Caffe Nero

Topics: Strategic management, SWOT analysis, Coffee Pages: 7 (2153 words) Published: August 11, 2011
What are the factors contributed to the growth of Caffe Nero in the United Kingdom market? INTRODUCTION:

Caffe Nero Group Limited was founded in 1997 in South Kensington, London by Gerry Ford. It is an Italian style coffee shop and the largest independent coffee retailer in Great Britain in recent days. Now, it has over 400 stores and nearly 3000 employees in the United Kingdom. It is also to the development of overseas market, in 2007, Caffe Nero opened the store in Turkey, and after one year later, it opened the shop in the United Arab Emirates, the Middle East. Caffe Nero has a philosophy; it is very simple, which included four elements, Food, Service, Coffee and Atmosphere, especially Coffee and Atmosphere, a good coffee can give customers a good first impression, make people sweet in heart, Atmosphere is also very significant point, a good atmosphere will give customers’ mind relax and happy, increase the customers’ consumption. When people go to the Caffe Nero, it will see behind the Caffe Nero, it writes ‘Italian’, it does not mean Caffe Nero is from Italy, it means in the Caffe Nero, the coffee style is Italian, the coffee is used for a unique Italian blend is made from seven different coffee beans, which is different with the other cafe rivals in the UK market ( 2011). Now a day, more and more coffee shops are opening in the UK market, because people are richer than before, and most persons do not have much more time to make coffee and cook food and the business is too busy. Those three factors stimulate the coffee market. In Great Britain, there are two main rivals are competitive with Caffee Nero; one is Starbuck, and the other one is Costa Coffee. Caffe Nero. Starbuck and Costa Coffee are controlling approximately 57 percent of the UK coffee market. For the past five years, Caffe Nero has more than doubled in size to outnumber four hundreds stores with Earning before Interest, Taxes, Depreciation and Amortization (EBITDA) of £28.7 million and revenue of £153.6 million until May 2010 ( 2011). Even though the Starbuck has more than 700 stores in United Kingdom, and Caffe Nero only over 400 stores, but the Caffe Nero is more successful than Starbuck. Most of the British people like Caffe Nero more than Starbuck, because people like Caffe Nero coffee taste more. Also, the architectural design is suitable for the people and the service is better than Starbuck. So, it is necessary to do a research to analyse the Caffe Nero success and make profit growth factors, it will use SWOT (strengths, weaknesses, opportunities, threats) to analyse in detail, include internal factors and external factors.


SWOT model is similar like Chinese Ying- Yang, which means one side is positives and another side is negatives, also comprised with internal factors and external factors (Figure 1). SWOT model is a tool for auditing an organisation or a company and its environment, find a suitable way for business, these contain strengths, weaknesses, opportunities and threats, which maybe used more often than any other management styles in the process of decision designing. The SWOT analysis is a helpful support to strategy formulation, which is relate to the analysis of a company’s external environment and internal environment with the objective of distinguishing organisation internal strengths in order to utilize the external opportunities and refrain from its external threats, also find out the weaknesses. This technique is original in Albert Humphrey, who did a research project in University of Stanford in 1960s to 1970s, and the research data is from the Fortune 500 companies. SWOT analysis is a strategic planning equipment, which is used to estimate the strengths, weaknesses, opportunities and threats included in a business project or in a business risk or in some other situation of accompany requesting a decision in aspire of an objective. It contains internal environment...
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