The torrent of new store openings from the big coffee shop and sandwich chains is set to slow to a trickle as consumers tighten their purse strings because of the recession.
According to a consumer survey commissioned for a new report by Key Note, 42% of people said they were likely to cut back on visiting coffee and sandwich shops in the future as a result of the recession - a development predicted to dramatically slow growth in the market in the next five years. The sector will also be hit by the ageing UK population, saturation in prime locations and increased competition from other retailers, such as department stores and supermarkets.
The Coffee & Sandwich Shops Report predicts that the number of stores operated by the top 12 coffee shop brands will increase by 26% over the next five years from 2,980 to 3,760 in 2013. The number of stores operated by the top 13 branded sandwich shop chains is predicted to grow by 13% from 3,780 stores to 4,265. This is a much slower rate than in recent years.
"Among the coffee majors, only Starbucks has so far announced any outlet closures. Most of the major coffee- and sandwich-shop operators are likely to scale back their plans for further outlet openings," said the report. "Profitability at coffee and sandwich shops is likely to suffer, as special offers are used more often to attract customers."