Costa’s parent company Whitbread has warned that it may be forced to raise prices to combat the effects of the National Living Wage.
The company said it was working on plans to offset the change from the current national minimum wage of £6.50 to the living wage of £7.20 when it comes into force in April next year.
Andy Harrison, chief executive, said there would be "selective price increases" among other measures to deal with the extra £15m to £20m that he expects the living wage to cost the business.
Of Whitbread’s total hourly paid staff of 42,000, around 34,000 are currently paid £7.20 or less. Of those, 16,000 are aged over 25 and so will benefit from the living wage.
Harrison said: “We are developing plans to adopt the recently announced National Living Wage. We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases.”
Whitbread’s comments came as the firm also revealed slightly slowing sales growth over the summer and said trading was weaker than expected last month, which it attributed to poor weather over August and strong comparatives on last year.
From April 2016, the national living wage will be £7.20 an hour for workers aged 25 and older. The minimum wage will still apply for workers aged 24 and under.