The company operates a dozen Kylemore-branded coffee shops and manages 40 full-service restaurants on behalf of clients. It also holds the franchise for Quiznos Subs, of which there are 10 outlets on the island, most of them in Dublin.

In the latest accounts, the company said it hopes to boost the number of Quiznos operations this year, but cautioned that "availability and cost of appropriate property sites" represents the "most significant challenge" for the franchise development in 2006.

The company added that its contract services division secured a "significant" number of new contracts during the year. The group also disposed of a restaurant in Newry this year, and listed an almost 850,000 profit on the disposal of tangible assets.

Kylemore, which employs almost 580 people, closed 24 cafes in 2001. The business started with a shop at Store Street in Dublin's in 1887 and has been run by the Hogan family since 1920.

Brian Hogan, current chief executive, blamed the 2001 shop closures on changing consumer habits, the growing trend of in-store bakeries, and rising distribution costs.

In 2003 the company embarked on a 10m refurbishment programme. Kylemore hopes to grow business across its existing restaurants before expanding into new locations.

Kylemore's director of restaurants, Amanda Browne, told the Sunday Tribune earlier this year that the company is also exploring the introduction of master franchises for two UK retail brands.

Browne said one was an "Asian food concept". She added that the firm will engage in a conservative rollout of the Quiznos franchise in Ireland.

"We would like another 10 to be open during the financial year but we're not going to mass-produce with Quiznos on every corner, " Browne said.

"We're very careful about how we roll this out."

Publicly-quoted DCC acquired a 50% stake in Kylemore in 1998 for 7.6m after merger negotiations between the caterer and Campbell Bewley fell through the same year.