Activities

Coffee Republic is the owner, operator and franchisor of a chain of espresso coffee shops that was rescued from administration in July 2009 by Middle Eastern property company Arab Investments.

The group was founded in 1995 by brother and sister team Bobby and Sahar Hashemi. After making swingeing losses in 2002, the group decided to covert its coffee bars into a more food-focused US-style deli and pinned its future hopes on franchising.

The chain is now made up largely of concessions and franchised outlets, with a number of franchised coffee shops overseas.

Timeline

• 1995: Coffee Republic is founded by brother and sister team Bobby and Sahar Hashemi, opening its first site in London’s Mayfair towards the end of the year.
• 1998: The group enters the Alternative Investment Market (AIM) by reversing into Arion Properties. The group grows to 24 branches after opening 17 new sites between March and November and has by now expanded beyond the capital to York, Birkenhead, Newcastle and Manchester.
• July 2000:  Coffee Republic switches from AIM to the full list and raises £10.25m for expansion through equity funding. At this point, it has 61 coffee bars and cafés and announces plans to open 80 more by 2002.
• March 2001: Hashemi steps down as chief executive but continues as a non-executive director. He returns as executive chairman in the summer of 2002.
• December 2001: Coffee Republic buys the GoodBean coffee bar chain for £8.6m, gaining 12 outlets in south-east England and seven further sites under construction. The acquisition takes the group to 108 outlets.  
• 2002:  In July, the group announces plans to halt its expansion programme, sell underperforming bars and launch a strategic business review as annual losses plummet from £2.7m to £7.5m. A number of takeover talks ensue with easyGroup, Benjys and Caffè Nero. Benjys’ £8m offer is rejected in October and Caffè Nero’s rumoured £10m bid is rejected in November. In November, Coffee Republic sells 13 sites to Starbucks for £2m and returns to an AIM listing.
• August 2003:  Coffee Republic unveils a survival plan to convert itself into a New York-style deli-bar chain called Coffee Republic Deli and whittle its numbers down to a core of 50 outlets. It pilots the concept at Baker Street and Exchange Street in London.
• November 2003: The group raises £2.45m in a placing and open offer to convert 50 core coffee bars into US-style delis
• June 2004:  Coffee Republic sells eight outlets in Cardiff and southern England to Caffè Nero for £700,000 in cash and Caffè Nero’s 5.7% stake in the company.
• November 2005: The group signs its first franchise deal and ends the year with four franchised outlets. It intends to retain just 10 to 15 bars under company ownership.
• October 2006: Bobby Hashemi steps down as executive chairman following a shareholder revolt in which major investors Surthurst and Plymouth Land called for an extraordinary general meeting to vote on his removal. Peter Breach and Steven Bartlett become chairman and chief executive respectively.
• November 2006: Coffee Republic has signed an agreement with CR Direct that will allow it to develop branded outlets within Family Entertainment Centres across the country, of which there are currently more than 3,000.
• December 2006: Coffee Republic signs its first international master franchise in Bulgaria, as the company’s new management team realign the business.
• March 2007: Coffee Republic signs an international franchise agreement for Turkey with Ada Kahve Gida Sanayi ve Ticaret Limited Sirketi.
• March 2007: The group raises £935,000 with the placing of 37.4 million new shares at 2.5p each to fund expansion, recruit a network of franchisees.
• April 2007: Coffee Republic returns to the stock market to raise £707,000 from the  offer of 28 million more shares at 2.5p each.
• May 2007: Coffee Republic announces two new UK regional development franchises – to CR Dorset for the territory of Dorset and to FIMY for the Channel Islands. It  also grants the international franchise for Romania to Krrus Holdings SRL
• June 2007: Coffee Republic signs its first first “Coffee Republic Served Here” franchise agreement with brewer and pub operator Greene King. The concept will be rolled out to 28 of the brewer’s London pubs, with hopes to extend the partnership in the future. Coffee Republic also grants a new UK regional development franchise with CRSE that extends its coverage from Kent and Sussex into Surrey..
• June 2007: Coffee Republic announces the conditional placing of 26 million new shares in a placing to raise £650,000 before expenses.
• June 2007: The group signs two more regional development franchises. CR Coffee Houses (set up by the Mooney Hotel Group) will cover Ireland and Eire while East Coast Traders will develop venues in Norfolk, Suffolk, Essex, Cambridgeshire, Bedfordshire, Luton and Peterborough.
• August 2007: Coffee Republic negotiates a regional development franchise with Coffox for Oxfordshire and the Royal Borough of Windsor and Maidenhead.
• September 2007: Coffee Republic signs an international franchise agreement with clothing specialist the Paris Group to develop outlets in the UAE, Bahrain, Qatar and Oman as part of its Food Vision hospitality arm.
• October 2007: Coffee Republic grants CR Mercia a UK regional development franchise for Warwickshire, Worcestershire and Gloucestershire.
• October 2007: Coffee Republic signs a franchise with McLeish Brothers to open café concessions across the firm’s 25 planned New York deli-style stores in Scotland over the next two years. It is Coffee Republic’s  eighth regional development franchise.
• December 2007: Coffee Republic wins a deal to roll out the  “Coffee Republic Served Here” concept launched in June to Cineworld’s 73 UK sites, starting in early 2008.
• January 2008: Coffee Republic signs an international master franchise for Kuwait with the Aquila Food Company.
• April 2008: Coffee Republic signs an international master franchise for Saudi Arabia with Al Hadaf, bringing the number of countries under international franchise to 10. The group also unveils plans to offer free Wi-Fi to customers at around 50 stores from 1 May.
• December 2008: Shareholders in Coffee Republic vote in favour of a share issue of 2.67m new shares to raise £800,000 that would leave it debt free.
• July 2009: Coffee Republic suspends its shares on AIM pending clarification of the financial position of certain subsidiaries. On 7 July, it announces that its principal UK operating company has gone into administration and, on 13 July, announces the appointment of KPMG as administrator following a request from a landlord to wind up the company. KPMG closes 10 company-owned stores, leaving nine.
• July 2009: Middle Eastern London-based property firm Arab Investments buys Coffee Republic out of administration. The portfolio now comprises 59 UK bars (five company-owned and the rest franchised), some 101 UK concessions, and 18 overseas franchises.

Financial snapshot

Full year 

Turnover: £5.85m (2007: £9.72m)
Pre-tax loss: £2.49m (2007: £2.42m)

Half Year

Turnover: £2.99m (2008: £2.88m)
Pre-tax loss: £527,000 (2007: £895,000)

Financial year end: 30 March 2008
Half year end: 28 September 2008

Operating data

Coffee Republic Trading comprises five company-owned UK bars (in Warwick, Hove, Bluewater and two in Birmingham) and around 101 UK concessions.

Coffee Republic Retail comprises around 54 UK franchised outlets and 18 overseas franchised outlets.

Strategy

Arab Investments sold 15 less profitable company-owned bars, leaving the company with the five best-performing units.

It blames Coffee Republic’s slide into administration on the large number of onerous head leases on franchises that were signed by head office and is busy transferring these leases away from central responsibility

The new owners intend to continue growing the brand through franchising where appropriate, including overseas.

Source: David Reynolds, July 2009

Key directors

Director-owner: Tariq Affara
Director-owner: Khalid Affara
Chief financial officer: David Reynolds

Contact

Ground Floor
109-123 Clifton Street
London
Greater London
EC2A 4LD

Tel: 020 7033 0600
Fax: 020 7033 0464

E-mail: reception@coffeerepublic.com
Website: http://www.coffeerepublic.co.uk