Turnover across the UK’s branded coffee chain sector increased by 10% in 2011 to reach an estimated £2.1bn, however, consumers are spending less per visit, according to a new report.
Allegra Strategies’ annual Project Café11 UK survey found that with 1,342 outlets, 167 opened this year, and £531m in annual revenue, Costa was still the UK’s favourite coffee shop within the 15,000-plus strong sector.
Second placed Starbucks opened 12 stores during the year to trade from 743 outlets with an estimated turnover of £404m.
In fact, the branded coffee market has shown “incredible resistance” during the downturn, according to Allegra, which has enabled it to “substantially outperform” the wider retail market.
Over 600 new outlets opened during the year, although this is down on the 800-plus launched in 2010.
The study, which questioned more than 36,000 consumers, found that the frequency of visitor visits continued to grow, with one in 10 UK adults now visiting coffee shops daily. Just under 40% of consumers said they visited coffee shops more often than 12 months ago.
However, the report did highlight some concerns, with weaker mid-sized chains and low quality independents, suffering as major brands expand. It also found that consumers had started to spend slightly less per visit from £3.50 in 2009 to £3.18 in 2011, reducing their food purchases from coffee shops. 69% of consumers interviewed purchase food in coffee shops regularly compared with 71% in 2010.
Allegra predicts like-for-like sales growth will continue, with leading brands to average high single digit growth over the next five years.
It said that the branded coffee chain market would be the main growth driver of the overall market. It said the sector is expected to grow at 6% compound annual growth and exceed 6,000 outlets by 2015, with sales predicted to grow by 10.7% CAGR and reach £3.2bn by 2015.
Allegra forecasts the total UK coffee shop market will reach 18,000 outlets and £7bn turnover by 2015 with average compound annual growth of 4.4%.
It said that the branded coffee shop segment totals 4,907 outlets, with moderate growth at 5.6% in 2011, as expansion by leading branded chains continued to drive total overall UK market growth.
Non-specialist operators, such as M&S Café and J D Wetherspoon, continued to show strong expansion with outlet growth of 5.7% and 253 new stores, to reach an estimated 4,708 stores.
It said that food-focused leaders, Pret A Manger and EAT, had a combined estimated annual revenue of £409m, which gave them a 51% share of the food-focused segment sales. The two chains trade from 247 and 113 outlets respectively.
Jeffrey Young, managing director, Allegra Strategies said: “The UK coffee shop market continues to exceed expectations by growing significantly in value, but also in outlet numbers. As consumers gain more opportunity to consume coffee through more outlets, they are making it part of their lifestyle.
“High quality independent coffee shops are fuelling consumer demand and driving the branded coffee shop sector to increase focus on unique interiors and improved brewing methods within a wider, more artisanal coffee offer. This focus on quality in all areas can only continue to drive a thriving industry.”
