KPMG appointed by Caffe Nero to find savings

KPMG is understood to be working with Caffe Nero to help the ailing chain negotiate rent cuts. The move comes as high street coffee vendors grapple with tough new restrictions aimed at slowing the spike in new Covid-19 infections the UK is facing.

Founded in 1997 by Gerry Ford, Caffè Nero is an Italian-style coffee house brand headquartered in London, England. The company looked to be performing strongly prior to the 2020 coronavirus lockdown, running 1,000 coffee houses in Ireland, Sweden, Poland, Cyprus, Croatia, Turkey, the UAE, Oman, the US and the UK. It’s British operations alone employed about 5,000 people, reportedly serving 135 million customers annually.

Since the outbreak of Covid-19 saw the UK close all but essential services, however, the situation drastically changed for Caffe Nero. Following its unprecedented period of zero footfall in the second quarter of the year, the chain is reportedly still struggling to recover, thanks to the slower-than-expected return to offices in city centres.

According to a new forecast from Big Four firm PwC, if pandemic levels of home working persist, lower consumer spending and a decrease in economic clustering could reduce UK GDP by £15.3 billion every year. Of that figure, £12.1 billion would come from lower consumer spending, thanks to office workers spending fewer days in city offices. This has had a severe impact on many of Caffe Nero’s competitors, including Pret a Manger and Costa Coffee. Between the two brands, who were experiencing exponential growth prior to the lockdown, more than 4,500 redundancies have been planned in recent weeks.

As Caffe Nero looks to weather the same storm which has seen its rivals close stores and plan redundancies in recent weeks, Sky News has reported it has engaged professionals from KPMG. The Big Four firm is understood to be working with the chain on a range of possible options to help downsize its costs – likely including mechanisms to enable rent cuts and possible limited store closures. According to one source, executives have already been engaged in "constructive dialogue" with landlords, but needed to intensify talks to address its fixed cost base – something the tapping of KPMG could help with.

A spokesperson for Caffe Nero commented, "It has been a difficult period since lockdown measures were introduced by the government and we're working incredibly hard to navigate our way forward. As part of this, we are working closely with advisors to help review our options and assist with our on-going negotiations with landlords."