Europe’s coffee shop market: pinched yet promising
Image credit: Costa Coffee
Out-of-home coffee – whether from a coffee shop or a café, chain or independent – is a universal ‘small indulgence’ that consumers are just not willing to give up, even during challenging economic times. They may cut back, but it appears consumers will not completely do without their ‘coffee treat’ — at least according to new research.
World Coffee Portal’s Project Café Europe 2025 reveals that demand for coffee out-of-home remains robust across Europe and branded coffee chains are broadly accelerating growth across the continent despite higher operational costs and lower consumer confidence in many markets. Underlining the strength of demand for premium coffee experiences, even amid economic uncertainty, 33 out of 50 European markets expanded by outlets over the past 12 months, including 15 of the largest 20. Major markets, including the UK, Germany, Russia and France, expanded by more than 100 outlets. The total European market grew 4.7% to reach 51,042 outlets over the last 12 months – the highest number of net new stores recorded by World Coffee Portal in five years.
Sustained cost pressures remain a major challenge for European industry leaders interviewed by World Coffee Portal. Adding to high inflation, energy, and raw materials costs, record-high green coffee prices are the latest major issues European branded coffee chains face. Many operators have responded by raising beverage prices, with a regular cappuccino costing €3.69 on average across Europe – a 7.6% annual rise. (For example, the cost for a 12-oz cappuccino in Türkiye surged 53.1% to €3.51, while in Portugal it jumped 19.8% to €3.15, and in the Czech Republic, prices increased 13.5% to €3.76.)
In an increasingly competitive market where value-for-money is a key consumer concern, many coffee chains face a tougher trading environment. The report finds that 31% of industry leaders surveyed described trading conditions as ‘difficult’, up from 19% a year ago. And yet, high commercial coffee prices are also making premium and quality differentiated propositions more attractive, generating new opportunities for growing specialty coffee markets in France, Germany and the Iberian Peninsula.
The research shows that European industry leaders are broadly optimistic, with 75% assessing there is strong potential for further branded coffee chain growth across the continent. The largest coffee chain operators in Europe are: McCafé (3,980+), Starbucks (3535+), and Costa Coffee (3,095+).
However, many operators are facing a tough economy, with strong sales outstripped by soaring operational costs. Poland was the largest European market to contract over the last 12 months, with net 26 stores closures following five consecutive years of growth. The Swiss and Swedish markets also contracted 6.3% and 5.7% by outlets, respectively. Yet, demonstrating the diverse range of economies across Europe, the Turkish branded coffee shop market grew 12.6% to surpass 3,800 outlets despite annual CPI inflation topping 44% in 2024. Quite surprisingly, Ukraine’s branded coffee shop market grew 8% to exceed 350 outlets amid Russia’s ongoing invasion.
The new report also finds that the European branded coffee shop market is broadly in good health, with established markets, such as the UK (the largest market with 11,450+ outlets), Germany (the second largest market with 7,425+ outlets), France, Spain and Italy all achieving sustained outlet growth. Smaller markets, such as Croatia, Lithuania and Armenia, are also developing strongly.
Within the branded coffee chains there is also an increasingly sophisticated food-focused and bakery segment harnessing the appeal of premium coffee to grow their businesses. World Coffee Portal forecasts the total European branded coffee shop market will reach 53,200 outlets within 12 months and exceed 60,900 outlets at 3.6% CAGR by March 2030.
Commenting on the report findings, Allegra Group founder and CEO, Jeffrey Young said, “It’s exciting to see continued growth among Europe’s chain operators, but also a promising specialty coffee scene as more consumers embrace boutique hospitality experiences – and are no doubt upping coffee quality at home as well. That being said, the European market remains underpinned by a growing set of branded coffee chains performing well in a challenging economy.”
According to Young, with inflation, geopolitical tensions and record high green coffee prices, there is a lot of uncertainty across Europe and operators need to be smart to navigate these challenges. “However, as this report shows, there is tremendous consumer appetite for coffee and café culture to support a thriving European market in the years ahead.”
