The UK branded coffee shop market contracted 1.9% to 9,159 outlets in 2020, Allegra’s World Coffee Portal reveals.

Eighteen out of 40 European branded coffee chain markets contracted during 2020 as Covid-19 caused significant disruption to out-of-home sales.

Germany suffered a 3.1% decline to 5,490 outlets and Spain endured Europe’s largest market contraction, with 133 net store closures shrinking the market by 8.8%.

Despite severely disruptions to sales across the continent, the branded coffee shop segment has now stabilised in terms of outlets, growing 0.9% to 39,308 sites.

Industry leaders are anticipating improved trading later in 2021. With the UK and many Eurozone economies forecast to rebound in 2021, 60% surveyed expect trading conditions to improve over the next 12 months, with just 20% forecasting a further deterioration in trading.

Looking towards a brighter future, 65% percent of European industry leaders surveyed believe there is still plenty of growth potential for branded coffee shops in their country.

The three largest branded coffee chains in Europe – Costa Coffee, Starbucks and McCafé – comprise 8,756 outlets, holding a combined 22% share of the European branded coffee shop market and collectively expanding by 250 outlets.

Twenty of Europe’s largest branded coffee chains control nearly 48% of the total market, with multi-national operators accounting for over 61% of outlets.

The total European branded coffee shop market is forecast to reach 45,400 outlets by 2025.

Allegra founder and CEO Jeffrey Young said: “We are living in very uncertain and difficult times and the downturn for European coffee shops due to Covid-19 has been profound. Nonetheless, coffee drinking across Europe continues to be a major part of European lifestyles and we expect the market to return to pre-pandemic levels in 2022 – or potentially even 2023.

“With the continued progress of the vaccine roll-out and recovery from the pandemic, we anticipate European consumers will flock back to coffee venues as highly valued and necessary social experiences.”