Founded in 1998, Coffee Nation pioneered a new market segment of self-service, gourmet coffee stations, operating from a variety of locations including motorway service stations, petrol forecourts, airports and large retail stores.
When Primary first met Coffee Nation in early 2000, it was still a relatively new company having installed just four of its new self-service coffee machines in trial locations with Welcome Break and Texaco. The business, which had been funded by angel investors up to that date, received a £4 million funding package from Primary in June 2000 to support a large scale roll-out of the concept.
The Big Idea
Coffee Nation had proven its concept with hugely impressive financial returns in its trial locations but had limited access to funds to scale the business. Primary immediately identified the enormous potential of the business model and our vision and enthusiasm struck a chord with its founders.
The Grand Plan
Our initial investment, with additional staged funding, enabled the company to put in place the management and infrastructure to undertake a large scale roll out of the business with its existing customers. This enabled the company to negotiate new contracts with customers such as Welcome Break, Texaco, Moto, Esso, Somerfield, Sainsbury and Tesco. Substantial additional investment was made in the development of equipment, significantly reducing capital and operational costs compared to the original machines.
The Bottom Line
During our period of ownership the business grew exponentially from just 4 units to over 800 in the UK, selling over 20 million cups of coffee annually. We sold the business by way of a secondary buy-out in April 2008 generating a return of 3.7x the cost of investment.
Date of investment: June 2000
Deal status: Realised
Date of realisation: April 2008
Investment return multiple: 3.7x cost
For more information talk to: Neil Wallace or Charles Gonszor