With few parts of UK business managing to sidestep the global financial gloom, one might assume that an increasing number of people are learning to soldier on without their daily espresso macchiato or tomato, basil and mozzarella panini. Gerry Ford thinks otherwise. Despite the economic uncertainty, he is confident that his Caffè Nero outfit — the country’s largest independent coffee house chain — will grind on as usual. “A morning coffee served by a familiar face is part of people’s wanting to carry on with daily routines,” says the 50-year-old American-born entrepreneur. “Frankly, where else can you spend £2 and sit somewhere pleasant for an hour, read a free newspaper and use the Wi-Fi? Coffee houses are not a fad, they’re a lifestyle.”


Ford savours the industry and consumer accolades Caffè Nero has won for its coffee — which accounts for 55% of the 400-outlet chain’s revenue — as much as its financial milestones. The company has enjoyed 45 consecutive quarters of growth and last year reported a 43% jump in pre-tax profits to £13.7m, with revenues up 19% at £129.3m, despite the rising cost of wheat, milk, oil and coffee beans. Opening around a store a week in the UK during 2008, the year also saw the first 16 Nero Express outlets, in airports 
and railway stations, and the company’s first 12 overseas stores, in Turkey.


Ford is vague as to exactly how many outlets will open this year but he thinks the Nero Express units can comfortably swell from 16 to 60 while Turkey “can easily sustain 100 stores”. Then there is the Middle East. Under a franchise deal, Nero will open its first store in Dubai this month and Ford expects to add another ten in the UAE within the next few months before looking at other Middle Eastern countries. Again, “around 100” is the vague target. There are also plans for China, India, the Nordic countries and central Europe. 


Nevertheless, the economic downturn presents Ford with an opportunity to test his business motto: “When you develop any venture you must be flexible until it works. Once it works, stick to the model and don’t drift off course. Some people never get it right in the first place — they might do okay for a little while but only when the economy is buoyant.” He also believes that it is worth spending time getting the model right. “Between 1997 and 1998 we spent 18 months developing the brand — the logo, the coffee, the colours, furniture, the design, everything.” 


Ford, who grew up in San José, epicentre of Silicon Valley, says he only ever wanted to be in business. “When I was growing up entrepreneurs ruled the world. I actually had a paper route that took in eBay’s headquarters. I had my first date in the restaurant next to Apple’s headquarters. At university [Stanford, where he studied politics and international relations], we would set up our own companies. It was the culture.” After a brief stint at Hewlett-Packard, he took a PhD at Oxford and an MBA at INSEAD. His vision of creating “continental-style espresso bars” grew from the many hours he’d spent hanging out in European coffee houses while writing his PhD. 


The first Caffè Nero opened in 1990, in South Kensington, London, a year before Starbucks opened in the UK. “The intention was to build a brand which had to be premium, classic, artisan, quality casual, cool, accessible, timeless. It had to be European, definitely not American, a coffee house, not fast food. It had to have premium coffee and quality food through the day, but it had to be a neighbourhood gathering place — efficient but with soul.”


Despite the sector recently losing some of its froth, Ford is even more upbeat about Caffè Nero’s long-term prospects, pointing out that he has easily surpassed the store target he promised when Caffè Nero was a public company. In March 2001 — four years after investors had giggled at the thought of British drones paying more than £2 for a cup of coffee, and with 53 thriving outlets — Ford raised £9m on the dotcom-battered London stock exchange. In February, 2007, with the number of outlets nudging the 300 mark, Ford bought the company back for £235m, via his investment vehicle Saratoga, and Paladin Partners, a private equity firm he co-founded. Although there are Caffè Neros in 210 UK towns, serving 1.1 million customers a week, Ford is convinced there is room for another 300, claiming “good coffee” has still not fully percolated throughout the country. “As a private company,” he notes wryly, “we can focus on the product without spending time worrying about how to get the share price up.” 


With Starbucks introducing “value-meals” and free refills at many of its 700 UK outlets and an aggressively expanding McDonald’s partly attributing its 7.1% rise in worldwide sales on ‘gourmet’ coffee-led breakfast items, one might assume that price-point is becoming a bigger factor. Ford though is adamant that for many of his clientele, quality will always be the clincher. “Customers have a ‘radius’ in which they will choose their preferred outlet,” he asserts. “If you’ve got a Starbucks or a Costa on the corner, but a Caffè Nero a block away, and you like our coffee more, you’ll go to the Caffè Nero.” More than 30 of the chain’s stores are located next to Starbucks, he points out. 


Although there are Caffè Nero concessions in some major UK stores, such as House of Fraser and bookshop chain Waterstone’s, Ford says he has rebuffed offers from other High Street fixtures. “We want to ensure that the brands we work with have a similar sort of positioning as well as a logical connection to coffee,” he says. 


More importantly, Ford says he is careful to avoid giving his customers the sense of being in a chain, witheach outlet attempting to incorporate the style of its neighbourhood. “We’re not a food service company,” he says, embarking on a lengthy recital of the staff’s exhausting training and motivation regimes and the authenticity of the ingredients and processes employed. “We have no push-button coffee machines,” he bristles.


Crucially, though, he adds: “We have rapport with our customers, we know their ‘usual’. Often people don’t just want a shot of coffee. They 
want an emotional fix.”