Coffee Nation (Costa Express)
Coffee Nation was the leading self-serve gourmet coffee company supplying the public through retail and forecourt partners such as Tesco, Moto, Sainsbury and Welcome Break across over 400 locations across the UK.
Milestone Capital backed the secondary management buy-out of Coffee Nation in March 2008 with Investec Growth & Acquisition Finance providing the mezzanine finance. Michael Tait was brought in as chairman and an investor in the business.
Mike worked closely with talented management, Scott Martin CEO and Simon Vardigans CFO on a new strategy for Coffee Nation that would see dramatic changes to the R&D programme and expansion into new markets.
The designing and manufacture of Coffee Nation’s own coffee machines were stopped and instead, R&D investment was concentrated on designing and building machines on an OEM basis utilising coffee making technology from top manufacturers such as Shaerer in Switzerland. This new approach to coffee machine design resulted in extended capacities, advanced user interfaces, payment systems, energy efficiency and a better quality coffee experience. Telemetry was also a key design addition which allowed real-time monitoring and maximising of uptimes of the whole estate – all managed by a support team working from an advanced dashboard system.
Many other initiatives such as a new showroom, promotion vans, building a marketing team and telesales function and moving into new markets such as universities, contributed to the number of Coffee Nation sites growing to over 900 with sales reaching over 1.5 million cups of coffee per month and £30m of sales.
Michael Tait felt that an exit was possible and he invited the CEO of Costa to visit and see how things worked in the ‘Coffee on the Go’ market. It wasn’t long before the board of Costa and Whitbread also visited to hear the proposition. The strategic arguments for Costa to acquire Coffee Nation were well taken by the Costa and Whitbread teams and this led to a very successful exit. Coffee Nation was sold to Costa for £59.5m which generated a 3.7x return on Milestone’s original investment in under three years. The company is now Costa Express.