Cooks Coffee Company Limited Analysis

Overview

Cooks Coffee Company (CCC) owns the international intellectual property and master franchising rights to the Esquires Coffee brand globally (excluding Australia and New Zealand). In the UK and Ireland, it directly operates and franchises Esquires Coffee stores; whilst in Portugal, Bahrain, Jordan, Kuwait, Saudi Arabia, Pakistan and Indonesia, it has master franchise agreements.

CCC owns the Triple Two Coffee business that is based in the UK and is one of the fastest-growing coffee focused brands in the UK market.

CCC has 109 franchised outlets operating internationally as at 31st March 2022.

CCC also owns Crux Products Ltd with the goal to channel high-quality food & beverage products between New Zealand and China.

CCC operates in global markets and is listed on the NZX market (NZX: CCC).

Cooks Coffee Company focuses on three fundamental business elements:

• Operations of the international footprint under the established Esquires Coffee Houses brand principally utilising a franchise model. Esquires uses exclusively Organic and Fairtrade Coffee and delivers artisan style coffee through local people.
• Building the fast-growing Triple Two Coffee business initially in the UK followed by international markets.
• Growth of the group through a combination of organic growth and further acquisitions.

Performance

The following information was extracted from Cooks Coffee Company Limited's full year results, released on 30 May 2024:

Highlights

• Total franchisee store sales in UK & Ireland up 18% at NZ$58.2m (FY23: NZ$49.5m).
• UK store sales up 21% at NZ$38.3m (FY23: NZ$31.6m), double the industry average of 9%.
• Ireland store sales up 11% at NZ$19.9m, (FY23: NZ$17.9m) compared to the industry growth of 1%.
• 75 Group sites in the UK and Ireland as at 31 March 2024, up from 64 as at 1 April 2023.
• Net store numbers growth in UK of 18% and 15% in Ireland versus industry growth of 4% in UK and 1% in Ireland.
• Group revenue, which is highly correlated to store sales, up 19% at NZ$4.7m, NZ$3.9m.
• EBITDA of NZ$0.4m before impairment of receivables.
• The focus on suburbs and market towns has sheltered Esquires branded stores from the permanent changes in consumer behaviours post Covid, such as the working from home lifestyle change.
• The strategic direction plus the focus on organic coffee products and an enhanced food offering with local sourcing where possible, delivered by local owners of the franchised stores – ‘The local chain’ has proved successful for the brand.
• Growth in UK has been driven through strong performances by the Regional Developers in the Southeast, London, East England & East Midlands. The appointment of two new Regional Developers during FY24 for the North of England and the Southwest and South Wales will accelerate the growth in those regions.
• Appointment of Aiden Keegan as Group CEO. Aiden brings more than 20 years’ experience with the company in both core markets of UK & Ireland to the role.
• Esquires Coffee Houses Ireland were awarded the Irish Enterprise Award for 2024 as the ‘Best Modern Organic Coffee Shop Enterprise’.
• Esquires Coffee at Caerphilly were awarded the ‘Best Sustainable Café Chain’ in Gwent at the Welsh Enterprise Awards in 2023.
• Target store numbers for UK & Ireland by FY34 is 305.

Commenting, Cooks Coffee Executive Chairman Keith Jackson said: “We are delighted to report strong sales growth across our existing estate of coffee stores as we continue our expansion programme of new store openings. We have an exciting growth pathway clearly defined and have Aiden Keegan appointed to drive the future development of the business. Aiden is uniquely qualified for the role having spent 14 years as Operations Manager of the Irish business and the last almost six years as CEO of Esquires Coffee UK.”