COFFEE Republic yesterday hailed the popularity of its deli outlets as it posted narrower first-half losses.

The group said sites converted from standard coffee bars to delis as part of a major strategy change had shown a significant increase in sales.

It also got rid of Friends-style sofas as it battled to improve margins and cut exposure to competition.

Like-for-like sales climbed in the past few weeks as its core coffee shops also reaped the rewards of a wider restructuring.

Losses were £900,000 in the six months to September 26, compared with £1m for the same period last year.

Coffee Republic has been moving towards a deli format - offering sandwiches and hot food counters as well as coffee - in a bid to cut exposure to competition from rivals such as Starbucks, Costa Coffee and Caffe Nero.

Six of its 49 sites are trading under the new format, and chairman Bobby Hashemi said he expected the majority to be converted in the next few years. He said the format was popular with time-pressed people who wanted fresh food and coffee without having to go to a restaurant