Caffe Nero steams ahead

The high street coffee bar war intensified today after one of the biggest chains unveiled bumper sales figures.

Fast-expanding Caffè Nero said its revenues jumped 40 per cent to £32.8 million in the six months to 30 November. Pre-tax profits more than doubled to £2.1 million.

The success was largely because of new branch openings. Sales over Christmas at the Italian-themed chain were 8.5 per cent higher than during the same period last year, despite the slowdown in consumer spending. Its share price rose 10p to 1331/2p - an all-time high - after the announcement.

Caffe Nero and its bigger rivals, Starbucks and Costa Coffee, have hugely expanded in recent years. But Coffee Republic nearly went bust, and has sold off dozens of outlets. Madisons coffee bars have pulled out altogether.

Meanwhile traditional family-run café³ and "greasy spoon" diners are finding it hard to compete, with many being forced out of business.

The big chains are increasingly turning to the provinces after saturating the capital's most lucrative streets. Caffè ero chief executive Gerry Ford said: "Cities like Leeds, Manchester and Glasgow, and towns like Harrogate, are operating as profitably for us as London."

His company is opening about 40 outlets a year on average, of which one in 10 is still in the capital. To avoid sky-high rents, the big chains are opening in shops, offices and even banks.

A parallel battle is raging for the sandwich-bar market, with Subway, Eat and several smaller chains taking on the dominant Pret A Manger.