Caffè Nero warns of rising prices. Will they affect the company’s brand perceptions?

Caffè Nero’s sales are rising, and due to an active acquisition strategy, so is its debt. Founder and majority shareholder Gerry Ford has put plans for further expansion on hold for at least a year, but has warned that, in the near future, the costs of its products could rise.

It’s a good opportunity to look at public perceptions of Caffè Nero, and to think about whether the brand has enough reputational headroom with consumers to increase its prices. YouGov BrandIndex data shows that the chain is better regarded than the typical UK coffee chain. Index scores, which track brand health by averaging several metrics, are at 11.5, 1.4 points ahead of the typical UK coffee chain’s scores of 10.1.

Caffè Nero’s underlying scores could illuminate some of the reasons for this performance. At 17.8, Impression scores (a net measure of whether a brand is liked or disliked among the public) are 3.4 points higher than the average among its competitors. Nero also enjoys stronger Customer Satisfaction scores (17.0 vs. 14.7), and Recommend scores, which track consumer advocacy (12.6 vs. 10.8). 

These scores may be indicative of a strong customer experience, and Caffè Nero’s higher-than-average standards: at 15.5, Quality scores also outperform the industry. Perhaps the best indicators of the brands standing among the public is the Consideration metric, which asks consumers whether they would choose one brand over another from a list. Caffè Nero’s scores are at 17.9:1.6 points ahead of the competition (16.3). 

But there is one area of weakness relative to the average: at -2.0, Value for money scores are both negative, and lower than the competition (1.0). With prices potentially on the rise, this gap could potentially widen, and this may have a knock-on effect on other scores: what a customer thinks of a brand in terms of quality and customer service can be impacted by how much they’re paying for a particular product or service. Will the brand remain as well-liked as it is when customers are forking out more money for an Iced Velvet Americano or a Salted Caramel Latte?  

This article was originally published in City A.M.

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