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Competition boils up between independent coffee shops and big chains

2-minute read

Competition boils up between independent coffee shops and big chains
Josh Hall

Josh Hall

26 April 2017

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Independent, ‘artisan’ coffee shops are staking a claim to High Street dominance.

This is according to hospitality giant Whitbread, owner of Costa Coffee, which saw its annual profits slow, in part thanks to renewed competition from independent cafes.

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Shares in the group fell by nearly 6 per cent in the wake of the news, which showed annual profits were well below analysts’ expectations.

Like-for-like sales at Costa grew by 2 per cent during the period, but this was significantly down on the 2.9 per cent growth seen in the previous year.

In a statement accompanying the results, Whitbread said that consumers are “becoming more demanding in the way their priorities are met,” and also cited an increase in food outlets offering coffee.

Rise of independent coffee shops

Separately, recent research from Simply Business, who insure over 1,000 independent coffee shops across the UK, found a huge increase in the number of independent coffee shops between 2015 and 2016. Looking at over over 5,500 data points, the resarch showed a 41 per cent increase during the period.

Nottingham saw the biggest rise, with a 69 per cent increase year on year, followed by Birmingham at 53 per cent, Sheffield at 48 per cent, and Coventry at 37 per cent.

There's bad news for artisan coffee fans in Edinburgh, though, as the Scottish capital bucked the trend with 12.5 per cent were independent cafes in 2016 than in the year before.

Mixed outlook

Independent coffee shops continue to flock to the High Street, buoyed by consumers in search of more unique retail and leisure destinations.

But the squeeze on living standards, produced by a combination of long-term wage stagnation and an expected forthcoming rise in inflation, could cause consumers to reign in spending.

Inflation is expected to rise to 2.7 per cent by the end of the year, before peaking at 2.8 per cent in 2018.

Is now the time for independent coffee shops to take the UK by storm, or should prospectivee cafe owners be cautious? Let us know what you think in the comments.

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