There are currently 7,022 independent cafés operating in the UK, with an estimated value of £2.4bn. By 2024, the number of outlets could be in excess of 8,000, according to new data compiled by Allegra.
UK independents currently serve more than 10.5 million cups of coffee each week. But with branded chains often competing on location, convenience and price, independents need to ensure their proposition is “pitch-perfect” every time to entice premium consumer spend.
Indeed, rising labour costs and property costs are currently the greatest challenges facing independent coffee shops in the UK, ahead of business rates and increasing competition.
But despite the challenging retail environment, 80% of independent coffee shop leaders surveyed in March this year reported positive sales performance in the last 12 months; a majority cited coffee and service quality as key success factors. Three-quarters of those quizzed felt there is still plenty of growth potential in the UK.
Allegra’s research also showed that more than 70% of independent café consumers purchase coffee to drink in-store, compared to 56% of branded chain customers. A further 21% choose independents based on service quality, compared to 16% at branded chains. Similarly, 18% said atmosphere was the main reason behind a visit, compared to just 8% at branded chains.
These longer dwell-times also present an opportunity for menu diversification, including single origin coffees, non-dairy milk and vegan options, which are more likely to appeal to consumers under-30s.
IGD recently predicted that coffee specialists, including both independents and the likes of Starbucks and Costa Coffee, will experience a compound annual growth rate of 5.2% over the next five years.
Rhian Thomas, IGD head of shopper and food-to-go insight, said: “Over the past 12 months we have seen significant developments from coffee specialists, with a clear trend towards the expansion of smaller, more niche chains. Expansion at the likes of Coffeesmiths Collective, with a repertoire of coffee chains under its umbrella, shows how the barista coffee experience is evolving.”