and a slightly different offering, more ‘grab & go’ type of thing, not quite such a high food component.
So, the two brands are complementary and both are growing in accordance with our expectations.
Q5: What can investors expect from Cooks Coffee Company in 2023?
A5: We’ve really got a focus on continuing the organic growth, that’ll be the key thing. We do see the opportunity for synergies like acquisitions which is a philosophy we have to build a house of brands which are complimentary in the coffee space.
So, we’re looking to accelerate that opportunity now with more stability in the market relative to COVID, we’re expecting that to be something that’s now in the past and we’re looking to build upon the strength that we’ve shown in 2022 and continue that growth.
Also looking to add a good range of new stores, we’ll be expecting to add at least 1 a month for each of the brands, that really is our target throughout the calendar year. Hopefully we can then add some acquisitions during the course of the year and that would lead to significant growth in both the bottom and top lines.
What we’re looking to do then is build shareholder value and grow liquidity of the stock on both the New Zealand and the Aquis market