The UK’s largest branded coffee chain posted strong 2023 sales growth in the UK and internationally but energy, payroll and investment costs impaired profitability
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Costa operates more than 4,000 stores and 15,800 self-serve coffee machines in 50 markets globally | Photo credit: Costa Coffee
Costa Coffee slipped back into the red last year as inflationary pressures caused profits to fall by more than £250m (£326m) to a £9.6m ($12.5m) pre-tax loss.
In a Companies House filing, Costa Coffee said rising costs, particularly on energy and payroll, negatively impacted profitability. Impairment charges – typically the result of a reduction in the value of an asset – relating to its Costa Express and Costa International subsidiaries also strongly contributed to the loss, the filing shows.
The loss comes after Costa Coffee returned to profitability in 2022 with earnings of £245.9m ($320.7m).
Despite a total net loss of £14m ($18m), Coca-Cola-owned Costa Coffee achieved 9% year-on-year group sales growth in the 12 months ending 31 December 2023 to reach £1.2bn ($1.6bn).
The UK, Costa Coffee’s largest market with more than 2,600 outlets, contributed 96% of total sales during the period at £1.17bn ($1.5bn) – an 8% year-on-year rise. International sales grew 71% to £45.8m ($59.7m).
However, Costa Coffee’s revenues are still below their pre-Covid level of £1.3bn ($1.75bn) in 2019.
Founded in 1971, Costa Coffee operates more than 4,000 stores and 15,800 self-serve coffee machines in 50 markets globally. The coffee chain was acquired by US beverage giant Coca-Cola for $4.9bn in January 2019 and is currently led by CEO Philippe Schaillee.