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Monday, 27 August, 2001, 17:01 GMT 18:01 UK
McDonalds to sell Aroma
Aroma Street Cafe in Regent Street, London
McDonalds bought Aroma for $14.5m in 1999
by BBC World Business Report's Alex Ritson

American fast-food chain McDonalds is to sell its up-market Aroma coffee shop chain in the UK.

The 35 Aroma coffee shops are expected to fetch over $20m (15m).

Among those said to be interested is Coffee Republic.

A spokesman for McDonald's said: "McDonald's Corporation has appointed SG Hambros to look at the options for the future. This includes a sale."

The $14.5m investment by McDonalds in Aroma in 1999 was then seen as an attempt to diversify out of burgers.

Then last year it went into alliance with sandwich bar chain Pret A Manger.

Pret A Manger's success in selling a healthy food image appealed to McDonalds.

A branch of the Aroma coffee chain in London
Aroma: Specialist coffee bars
These healthy sandwich bars also sell coffee so Aroma's specialist coffee bars appear to have become surplus to McDonalds requirements.

Added to this the coffee market in the UK is chronically overcrowded.


Walk down the short street from the nearest underground station to our office and you will pass two Starbucks, two Coffee Republic, and one Aroma coffee bar.

They all have similar menus, variations on expensive cups of coffee with more or less milk, plus other flavourings if you don't really like the taste of pure coffee.

Since the aggressive chain Starbucks moved into the UK, the market has become obviously overcrowded.

All over London you regularly see two Starbucks branches looking at each other across the street, with two Coffee Republics not far away.

The BBC's Alex Ritson
"Consolidation in London streets could be on the way"
See also:

31 Jan 01 | Business
McDonald's gobbles Pret stake
28 Jun 01 | Business
Coffee Republic cuts losses
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