The UK’s coffee sector suffered a 40% decline in sales in 2020. The number of outlets also fell by 182 stores to 9,159, but some of the biggest chains continued to expand.
On-going Covid-19 restrictions – including temporary store closures, takeaway-only trading, and the requirement for customers to stay home – have all contributed to sharp sales declines at UK branded coffee shops, noted World Coffee Portal in its Project Café 2021 report.
While 85% of UK consumers surveyed report typically visiting coffee shops at least once a week, just 56% have maintained this frequency during the pandemic. Just over one in four (26%) said they would regularly use delivery services if the option were more readily available.
Daily commuting has “decimated” footfall at travel hubs and city centres, though many neighbourhood outlets have benefitted from increased levels of home working as more customers shop locally.
This dynamic is reflected in the first fall in the number of Greater London-based coffee shops in two decades. The UK capital now has 2,330 branded coffee shops – down 1.9% on 2019 – but still accounts for more than one quarter of all UK branded cafés.
The UK’s three largest branded café chains, Costa Coffee, Greggs and Starbucks added 56, 28 and 30 locations to operate 2,681, 2,078 and 1,025 stores respectively. Caffè Nero’s estate fell by 16 stores to 648.
World Coffee Portal forecasted 1.2% outlet growth in 2022. “It will take at least three years before the segment returns to pre-pandemic levels,” said Allegra Group founder and CEO Jeffrey Young. “Recovery will require significant innovation, discipline and leadership, with successful operators adapting to on-going trading challenges with smart, technology-led solutions and new store formats.”
In a survey of industry leaders by World Coffee Portal, 59% reported a year-on-year loss exceeding 5% over the last 12-months. Those loss-making operators report an average negative financial impact of £27,650 per store, per month. Just 15% of industry leaders surveyed were positive about the current trading environment, down from 69% from 12 months ago.