Californian who aspires to blend with European café society

Business Profile: Gerry Ford's Caffè Nero is edging toward profitability, but can he convince investors about his alternative to the pub?

If Starbucks is the Goliath of the coffee shop world, then Gerry Ford is its David. The mellow, smooth-talking Californian who heads the fledgling coffee bar operator Caffè Nero, is on a crusade to slay the perception that the only way to make money from coffee shops is to mimic the saccharine, latté-esque, sofa-dominated world so beloved by US sitcoms.

Perhaps unsurprisingly for a man whose curriculum vitae features three of the world's top universities, Mr Ford's coffee bar vision is more finesse than froth, more cosmopolitan than homespun, more Italian deli than American doughnut house. His dream of spawning a chain of continental-style espresso bars in high streets across the country, grew from many hours spent hanging out in coffee houses across Europe while writing his PhD (appropriately enough on US and European relations). He liked the atmosphere and wanted to recreate it, en masse, in the UK.

"I'm more of a café person than a pub person," he says, describing his motivation behind setting up Caffè Nero. "When I came here it was something that I felt was missing and, coincidentally, it was something that more and more people, I think, were drawn to as a lifestyle change as an alternative to a pub."

Since the first Caffè Nero opened in London just five years ago, the group has grown rapidly to 108 sites and now vies with Coffee Republic for the third spot in the nation's coffee bar league after the ubiquitous Starbucks and the Whitbread-backed Costa Coffee. Despite posting a loss for the last financial year of £2.68m, the business is edging towards profitability, with analysts expecting it to pass that milestone by May 2003. Sector followers rate the group and Mr Ford highly and expect it to outlive the mêlée of copy cat imitators that sprung up at the end of the Nineties. Yet the group remains stubbornly out of favour with investors, most recently dragged down by the woes affecting Coffee Republic, which is up for sale.

Mr Ford is understandably anxious to dispel the myth that coffee shops are as destined to failure as the dot.coms they grew up alongside. He patiently explains: "Because certain brands fade or don't succeed it doesn't mean that the business model or the sector is bad. Because one pizza place goes away that doesn't mean that all pizza is bad.

"In this case, what's happened in the last year or so, is that [coffee has become] a high attention item because it's on the high street and it's something that people consume daily. It's a new phenomenon, a new life-style alternative. And then, when some of the weaker brands go wobbly, what happens is [observers] have extrapolated from that and condemned the business model and the sector."

He hopes Caffè Nero will eventually be seen as an operator that set the standard to which others aspired. He points to Starbucks' $8bn market valuation as proof that coffee doesn't have to be a black hole that sucks investors dry, yet insists he can do it his way.

This means nurturing the UK's nascent café culture and building up a brand that draws in customers for more than just its cappuccinos. Rather grandly, he wants to create a chain of bars that creates for its customers "a natural gathering point that enriches their life in some way".

With degrees from Stanford, Insead and Oxford, Mr Ford is clearly no fool. He understands what certain other operators seemed to forget – that just selling coffee, no matter how dressed up and overpriced, would not justify the high rents operators have to pay to secure the high street locations they need to lure in passing shoppers.

From early on, Caffè Nero chose to concentrate on fresh sandwiches and tempting soups rather than dreaming up ridiculous takes on a classic espresso. Moreover, Mr Ford has always made a thing of the fact that the food on offer changes throughout the day, which means he can persuade customers to part with more cash than some of his rivals. This, as much as the determination to ensure his barristas can knock up the perfect espresso, is behind Caffè Nero's Continental flavour.

Asked whether he plans to go ultra-European and mimic his Dutch counterparts and broaden his menu to include joints alongside his pastries if the Government ever properly relaxes the law on cannabis. "Provocative question," he says nervously shooting a glance at his public relations minder. "I haven't thought about it all and it's probably not what I had in my vision originally." Maybe not, but a sure-fire way of getting his customers to spend more on nibbles, perhaps.

Of the other topic of the moment – how Western coffee sellers rip off beleaguered Third World coffee growers – Mr Ford is similarly guarded. He starts by claiming that it is nigh on impossible to trace the origin of Caffè Nero's house blend of seven beans but then remembers that the group has started sourcing two of its blends direct from farmers in Brazil and Costa Rica. He has been invited to visit their coffee plantations, he adds, but the trip came when the group was in the middle of buying the Aroma chain from McDonalds so he was too busy to go. "Over time I'm sure our policy and understanding of the situation will grow," he adds.

For Mr Ford, who is disappointingly unwired for a coffee bar executive, drinking just one coffee a day, this year will be crunch time. If he fails to meet expectations the City will punish him just as it has punished Coffee Republic. But if he succeeds, then Mr Ford hopes to take his European-modelled product to such caffeine-fuelled countries as Finland and Germany.

Making beans count

Age: 42

Pay: £140,700 (including £15,700 of benefits)

Career path: BA from Stanford, MBA from Insead, PhD from Oxford. Started working at Hewlett-Packard, then spent three years with Apax Partners, the venture capitalists. Has run several companies in the food and consumer goods sector. Co-founded Paladin Associates in 1991, a venture capital group that is Caffè Nero's largest shareholder. Started work on Caffè Nero in 1996.

Interests: Travelling, sports, reading and listening to music

Biggest influence: Bill Hewlett and Dave Packard [both ex-Stanford] who founded Hewlett Packard, "two individuals I thought worthy of a lot of respect ...[taught me] how you build up a company that has a very distinctive culture".