Nescafé outlet in Mexico City. A Nescafé outlet in Mexico City.

Nestlé plans to open 150 coffee shops

The firm will invest 800 million pesos jointly with restaurant operator CMR

Food and beverage firm Nestlé plans a joint investment of 800 million pesos (US $42.5 million ) with a Mexican restaurant operator to open 150 coffee shops in the next eight years.

The Swiss-owned company already has three Nescafé locations in Mexico City, where it plans to add seven more this year.

Restaurant operator CMR, which runs restaurant chains such as Olive Garden, Red Lobster and The Capital Grille, has entered into an agreement with Nestlé to establish and operate the new cafes.

Company chairman Joaquín Vargas said coffee shops are a growing business and the two companies make a good combination with which to enter the market.

Nestlé owns brands such as Gerber, Stouffer’s, Lean Cuisine and Nescafé coffee, which is popular among Mexicans.

Mexico is one of the top 10 markets for Nescafé in the world.

Company president Phillip Navratil said consumption of coffee outside the home has surpassed consumption within, which was what triggered the investment decision.

Navratil said Nestlé has a presence in over 180 countries. He claimed that 95% of Mexicans prefer Nescafé, drinking about 510 cups every second.

The coffee shops will also offer cold and other hot beverages, natural juices, sandwiches and free wifi.

Nestlé expects to sell 40,000 cups of coffee a day once the expansion is complete, and employ 1,000 people.

Nescafé coffee shops’ biggest competitor will be Starbucks, which operates about 600 cafes nationwide and has 45% of the market, according to statistics portal Statista. The United States firm is followed by Café Punta de Cielo with 13% of the market and The Italian Coffee Company with 11%.

Source: Expansion (sp)  El Universal (sp) Forbes (sp)

Reader forum