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‘We are below the Costas and the Neros but above Greggs’

Around the time ITV’s Airline documentary started making stars of easyJet staff, Nathan Lowry was making his own television splash.
In 2000, Lowry was fronting a popular Sotheby’s auction of Wembley memorabilia on Sky Sports. Hundreds of lots were up for grabs; everything from the Queen’s bathroom door to pieces of the hallowed turf.   
Six years later the Northern Irishman first met easyJet founder Sir Stelios Haji-Ioannou, saving him over ?1m on a property deal. It was the start of a relationship that would ultimately see the pair embark on a coffee crusade.
“I sat there with Stelios and two cups of coffee and a cookie was nearly a tenner,” Lowry says. “I thought, it’s just too much.”
Armed with Haji-Ioannou’s garish orange and white Easy livery, Lowry is the founder and chief executive of easyCoffee. Similar to other Easy brands, value, rather than simply rock-bottom prices, is at the heart of the business model. Shops have clean, bright, simple wooden interiors offering drinks that are 20pc to 25pc cheaper than the likes of Caffe Nero and Starbucks.
“We are below the Costas and the Neros but above the Greggs,” the 46-year-old says.
Fresh out of Kent University Lowry joined Sotheby’s in 1993. Starting out as a porter, he worked his way up to lead the auctioneer’s marketing team. However, by 2001 he was ready for a change. “I used to run very popular parties at university,” he says. “I liked doing hospitality so I thought I’ll go and get a pub.” 
The Angel in Sutton, south London, was his first target. Unable to raise enough money to buy the lease he bought the pub on his credit card.
Lowry refinanced his debt and set about building up a pub portfolio across London.
CV | Nathan Lowry
By the mid-noughties, the Northern Irishman had built up a name not only for his pub empire but also brokering property deals. And it was his property prowess which first put him contact with Haji-Ioannou, extricating the easyJet founder from costly leases associated with his doomed foray into operating cheap cinemas. 
Growing a pubs, clubs and property empire, however, was a slow process. The preponderance of red tape associated with launching new licensed premises was an anchor on Lowry’s desire to expand at pace. 
“I wanted to scale up but I couldn’t scale up quickly enough.”
In 2015, Lowry’s mind returned to his pricey coffee with Haji-Ioannou almost 10 years earlier and pitched the idea of launching a value chain.
“When Nathan first floated the easyCoffee idea, I was not immediately convinced as the coffee shop market appeared to be dominated by Pret, Starbucks and Costa,” Haji-Ioannou says. 
“However, I was attracted by his determination and his entrepreneurial record. He persuaded me there was still room for a smaller focused competitor to take on the big boys.” Similar to many of his other ventures, Haji-Ioannou has taken a minority stake. 
In return, Lowry can use the Easy brand, benefit from shared premises occupied by companies in Haji-Ioannou’s stable and count on support from the British-Cypriot.
Two years later, easyCoffee has only a handful of outlets, suggesting Lowry’s plans for a speedy roll-out may have been a little premature. Nevertheless, he insists he has used the time to lay the foundations for this summer’s multimillion-pound fund-raise. Corporate financiers Whitman Howard are in the middle of whittling down around 20 interested parties – private equity houses or high net worth individuals, Lowry says, with the proceeds set to be deployed in late summer. 
Facts | UK coffee market
While Lowry plans to use some of the cash to open eight of his own shops, he wants to move into franchising. It is a franchise model that will allow him to have around 200 outlets across the UK and Ireland in short order.
“We are targeting people who can open multiple shops.”
The company gives franchisees the exclusive rights to town or city. Each territory needs to be able to support a minimum of 10 units and easyCoffee requires franchisees to open two units in its first year of trading. Partners pay easyCoffee a franchise fee of ?25,000 per shop. Fit-out costs are estimated at ?100,000 to ?125,000 per unit and target annual rent of between ?15,000 and ?35,000. Franchisees then hand over 5pc of revenues as a royalty fee and 1pc as an advertising levy.
The firm is unlikely to have a large London presence. “The rent and rates [in London] are crazy,” he says. “The business model is for places like Blackburn and Burnley. Regular British high streets where people value coffee being that much cheaper.”
Even so, Christian Mole, the head of UK hospitality and leisure at accountancy firm EY, thinks the Lowry’s value coffee model will be “challenging”.
“In the long-run coffee shop customers have historically been seen to be relatively price inelastic, and driven more by convenience,” Mole says. “New entrants will have to pay similar wages to the main brands, so unless they can come up with a more efficient staffing model, they are going to need to secure very cheap sites in order to keep rents down.” 
Keeping rents down, especially outside of London, is not an entirely fanciful idea, however.
‘We are below the Costas and the Neros but above Greggs’

The business model is for places like Blackburn and Burnley rather than London, Lowry argues
“We are getting better and better property deals,” says Lowry.
Those at the value of end of the market – or at least the market in between Greggs and Starbucks – must not simply fend off other coffee chains.
“The higher end of the market is now occupied by the independent/artisan coffee shops which are already gaining market share in more affluent areas. The challenge for the mainstream brands is to try and differentiate themselves,” Mole says.
Franchising is just one of two key planks of Lowry’s grand plan. The other has been borrowed from a rival. 
One of Costa’s recent initiatives has been the roll out of its Express vending machines. It’s a shrewd move that cuts rent and staffing costs – the two largest expenses a coffee chain faces. 
“There is a huge gap in the market with petrol forecourts,” Lowry says. “People want another brand.”
All easyCoffee’s drinks cost ?1.60. Proprietors are lent the machines for free with “profits split fairly”. The company requires the machine to be placed within three metres of premises’ main entrance.
The man from County Down has bold ambitions beyond the UK. “I can see this brand going European-wide – where easyJet flies to,” he says.
“Our fundamental view is that coffee is too expensive and it doesn’t need to be so expensive,” he repeats
“Think of how the airline started 23 years ago,” Lowry says. “Stelios first shook up the model by using the telephone number, then he was on the internet.” 
While easyCoffee can be found in easyHotels and easyGyms it is conspicuous in its absence of being served on easyJet flights. Lowry is somewhat sheepish when asked why and it’s hard to tell whether there’s a deal in the pipeline. “We’re working on it,” is all he’s prepared to say. Which probably sums up where easyCoffee is right now.
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