Specialist premium retailer Farmers' City Market, which models itself on an indoor farmers' market, plans to open three further branches this year.

Co-founder Jana Satchi, who has mooted expansion plans since the store opened in 2006, said he could one day envisage the retailer as a national chain.

"There is a huge market for this kind of food," said Satchi, who runs the store in London's Hampton Hill with business partner Stephen Wilkinson. "The message is strong enough to take it nationwide."

Negotiations are being finalised for the three new stores, but Satchi would not name the sites, although he confirmed they would all be within the M25. He said it was focusing on the London area for the time being simply "because it makes the supply chain easier".

The popularity of farmers' markets across the country, however, showed there was strong demand for quality food direct from the producer and proved the format could eventually succeed outside affluent London, said Satchi.

Farmers' City Market

revealed it had changed its business model in December last year to facilitate growth. Initially it had signed up to work with farmer 'partners' who would stock pitches and share the risk. It had also charged a pitch fee and paid a flat commission on sales.

But Satchi said the business had now reverted to a traditional model of buying from producers and wholesalers because the initial model "was not scaleable".

In another change to the business, Satchi and Wilkinson revealed they were set to launch a Farmers' City Market own-label range of products, starting with jam, peanut butter and eggs. Negotiations were being finalised with manufacturers, but they planned to roll out and extend the range to include juices and free-range chicken.

They added that as a premium retailer they were prepared for a "tough old ride" in the coming year in the face of tightening financial conditions.

However, Wilkinson said he was optimistic that restaurants, rather than retailers, would bear the brunt of consumers having less to spend on luxuries.