Liverpool-based Optimum Group said increased competition in the UK coffee shop market and rising raw material and labour costs could further squeeze its narrowing profit margins
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Optimum Group currently operates 27 licensed Costa Coffee stores across the Northwest, UK | Photo credit: Costa Coffee
Liverpool-based Costa Coffee franchisee Optimum Group achieved record revenues in 2023 but warned increased competition in the UK branded coffee shop market and rising costs had led to sharp fall in profits during 2023 and could adversely impact operations going forward.
Founded in 2006, Optimum Group currently operates 27 licensed Costa Coffee stores across the Northwest, UK, alongside two Kaspa’s Desserts outlets and a single I am Doner fast-food restaurant.
The group achieved 9% year-on-year sales growth in the 12 months ending 31 August 2023 to £10.4m ($13.4m), with licensed Costa Coffee stores contributing 94% of total revenues. However, Optimum Group’s full-year operating profit fell 46% from £520,858 ($669,031) in 2022 to less than £281,151 ($361,132) in 2023.
In its Companies House filing, Optimum Group said the ‘competitive nature of the UK coffee industry is increasing year-on-year’ and that the growth of both chains and independents poses ‘significant risks’ to its operations.
The business has been forced to ‘tighten controls’ and is exploring further saving opportunities as fluctuations in raw materials and high labour costs continue to hamper profit margins.
Liverpool-based Optimum has two new Costa Coffee stores scheduled to open in the fourth quarter of 2024 alongside a second I am Doner outlet in the first quarter of 2025. To navigate growing headwinds facing coffee shops, Optimum has also further diversified its portfolio by investing in an unnamed supermarket.