Branded coffee shops are growing at twice the rate of the independent coffee shop sector, research from Allegra reveals.
Independents are still in growth, with an estimated 7,022 coffee shops in the UK, growing at an annual rate of 4%.
But the rate of expansion is vastly outpaced by the branded coffee segment, which totals 8,149 outlets, representing annual unit growth of 8.7%.
Independents are categorised as any coffee shop business of four outlets or less. Allegra also tracks non-specialists, including pubs, book shops and supermarket cafes, with 25,483 total outlets in the UK.
Allegra’s latest report, The Rise of the Independents, finds the segment generates store sales of more than £2.4bn, with annual growth of 3.7%.
The independent sector comprises 27.6% of the total coffee shop market, with an additional 8,000 independent coffee shops to enter the market by 2024, at a forecast five-year growth CAGR 3%.
The report finds 70% of independent café consumers purchased coffee to drink in-store compared to 56% of branded chain customers.
Allegra said independents must capitalise on elevated in-store experiences, higher dwell times and product innovation to remain competitive.
Longer dwell-times also present an opportunity for menu diversification, such as single origin coffees, non-dairy milk and vegan options, which are more likely to appeal to consumers under-30s.
A key marketing demographic, 40% of this group surveyed indicate they are drinking more coffee at independents compared to a year ago.
Jeffrey Young, Allegra CEO and founder, said: “There’s no doubt independent coffee shops face an uphill struggle compared to scaled competitors, particularly in today’s highly challenging retail environment. But those independent cafés defined by razor-sharp menu quality and seamless, highly personalised hospitality face a very bright future indeed. I’m highly excited to see what the innovation a new generation of independent businesses bring to the market over the next few years.”