Specialists losing coffee market share to bakers and fast food operators

Specialist shops are losing coffee market share to the likes of Greggs and Patisserie Valerie.

The number of coffee servings sold in ‘quick-serve restaurants’ - which typically sell bakery products, sandwiches or burgers - has grown three times faster than in mainstream coffee shops since 2008, according to research from The NPD Group.

Since the year ending June 2008, specialist coffee chains have grown coffee servings by 21%, a third of the growth rate of QSRs, which have risen 63%. Coffee sales through pubs have grown 18% over the period.

The appeal of coffee has allowed operators to use it as a way of targeting new business opportunities, with QSR operators investing in coffee for breakfast and snacking.

In a recent trading update, Greggs boss Roger Whiteside said breakfast was a growing part of its trading day. He added that investment in additional coffee machines was speeding up service, and that the company was extending its coffee range.

Coffee shops have responded by trying to take a bite of lunchtime business, said NPD Group.

“Britain’s coffee market is highly competitive, with specialist outlets not just competing against each other but also taking on the high street QSR brands,” said NPD UK foodservice director Cyril Lavenant, adding that quality coffee is available in a variety of locations including fast-food restaurants, sandwich shops, bakeries, supermarkets, c-stores and forecourts.

“It’s no exaggeration to say that offering high-quality coffee is the lifeblood of the British foodservice market,” he said. “It provides a route for foodservice operators to serve customers from their menu throughout the day, from coffee with breakfast to coffee after a dinner out.”

Lavenant said specialist coffee shops needed to stand out to compete.

“Coffee shop chains tend to look alike and have a similar menu and ambience. The established brands have become bland. They need to wake up and smell the coffee to take on competitive threats.”

He added that some of the new, independent coffee businesses were adopting a “fresh approach” with brighter, sharper interiors, a more inviting atmosphere and appetising menu boards.

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