Coffee Republic announces bankruptcy

After weeks of intense speculation, the coffee chain Coffee Republic announced its failure yesterday. It was founded in 1995 by the brother and sister team Bobby and Sahar Hashemi in central London and became a regular fixture on the high street, with 187 outlets in the UK and abroad. Administrator KPMG plans to sell off the company's profitable cafes, saying "Coffee Republic has a strong brand and I expect considerable interest in the profitable parts of the business."

Job losses will be inevitable, with the 153 staff it employs all vulnerable. The group blamed its demise on the downturn in consumer spending, however internal politics did nothing to help the situation, with the founders being ousted by current chief executive Steve Bartlett two years ago. Intense competition from market leader Starbucks and Whitbread's Costa Coffee also hit profits.

In response to its difficulties Coffee Republic sold a number of franchises to fuel growth, however these led into even more difficulties and in December it announced a half-year loss of £527,000.

The company's shares were suspended at 22p after being worth as much as 160p two years ago.

WHAT THEY ARE SAYINGAndrew Hill in the FT: "Coffee Republic's decline and fall come as no surprise. Around the same time founder Bobby Hashemi was ousted, rival Caffè Nero was taken private, with shareholders making their exit at six times the flotation price. The fact KPMG expects to sell the chain to existing operators – some of which, such as Whitbread’s Costa, are still expanding – is a reminder that the coffee-shop market itself has not evaporated, but there is still a distinct difference between the froth and the dregs."

Financialadvice.co.uk: "While there is no doubt that the market for coffee will return in due course, when the recession ends and discretionary spending picks up again, it looks as though it has come too late for the likes of Coffee Republic which is another high street victim of the recession." ·