The independent coffee shop market is far from saturated, with plenty of potential for future growth, according to the latest research from Allegra Strategies.

In a survey of more than 200 owners and operators of independent coffee shops in the UK, Allegra found evidence of a growing café culture, with many operators saying they sell more speciality coffee drinks than ever before. The total UK coffee shop market, including branded chains, is estimated to be worth £4bn, with 10,100 outlets. Independents’ slice of that is valued at £1.8bn, with more than 5,100 outlets.

Most independents surveyed said their local market is far from saturated. Only 7% described their local area as over-supplied with coffee shops, while 15% said it was not at all competitive. Most described local competition as intense (41%) or modest (38%).

Quality of coffee was the most frequently-mentioned key success factor for independents, listed by 70% of interviewees. Location was the second most important factor, mentioned by 60% of coffee shop owners and managers. Personal, engaging service and coffee shop atmosphere were also rated as critical to success.

"Independent operators have the opportunity to benefit from the growing UK café culture. Critical to achieving this is premium coffee quality, an attractive environment and highly-personalised service that engages and builds a valued relationship with customers," said Allegra.

While 31% said coffee chain operators have a positive impact on their business, 30% view the influence as negative and 39% said branded coffee chains do not influence their business.

Allegra’s survey found the economic downturn and growing competition are leading to ever more challenging market conditions, with 50% of operators viewing current trading conditions as more difficult than one year ago and 15% perceiving them as "much more difficult".

l The full report is available to buy from Allegra Strategies, see [].


=== What makes a highly-successful independent coffee shop? ===

Quality of coffee: 70%

Good location: 60%

Personal and engaging service: 54%

Atmosphere: 48%

Source: Allegra Strategies, July/August 2008