Starbucks UK reported a 3.8% rise in like-for-like sales in the 12 months to 27 September 2015, on the back of an increase in pre-tax profits from £1.9m the previous year to £34.2m.
However, sales fell to £405.6m from £408.7m in 2014 after the company closed 17 loss-making stores and handed 74 sites over to franchise partners.
The group, which paid £8.1m in tax during the year, said that the growth in profits was driven by a focus on renegotiating leases, closing unprofitable stores, opening more franchise stores and cutting costs across the business.
Starbucks opened four new company-owned stores, 29 franchises and 21 licensed stores during the year, which it said had created 800 new jobs.
The company now owns 397 stores. A further 209 are held by franchise partners and 226 stores are licensed within train stations and airports.
Kris Engskov, Starbucks EMEA president, said the company had stripped out £16.5m of costs by “aggressively” renegotiating its leases.
He also said that in-store technology such as wireless charging Powermats and super-fast Wi-Fi had helped boost sales.
The company said that administrative expenses had been reduced, while it benefited from lower coffee prices, leading to an increase in its operating profit margin from 0.5% to 6.9%.
He said: “Thanks to the commitment and hard work of our partners (employees), Starbucks has delivered its largest ever after-tax profit since opening in the UK in 1998. Before and after-tax profits are both up by more than £30m as we have invested in the store experience while managing our costs. As a result, our corporation tax payments also increased.”
Prior to 2012, the company paid just £8.6m in corporation tax in its 14 years of trading in the UK.
In September, the group announced plans to raise its average UK wage to just under £8 an hour and launch a new scheme to offer interest-free loans to help its staff pay deposits on their housing.
In October, the company launched the first of its “coffee theatre” Reserve brand sites in the UK.
The new site in London’s Upper St Martin’s Lane offers an evening menu featuring craft beer and wine as well as fresh food such as pastries, salads and sharing platters of cheeses, meats and flatbread.