Almost £2bn has been wiped off the value of the UK branded coffee shop market in the past 12 months, according to the latest report by Allegra’s World Coffee Portal.

Its Project Café UK 2021 report found the £3bn branded segment of the overall coffee shop market suffered a 39% drop in sales due to the pandemic, with Greater London-based coffee shops registering a decline in numbers for the first time in 20 years. In contrast to reduced footfall in towns and cities, neighbourhood coffee shops have benefitted from increase levels of home working as people shop locally.

The total branded market now comprises 9,159 outlets – a decline of 182 sites over the period, while the number in the capital totals 2,330 – down -1.9% on 2019. Despite the overall decline in the number of branded coffee shops, the UK’s three largest branded café chains: Costa Coffee, Greggs and Starbucks all added net new outlets over the past year.

World Coffee Portal has estimated the market will see a modest return to outlet growth of 1.2% in 2022. Its survey of industry leaders revealed that 59% reported a year-on-year loss of more than 5% over the past 12 months, with only 15% positive about the current trading environment, down from 69% this time last year.

The total coffee shop market is projected to recover to pre-Covid levels by 2024, and exceed 9,600 outlets by 2025 at 1% CAGR.

Jeffrey Young, founder and CEO, Allegra, said: “While there’s no doubt the UK’s branded coffee shops are here to stay, Covid-19 has had a devastating impact over the last 12 months.

“Recovery will require significant innovation, discipline and leadership, with successful operators adapting to on-going trading challenges with smart, technology-led solutions and new store formats.”