Netting finance from Connection Capital and RBS, the coffee chain's first franchisee is set to open an additional 100 coffee shops over the next five years
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It’s obvious that the UK is a nation of coffee lovers: one only needs to look at all of the coffee shops there are on our high streets, town centres and even our motorways to see how close caffeinated beverages are to the nation’s heart. In light of this, it’s no surprise that 23.5 Degrees has managed to net a total £10m of funding to help bring more Starbucks outlets to our shores.
The coffee chain’s first ever franchisee, 23.5 Degrees has secured £5.6m investment from Connection Capital, at request of the specialist private equity firm’s clients in a round that was fully subscribed in just a few days. And in a double win for the franchisee, this has allowed it to leverage additional debt funding from the Royal Bank of Scotland that has pushed it up to a total £10m of investment.
Part of the reason for 23.5 Degrees’ investment drive is a desire to capitalise on the booming sector; it references data from Allegra Strategies, a leading strategic research consultancy, that shows sales in branded coffee chains are set to grow at an annual rate of 10%, reaching £5bn by 2020. With this latest cash injection, 23.5 Degrees will be able to roll out new stores and expand its network into new areas of the UK. The debt finance it has raised from RBS will allow the company to acquire an additional 16 sites, putting it on track to open 100 coffee shops over the next five years.
Anil Patil, managing director and founder of 23.5 Degrees, said: “This investment will give us the capacity to deliver on our plans to extend and expand our franchise network. As the franchise market continues to grow across the UK, we will be able to capitalise on latent demand in under-served areas of the country and help boost Starbucks’ UK market share.”
Good news then for drowsy consumers: it seems 23.5 Degrees will soon be bringing a Starbucks to a town near you.