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Costa Coffee MD John Derkach on Sustaining Growth

From the September 2011 issue.

Costa Coffee has over 2000 locations all over the world, 1500 of which opened in the last five years. Managing Director John Derkach talks about how the coffee chain has achieved such remarkable growth.

Five years ago, when John Derkach took over as Managing Director of Costa Coffee, he remembers the company was by all accounts doing reasonably well. Since Britain’s leading hotel and restaurant group Whitbread had purchased the coffee shop chain in 1995, they had expanded internationally with a few franchise stores in the Middle East, and had opened enough locations in the United Kingdom to prove as real competition to the country’s largest coffee chain at the time, Starbucks, and was just ahead of Nero, in what Derkach calls “a three-horse race” for the title of largest UK coffee chain.

Fast-forward to today, and the numbers tell the tale of how Costa managed to not only surge ahead of its competitors, but lap them in the race. With over 1300 locations in the country, Costa now has more presence than Starbucks and Nero combined. Add another over 700 locations worldwide and Costa Coffee, along with its subsidiary Coffeeheaven, is currently poised as the second largest coffee chain in the world.

To achieve this kind of sustained growth in a contracting economic period is no easy feat, let alone when you have Starbucks, one of the world’s most recognised brands, as your primary competition.

“We knew we had to compete with the American giant, probably the most successful food and beverage operation for the last 20 years, and we could not hope to compete, and certainly could not win, by simply being an English Starbucks,” says Derkach.

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