Caffe Nero's parent company has posted an annual loss of £15.2million despite demand for its coffees and snacks returning to pre-pandemic levels.

The red ink means the company, which has previously been branded 'Caffe Zero' over its contributions to the Treasury, paid just £2million in corporation tax over the past two years.

That was despite sales of almost £350m last year, according to the filings by Caffe Nero Group Holdings for the year ending May 31, 2022.

The company also owns Coffee #1, Harris + Hoole and Aroma said operating profit for the four companies increased from £13.6m to £30m driven by a recovery in sales and cost saving measures. Pre-tax earnings went from a loss of £11.5m to a loss of £15.2m.

It said both figures were "significantly impacted by the recovery from Covid-19".

Caffe Nero is the largest chain of the group with more than 600 coffee shops in the UK, including branches in Gloucester and Cheltenham and 6,000 employees.

It typically opens 70-90 new stores worldwide a year but instead only 20 were opened in the financial year and 19 were closed due to the pandemic.

Caffe Nero's profit was wiped out after it paid £35m on finance costs and interest to service its debt pile. Documents also show it has received £45m in Government support since 2021.

There is no suggestion Caffe Nero has broken any tax rules and the firm insists it pays significant sums in business rates, VAT and through employee contributions.

A Caffe Nero spokesman told This Is Money: 'Over the last two years, Caffe Nero has paid over £80 million in Government tax.

'The furlough money which we (and the rest of the country) received during Covid meant we could protect the jobs of our employees as the business struggled . . . caused by the forced closure of our business.'

Earlier this month, it said it had experienced a 'very encouraging first half of the financial year'.

Meanwhile Starbucks reportedly plans to open 100 new stores across the UK this year, while investing millions of pounds in upgrading existing cafes.

It comes as the world's largest coffee chain reported a big jump in sales in the UK for 2022, continuing its recovery from the pandemic, reports the BBC.

Starbucks, which launched in the UK in 1998, has over 1,000 outlets in the country, including branches in Gloucester and Cheltenham.

Last year the firm was reportedly looking to sell its British operations.

Its UK expansion comes despite inflation - the rate at which prices rise - being near a 40-year-high, pushing up the cost of ingredients for the firm and eating into its profits.