Nottingham coffee shop chain 200 Degrees has been backed to the tune of £3m to help it become a national chain and online retailer.
Over the next three years, the specialty coffee roaster, which already has six branches, will seek to open new shops in between five and 10 cities, ramp up its wholesale business and launch an online store where customers can buy different coffee flavours on subscription.
The funding from private equity investor Foresight Group could more than double both its workforce and revenue streams.
Co-founder Rob Darby said: “We have this ambition to become the leading specialist coffee company in the UK.
“People are becoming more and more discerning about their coffee and will seek us out for the love and care we put into ours.
“We’d like to grow what we’re doing and we felt the investment from Foresight, and the partnership with its mentoring scheme, will help us to develop into a bigger business.
“But we definitely have no intention to lose our independence or roots as our dedication to good, specialist coffee will remain at the forefront.”
The investment is the latest chapter in the story of 200 Degrees’ rapid growth since it was set up in 2012 by friends Rob Darby and Tom Vincent, who met while studying at the University of Nottingham.
This was followed up by a new branch in Carrington Street, near the railway station, and then in Birmingham, Leeds, Leicester and Cardiff – with each outlet serving about 150,000 cups of coffee each year.
New locations could include Sheffield, Manchester, Liverpool and Bristol.
The company sources its coffee beans from all over the world, including Ethiopia, Vietnam, Columbia, Costa Rica, Guatemala, Tanzania and Indonesia.
A subscription service has just launched, enabling customers to pay £8 for 250g coffee packages as often as they wish.
Currently, the business makes 80 tonnes of roasted coffee and has about 150 wholesaling customers, including Sat Bains’ Nottingham restaurant and workplaces such as Capital One’s European headquarters in Nottingham, each year.
It aims to increase production to 300 tonnes and 500 customers.
The growth plan could increase the workforce from 110 to 250 people – including boosting the number of people working at the roast house from six to 20 – with the anticipated £5.5m turnover for March 2018 expected to more than double over the next three years.
The Foresight backing, which draws from the £40m Foresight Nottingham Fund, is the first round of investment 200 Degrees has received, with the business previously scaled up using its founders’ own cash and £450,000 in bank loans.
As part of the deal, Jonathan Hart, a former managing director of Caffe Nero and CEO of Thorntons, will join 200 Degrees as non-executive chairman.
Mike Quinn, senior investment manager at Foresight, said: “200 Degrees is a very high-profile deal for Nottingham and the perfect example of the kind of company we are looking to invest into with the Foresight Nottingham Fund and venture capital trust funds that we manage.
“Rob and Tom have created a great brand in the Nottingham area and we look forward to working with them, expanding the store-led model to bring its quality coffee to more retail and wholesale customers across the UK from its base in Nottingham.”
The Foresight Nottingham Fund is a dedicated regional growth fund created to support small and medium sized companies across Nottinghamshire.
Foresight Group, an independent infrastructure and private equity investment manager, manages the fund and invests on behalf its investors, which includes the pension funds of Nottingham City Council and Nottinghamshire County Council.
Nottingham City Council cabinet member Councillor Nick McDonald added: “It’s great to see local entrepreneurs like Rob and Tom access capital from the Foresight Nottingham Fund to help roll out this Nottingham brand nationally.
“200 Degrees is a high-profile and immensely popular local business. The business can credit its early success to the fantastic local support and loyal customer base.