Cooks Coffee Company Limited (AQSE:COOK) Chief Executive Officer Aiden Keegan caught up with DirectorsTalk to discuss the company’s strong start to FY27, continued expansion of the Esquires estate, franchise growth, and its increasing focus on ESG.
Q1: Aiden, first off, congratulations on another positive trading update. Could you just talk us through the key highlights and what’s driven this strong start to FY27?
A1: Our sales are up year on year just short of 15% in that first quarter across both the UK and Ireland. A real highlight for us is the fact that in the 12 months to the end of June, we’re actually up about 19% across both markets.
I think predominantly what’s driven that is our increased store opening velocity or trajectory, if you like. We’ve gone from about 86 stores across both markets to 110 by the end of June, I think by and large, that’s what’s driven it. The newer stores perform that bit better than perhaps some of the older ones in the system and that’s the driving force behind it.
Q2: Now, the Group has grown its estate by 14.6% to 110 stores. How important has that expansion been? Where do you see further opportunities going forward?
A2: It’s certainly been, as I say, the driving force behind our growth of sales and revenue and last week we signed four more franchise agreements. We opened a new store yesterday and we’ve got three more coming in the coming three weeks. I think it’s the lifeblood of what we do, essentially.
Where it’s going to come from? As suggested by those numbers, the pipeline isn’t diminishing in any way. We’re finding a good throughput of people coming to us, approaching us and, although we’re always looking at ways to improve that, I don’t see it diminishing for the time being.
Q3: Despite the unusually hot weather, the business has delivered positive like-for-like sales growth. What does that say about the performance of the Esquires brand?
A3: I think anybody in the industry would say that that hasn’t come without its challenges. I think for us, it probably shows the strength of our offer, the strength of the menu in store and our flexibility as well in terms of how we can react to things like that.
Essentially for the first week or so, there was a negative impact, I think it’s probably our reaction and also the fact that this was a prolonged heatwave across the UK and Ireland, which is unprecedented. I certainly don’t remember anything like this. I think generally in the UK and Ireland, when we get those heatwaves, we tend to almost go into holiday mode, but you can’t do that across an eight to ten, twelve-week period.
So, I think people got back to normal. We then had the flexibility in store to pivot our menus to accommodate what people wanted, i.e. colder drinks etc., and a huge push on matcha, we’ve certainly seen a change in our sales mix over that time.
Thankfully, we’ve been able to sort of maintain sales.
Q4: Esquires has continued to outperform the wider UK coffee shop market, what do you believe is driving that outperformance?
A4: I can’t speak for competitors and how they behave but I do think our ability to grant individual franchises as opposed to bulk numbers; 5/10, as a minimum, gives us that flexibility and that allows us to aid people to flex their entrepreneurial ambitions, as it were, without having to bring in millions. We’re talking hundreds of thousands as opposed to millions to get a single store open. So, I think that helps.
I also think the fact that we’re small and we can pivot and we can react to things as outlined by the summer heat and so on, also means that the Esquires that you see today may not be the same Esquires that you see in 12 or 24 months’ time. That allows us to attract more people in that way as well.
I think it’s a combination of those things and also, we’re getting a lot of referral franchisees now as well. So, our success on the ground has been pushed out into communities and made us a bit more attractive for the type of people that we are attracting.
Q5: Now, you mentioned earlier that there are opportunities in the pipeline already. Looking ahead, what can investors expect in terms of developments or announcements from Cooks Coffee over the coming months?
A5: I’m hoping for more of the same, maybe even a little improvement. Like I say, we signed a number of franchise agreements this week already and we’ve got a number of stores opening in rapid order over the coming weeks. We look to continue that all the way through to probably a couple of weeks short of Christmas.
I also think we’re focusing internally as well on the fact that we have a lot of ESG credentials that we don’t shout about. So, I foresee that that will be going down that route. From our ethical sourcing of coffee to packaging products, to the fact that we’re in the community and helping communities, as a franchise-led business and flexing those ESG muscles as well. I think it’s what our ultimate customers want, it’s what our franchisees want, it’s what we want, essentially.
