UK branded coffee shop market exceeds 10,000 outlets as value grows to £5.3bn: The UK branded coffee shop market now exceeds 10,000 outlets and is now valued at £5.3bn, having grown sales 9.2% over the last 12 months, according to the Project Café UK 2024 report from World Coffee Portal. While total sales are back above pre-pandemic levels, weakened consumer confidence, high inflation and lower footfall at traditional prime locations have contributed to slowed growth and increased uncertainty, the report said. The number of outlets grew 3.6% to reach 10,199 stores, with Greggs and Starbucks opening 73% of the 353 net new stores, while a quarter of branded coffee businesses saw net reductions in their outlet portfolios. Costa Coffee remains the UK’s largest branded coffee chain, holding a 26% share of the market with 2,677 stores, having closed net 17 sites over the last 12 months. While 29% of operators did not open any net new outlets amid heightened industry caution, the proportion of industry leaders describing trading conditions as “positive” rose 12% to reach 49%. Branded coffee chains increased coffee prices by an average of around 9% over the last 12 months – leading to a 9% fall in consumer satisfaction with value-for-money. Average spend also fell 4% year-on-year, with consumers either more likely to only purchase a beverage or spend less overall on food items. The latte remains the UK’s favourite coffee shop beverage, with the average price of a 12oz serving increasing £0.28p to £3.51 over the last 12 months. Costa, Starbucks and Tim Hortons all grew their drive-thru presence to collectively hold a 93% share of the 801-site UK drive-thru coffee market. World Coffee Portal has forecast the total branded coffee shop market will exceed 10,500 outlets by January 2025, and more than 11,600 by January 2029, while sales are expected to exceed £7.2bn over the same period. Allegra Group Founder and chief executive, Jeffrey Young, said: “Despite some very strong economic headwinds, squeezed consumer spend and trading uncertainty, the UK coffee shop market – and especially branded coffee chain segment – has remained very resilient. Having achieved two decades of consistent growth only interrupted by the covid era, we’re now looking at trading patterns well above pre-pandemic levels. A very bright future awaits the UK coffee shop market as operators invest in innovation through technology, capture the hearts and minds of the next generation with new product categories and focus on delivering high-quality, value-for-money experiences.” Costa, Greggs and Starbucks all feature in the Propel UK Food and Beverage Franchisor Database, an exhaustive guide to the companies offering a food and beverage franchise in the UK available exclusively to Premium subscribers. The database is updated every two months, and the latest version features 225 businesses. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.

New border checks threaten deceleration in foodservice price inflation: New border checks threaten the deceleration in foodservice price inflation, the authors of the CGA Prestige Foodservice Price Index have warned. The index recorded an inflation rate of 13.8% in December, marking a sixth consecutive month of decline. However, the pace of deceleration is slower than anticipated, despite moderation in price rises and the market stabilising. The majority of index categories maintained double-digit year-on-year inflation in December, and the vegetables category recorded a rate above 20%, primarily driven by substantial increases in potato prices. Only one category, oils and fats, achieved deflation, with a 1.1% year-on-year decrease. Despite the recent general downward trend, apprehension is growing about a resurgence in inflation as a result of new border checks, those behind the index said. The government is set to implement new paperwork requirements for EU businesses sending animal and plant products to the UK from the end of January, with physical inspections commencing in April. This has led to concerns among food importers about disruptions including import delays, port queues, empty supermarket shelves and an upswing in inflation that will particularly affect food prices, according to the index. James Ashurst, client director at CGA by NIQ, said: “December’s figures continued a welcome respite in inflation across foodservice in the second half of December. Nevertheless, rates remain at exceptionally high levels. There are some positive indicators for 2024, including growth in consumer confidence and drops in interest rates and energy bills, but these border checks risk derailing the sector’s fragile recovery.” Shaun Allen, chief executive at Prestige Purchasing, added: “While prices continue to rise, the rates at which they are doing so are slowing currently. However, should the government’s planned border changes come into force, we may begin to see the rate of inflation rise again.”