The UK coffee shop market has seen a challenging couple of years. Economical uncertainty surrounding Brexit has had a knock-on impact on investment, and high street trading in general has seen considerable decline in recent years. How is this likely to effect trading in 2020, and what are the market leaders likely to be doing in the next 12 months to drive growth?
Current market position
Despite the difficult conditions the market finds itself in currently, trading has largely remained positive. Outlet growth has slowed down to 0.9%, however for the existing sites industry leaders have reported an uplift of around 5% in 2019. 56% of experts surveyed think there is plenty of room for growth in 2020 for branded coffee shops, with a third of them predicting improved trading conditions.
UK brands expanding business models
Over the last year we have seen major brands diversifying their offerings to meet the increased customer expectations and competitive high street market. Costa Coffee have been rolling out an updated store format with great success, which is likely to continue across the rest of the sites throughout the next year.
Pret have been making moves as well, with their acquisition of EAT and plans to convert these sites into their ‘Veggie Pret’ concept. We should expect some of the other big brands to follow with new concepts and brand expansions over the next 12 months.
Adapting to environmental concerns
2019 has seen a huge cultural shift towards being more conscious of environmental impact, with the coffee shop industry being no exception. Customers are more knowledgeable than ever on ecological issues and expect the brands they buy from to be doing their best to minimise any negative impact on the environment. Brands have started to focus heavily on recycling policies and promoting reusable cups, and have been taking steps to minimise plastic usage in their products. Both food and drink menus have also started to shift towards more plant-based options, with Greggs making tabloid headlines with their vegan sausage rolls. This trend definitely seems set to continue in 2020, as many brands have just launched new vegan options this month, and some of the big players now offer dairy free milk at no extra charge.
Outlet growth set to increase
Outlet growth may have slowed down last year, but with the Brexit uncertainty starting to clear, and recent acquisitions such as Coca-Cola’s purchase of Costa Coffee, this is set to regain some of the lost momentum. World Coffee Portal predict that the UK branded coffee shop segment is likely to exceed 9,400 outlets by the end of 2024, which shows a 2.7% increase. This just goes to show that the UK coffee industry is not slowing down yet, and next year could be the most profitable one yet!
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