Free from the daily grind

AS Britain enjoys the summer weather, Gerry Ford, Californian chairman and founder of the Caffe Nero coffee shops, is trying to tempt us with something a little different. Fashionable iced coffees, fruit smoothies and sophisticated sandwiches such as roasted vegetables and mozzarella are on the chain's new menu alongside its extensive list of cappucinos, lattes and espressos.

Whether money can be made from selling hot froth, let alone cold froth, to the great British public remains a matter of debate. Ford, a relaxed and confident 44-year-old, sighs wearily at the suggestion. 'Look at Starbucks in the US,' he says. 'It's an $8bn, $9bn, $10bn company, the leading success story in the food industry in the past 15 to 20 years.'

At its last results, Caffe Nero turned a £155,000 first-half profit, ahead of expectations and became the first branded chain to reveal pretax profits. But its shares are down 28% from their 50p float price in 2001, despite doubling this year. Mighty Starbucks has yet to turn a profit in the UK, adding to jitters.

We Brits may enjoy watching the Friends and Frasier coffee shop sitcoms on TV, or indulge in Continental cafe society on foreign holidays, but does the phenomenon have staying power over here?

Since 1995, when the Seattle Coffee Company launched its first bar in this country, there has been an explosion in branded coffee shops on our crowded High Streets. Mergers were inevitable, and several chains have already gone.

Republic, now itself under pressure, bought GoodBean in 2001. Caffe Nero acquired Aroma from McDonald's in 2002. Starbucks bought Seattle Coffee Company. Last year, Caffe Nero backed off from a takeover attempt of Coffee Republic, in which it still has a 10.7% stake.

'There will be more consolidation,' says Ford. Favourites to win from that shake-out are surely the two biggest players, Starbucks and Whitbread-owned Costa Coffee. But Caffe Nero is gaining fans.

In its favour is industry research from respected independent research house Allegra showing that it goes down best with consumers. 'We're the European, Starbucks is the American, Costa is the catch-all,' says Ford.

Ford has an awesome track record. He took his undergraduate degree at Stanford University, the entrepreneurial hothouse near San Francisco. Later, he notched up a business degree at high-flying Insead, near Paris, topping it off with a doctorate in international relations at Oxford University.

His CV makes him sound as if he should be running the Bush administration, not coffee shops. 'Some people I was with are now in influential places. I see them on TV, for better or worse, I see them making an impact,' he adds.

At a time of great international tension over Iraq, only months after the UK and US went to war against Saddam, selling coffee must seem rather mundane. He eventually admits to 'a little bit of a pang' that he is not involved in setting foreign policy, for which he still has a passion.

So why didn't he follow it as a career? He says mysteriously: 'It's something I looked at. I went through a whole thing in America. This is like a 90-minute discussion.'

Ford is here to talk about his business. Caffe Nero bars have smart Italian blue decor, comfy sofas and wooden tables and chairs. They are meant to be a friendly space where people can read, have a meeting or just 'hang out'. Ford laughs at the suggestion they could be pick-up places.

He argues: 'Particularly if you are a single woman, it's a very unthreatening, easy atmosphere to be in. This relaxed, social feel is the crux of why coffee society will continue to expand in the UK.

'The basis has been the pub, but that's changing. What we offer is accessible all day. Pubs are late afternoon on, driven by alcohol and predominantly for men.'

Ford insists coffee shops will not take over from pubs, but will sit happily alongside them. He aims to expand Caffe Nero from its present 121 sites to more than 350, gaining economies of scale. Key to successful growth is opening a large proportion of new sites in the provinces, where branded cafes are unusual.

Ford says: 'The most opportunity is outside the M25, where there is one coffee shop per 100,000 people.'

But away from the fad-driven, affluent metropolitan scene, will people really buy coffee at three times the price of office canteen fare? 'Absolutely,' he adds. 'So many people write to us asking, 'Will you come to our town?'.' He claims that once you have drunk real coffee it's difficult to go back to drinking instant. 'It tastes a lot better. It's like wine, or a better meal. It's a little treat, costing you only £1.60 a day.'

As its name implies, Caffe Nero's central product is based on an Italian-style coffee. Inspiration for the chain harks back to Ford's youth. He explains: 'It's not a unique idea. I saw the Starbucks thing in the US and knew it would come here. I spent a lot of time as a kid and a student in Continental Europe and I was more of a cafe person than a pub person.'

Ford's father was a professor of education whose career included sabbaticals in several European cities. The family upped sticks to follow him.

'I had a really nice childhood,' says Ford. 'Our family had quite an international bent.' Many of his formative years, however, were spent back in the US, in the heart of Silicon Valley in northern California.

'Apple was right there where I was growing up and eBay, the internet auctioneer, was about two blocks from my parents' house.' he says. After Stanford, Ford went on to work at Hewlett-Packard, one of the original technology companies.

Even though he never met them, he says his biggest professional inspiration comes from Bill Hewlett and Dave Packard, founders of the legendary firm. 'Everybody worshipped them. They built up a culture about fairness, getting people to be motivated. It was like a campus, an open-door policy.'

After achieving his doctorate, Ford moved into venture capital, joining Apax Partners in London, where he specialised in consumer goods and media firms, including the New Covent Garden Soup Company.

After three years, he left to set up his own venture capital firm called Paladin with a colleague. 'I still have investments at Paladin, I can go back to it any time I want to,' he says. Paladin owns 43% of Caffe Nero, and has offices above Caffe Nero's headquarters in Covent Garden, as well as in the US and Singapore.

Despite his mellow Californian accent, Ford has lived longer in Europe than America, with time spent in Germany, France, Portugal, Italy and the UK.

'I don't feel purely at home in America without some European influence. I feel pangs of homesickness about some things in the US, but I go back a lot to visit family and on business.'

Ford lives in London with his partner, financial journalist Amanda Hall, and their baby son, Taylor. What does he do when he is not thinking about Caffe Nero?

'I wish I could spend more time on my interests, because I'm always working. They range from sports to writing to reading to travelling.'

He is slightly embarrassed about the car he drives. 'It's a bad one, but I like it a lot. It's a Polo.' With 16% of Caffe Nero, Ford is sitting on a £3m paper fortune and could easily afford something more flashy.

But this cosmopolitan individual has an unworldly streak. He says: 'I hope to do a lot of different things with my life. I'm not particularly out to make money. People have lots of different phases in their careers. This is just one thing.'