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Consumer Research


Further growth for UK coffee shops

Further growth for UK coffee shops

The UK branded coffee chain market continues to expand rapidly, exceeding 3,000 outlets for the first time and an estimated £1.3 billion in turnover as UK consumers’ taste for coffee bars continues unabated.
According to Allegria Strategies, the market is forecast to nearly double over the next decade to reach up to 6,000 outlets and turnover in excess of £2.5 billion within 7-10 years.
Growing at more than 15 per cent for the past eight years, UK coffee bar culture has extended well beyond UK’s major urban centres and is penetrating smaller towns and the provincial areas due to phenomenal consumer demand and rapid opening programmes by coffee bar chains Starbucks, Costa Coffee, Caffè Nero, Pret A Manger and others.
Non-specialist players such as Marks & Spencer Café Revive have also responded with rapid development plans to meet burgeoning consumer demand.
Other players, such as BP’s Wild Bean Café and Coffee Nation, target motorists and coffee drinkers on-the-move.
Results from more than 6,300 telephone and face-to-face interviews with UK consumers (the largest sample ever conducted in the UK) reveal that consumers are visiting branded coffee chains more frequently than ever before:
Coffee shops are now mainstream and form an important part of UK lifestyles with more than 11 million adults visiting coffee shops at least once per week and more than 20 million persons visiting the venues at least once per month
‘Convenience of location’ remains the most important reason consumers select a specific coffee shop. Store environment has increased in importance as consumers use coffee bars as an important place to relax from busy lifestyles
Brand recognition of coffee chains increased 12 per cent between November 2005 and April 2007 and customer loyalty is on the rise
Average customer spend has increased more than 5 pre cent p.a. over the past three years as a result of price rises and increasing food spend within coffee shop outlets
Price sensitivity on coffee drinks has declined as consumers view specialty coffee as a premium offer but also see a visit to a coffee bar an important ‘treat’ and often a routine purchase
UK consumers are also becoming more adventurous in their food choices and are seeking a wider array of food and beverage offers, including Fairtrade, organics and healthy food options and are also eating and drinking more on-the-move
Starbucks is firmly recognised as the UK’s favourite coffee chain with 27 per cent of UK coffee shop visitors rating Starbucks as their favourite brand.  Starbucks has also gained significant ground in terms of its perception with UK consumers as an ethical brand and for fair treatment of its coffee suppliers
Whitbread owned, Costa Coffee is the UK’s fastest growing coffee chain and is highly recognised as a leading UK brand and for the quality of its coffee
Caffè Nero, which was subject to a £220 million buy-out earlier this year, achieves the highest overall satisfaction rankings by UK coffee shop visitors, leading the high street player rankings for quality of coffee Pret A Manager ranks highest for quality and variety of food and customer service

M&S Café Revive, also one of the largest UK coffee chains, scores highest across all segments for quality of coffee and ethical credentials.

Clearly this brand has benefited from a resurgent M&S through the leadership of Stuart Rose

Antipodeon new entrant, Flat White, based in London’s Soho, wins the Allegra award as the Independent Coffee Bar of the Year.

The coffee bar segment remains one of the few retail sectors with consistent year-on-year sales growth in excess of 10 per cent.

Allegra expects the market to polarise around clear winners and losers, with success, stacked in favour of well-organised market leaders.

Similar to other retail sectors, this market will be increasingly dominated by branded chains.

Independent coffee operators, however have experienced declining sales due to growing competition from the chains, with a significant percentage of independent coffee shop owner/managers surveyed believing that they had been adversely affected by the major chains.

A number of quality independent coffee shop operators see growth of the chains as an opportunity.

Given substantial consumer demand and opportunities identified in the regions, the UK coffee bar market appears to be very far from saturation.

Coffee-Focused Operators
Total Outlets
April 2007
Share of Outlets
Costa Coffee
Caffè Nero
Caffè Ritazza
BB’s Coffee & Muffins
Food-Focused Operators
Total Outlets
April 2007
Share of Outlets
Pret A Manger
Bakers Oven
O’Briens Sandwich Bars
Non-Specialist Coffee Operators
Total Outlets
April 2007
Share of Outlets
Marks & Spencer Café Revive
BP Wild Bean Café
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