The UK branded coffee shop market continues to rebound
Credit: Costa Coffee
Amid continuing economic pressures such as high operational and energy costs, exorbitant green coffee prices, and greater wages, the UK coffee and café culture continues to thrive. The British Coffee Association reports that 80% of consumers who visit coffee shops do so once a week and 16% of the population visit once a day. It may be the capital city, but London is not the only city in the UK to find a great cup of coffee — quality coffee can be found throughout the country as specialty coffee shops are opening all over.
Allegra World Coffee Portal’s Project Café UK 2025 report shows the £6.1 billion UK (USD $7.57 billion/EUR €7.30 billion) branded coffee shop grew 5.2% over the last 12 months to reach 11,456 outlets. In a highly competitive trading environment, many operators are focusing on value-for-money to attract price-conscious consumers who now have more coffee shop choices than ever before.
World Coffee Portal’s annual survey of 50,000-plus UK coffee shop consumers shows that those making multiple coffee shop visits per week has increased from 56% to 60% over the last 12 months, marking a recovery from the height of the cost-of-living crisis.
Early morning coffee shop activity increased from 22% to 24% due to a rise in commuter foot traffic as more employees return to offices. Average coffee shop spend has risen 5% to £6.23 ($7.73/€7.46), bringing it back above 2023 levels following the unprecedented decline in 2024. Findings showed that in total, 119 UK-based coffee chains increased their store footprint over the last 12 months, while 40 saw net store closures.
According to the survey, price consciousness is now perceived as the most important consumer trend in the UK branded coffee shop market — overtaking the growth of independent coffee shops. With the average price of a regular latte rising 5% to reach £3.64 ($4.52/€4.36) over the last 12 months, many major coffee chains, including Costa Coffee, Greggs and Tim Hortons, have adjusted loyalty schemes to reduce spending thresholds for redeeming rewards, or have broadened perks to include free or discounted menu items.
Further demonstrating that market-wide price increases have disturbed previously loyal consumers motivated by routine, Starbucks has frozen beverage prices over the last year, Ole & Steen has introduced a pastry of the week for a set £2 ($2.46/€2.39), while coffee and food to go chains Leon and Yolk have introduced value-focused subscriptions to compete with Pret A Manger’s Club Pret.
Project Café UK 2025 revealed that the UK branded coffee shop market is more competitive than ever before, with a host of boutique branded chains, a strong independent coffee shop segment and value-driven non-specialist operators all vying for market share. In the specialty segment, WatchHouse, EL&N, Black Sheep Coffee and BEAR have all raised investment over the last 12 months to open more UK stores.
The UK drive-thru coffee segment also continues to grow, adding 51 stores over the last 12 months to reach 855 sites. UK drive-thru coffee market leader, Costa Coffee added 27 sites to reach 373 over the last year, with Starbucks, Greggs and Caffè Nero also investing in the format.
Meanwhile, non-specialist operators with premium coffee offers, such as McDonald’s, JD Wetherspoon and major supermarkets continue to ramp up competition with established branded coffee chains, particularly on value.
Plant-based dairy alternatives are now widespread in the UK branded coffee shop market, and similar to the US market, major chains, such as Costa Coffee, Starbucks and Pret A Manger, have all recently removed non-dairy surcharges. Project Café UK 2025 shows oatmilk remains the favourite non-dairy beverage pairing among UK coffee consumers. However, with many consumers reconsidering the health benefits of these products, all plant-based dairy alternatives saw a year-on-year decline in popularity, with semi-skimmed and whole milk gaining favour over the last year.
Although the market is recovering, UK operators continue to voice concern over high operational costs, including record high green coffee prices, greater wage and taxation burdens and persistently high energy costs. Per the survey findings, 71% of operators reported positive sales growth over the last 12 months, a 7% year-on-year decline.
Yet, despite short-term apprehension there is long-term optimism for a broader economic recovery and further branded chain expansion in the UK. World Coffee Portal forecasts the total UK branded coffee shop market will exceed 11,800 outlets by January 2026 and more than 13,200 by January 2030 at five-year outlet growth of 3.0% CAGR. Sales are expected to exceed £8 billion ($9.934 bn/€9.578 bn)over the same period, representing five-year growth of 5.7% CAGR.
Commenting on the findings of Project Café UK 2025, Allegra Group founder and CEO, Jeffrey Young said, “The UK coffee shop market continues to be resilient, even in very difficult economic times as consumers face significant cost pressures and disposable income is limited. However, coffee remains a relatively small-spend purchase and one that UK consumers value highly as a treat, opportunity to socialise, and a moment of human connection. We’re now seeing an emerging trend of boutique coffee operators scaling up alongside drive-thru and smaller stores offering new ways to enjoy the UK’s vibrant coffee culture. We expect the UK branded coffee shop market to continue its growth journey over the next 3-5 years.”
- Vanessa L Facenda, editor, Tea & Coffee Trade Journal
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