Brexit uncertainty and tough high street trading have taken their toll on branded coffee shop openings, according to a new study.
The UK branded coffee shop market grew by just 70 outlets in 2019 to 8,222, an increase of 0.9% year-on-year, according to Project Café UK 2020, Allegra World Coffee Portal’s report on the UK café industry.
Twelve months ago, researchers reported that the market had grown 8.7% year-on-year.
The cost of property, labour and the impact of Brexit were cited as the top three challenges facing coffee shops, with 56% of industry leaders believing there was still plenty of growth potential for branded café chains in the UK.
Allegra expected reduced uncertainty on the UK’s future relationship with the European Union, alongside major merger & acquisition activity including Coca-Cola’s purchase of Costa Coffee and Causeway Capital’s rebuilding of the Patisserie Valerie brand, to bring increased investment and outlet growth in 2020.
“Following two years of tough trading, the UK coffee shop market has held up well against significant headwinds,” said Allegra Group CEO and founder Jeffrey Young.
“We expect outlet growth to regain momentum during the next two to three years and forecast better times ahead for those operators that can readily capitalise on the opportunities and adapt to the challenges in what will remain a highly competitive market.”
World Coffee Portal has forecast further transformation in the industry in 2020, with major brands launching new formats, including travel kiosks, drive-throughs and specialised sub-brands.
It expected the UK branded coffee shop market to top 9,400 outlets by the end of 2024, displaying a five-year CAGR of 2.7%.