Cooks Coffee Company plc (AQSE:COOK) Chief Executive Officer Aidan Keegan caught up with DirectorsTalk for an exclusive interview to discuss financial highlights, revenue growth, new stores, ethical practices, drivers for the stronger post-period growth, meeting FY targets, and what we can expect in the next 6-12 months.
Q1: Aidan, could you just summarise the financial highlights, including the 27% revenue growth and profitability turnaround, and what actually drove this?
A1: Well, the 27% growth, which has actually been growing again since we’ve actually done those accounts, has been fantastic. I think primarily driven by our franchisees putting their hands up for store number two, three and four in some cases, and our regional developers who really drive the business within their regions around the UK, which has been fantastic and has seen exponential growth. I think we’ve got to give a lot of the credit to them.
We developed a good model that allows people to get a swift return on their investment, and they leverage that in terms of their business development locally. So, fantastic.
Q2: Now, you mentioned the new stores, Cooks Coffee Company has added eight new stores in the UK and Ireland during the period. How do you choose new locations and how are the eight stores impacting performance and reach?
A2: So, how we choose is basically based on a demographic programme that we put in, I guess the easiest way to put it is we kiss a lot of frogs, both in terms of property and people.
What we’re looking for is a specific demographic within the area of the sites that come to our attention, we get sent a lot of sites by prospective agents and so on and so forth. We put the research in, look at the surrounding area, look at demographic in terms of mean income and age group and so on, and make a choice based on that.
How they’re adding? I think the eight on their own are one thing, but essentially, we changed the model in around 2018-19 and the stores that have opened since then have contributed hugely to the growth and to the profitability on the ground.
At this point, post-COVID, our profitability at head office as well, which is fantastic.
Q3: With the Caerphilly store winning Best Ethical Café Award, how will you expand on ethical practices like those recognised at Caerphilly?
A3: I think that was fantastic achievement by the local store and my kudos and thanks go out to John and Julie, who are the franchisees on site.
From our perspective, from a broader perspective, as it were, it’s very important for us to have those ethical credentials. We use a lot of recycled materials in our store fit out, all our cups and paper cups or disposable items are both recyclable and compostable and we’re also looking to leverage the credentials of our suppliers.
Our coffee supplier has a target to be carbon neutral within the next number of years and that is now becoming a focus for when tendering product, tendering for all types of materials and supplies.
So, that’s how we see the future of it in terms of our own ESG credentials.
Q4: Post-period sales have shown even stronger growth, what’s driving the stronger post-period sales growth? Are you confident in meeting full-year targets?
A4: Yes, I’m very confident in hitting the full-year targets. We have a strong pipeline through to the end of the calendar year, we’d hope to open another three stores, including one refurb and then beyond that, open at least another five in Q1, which brings us to the end of our financial year.
So I’m very confident about hitting our own targets.
What’s driven the growth recently? I think it’s a mixture of a couple of things. We continue to add stores through that period, the mild weather up to about two weeks ago has certainly helped, allows people out and about. I know it’s been a little bit inclement in the last week or 10 days, but up to that point, it was quite mild. So, that’s certainly a boon for us. We’d hope to maintain that running all the way to Christmas.
So yes, I think generally speaking, what we’re offering the public, they want, our repeat customer is huge.
I think to touch on one of the earlier questions there around new store driving growth, I think a good barometer of that is that we renovated two stores this year and their like for like sales are already up 50%, speaking to the improved model that we have out there now and the difference that that can make to stores.
Q5: You talked about new stores there, but what else can we expect from Cooks Coffee Company in the next six to 12 months?
A5: Well, I think in the next 6-12 months, we will be looking to add stores and we’ve got quite a strong pipeline across the UK and Ireland. So, I think, we like to be ambitious without being reckless, as it were so more organic growth for ourselves, both in the UK and Ireland.
We are also looking at some markets outside of those jurisdictions that we would do either in partnership or as master franchise agreements.
