Inflation, the high cost of living and consumer boycotts negatively impacted the coffee chain’s UK sales, with greater competition from a growing domestic specialty coffee segment also contributing to lower footfall
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Starbucks’ Threadneedle Street store in London | Photo credit: Starbucks
Starbucks has reiterated its commitment to the UK market after reporting significant losses and revenue decline last year.
The world’s largest coffee chain posted a £35.2m ($44.8m) loss before tax in the UK for the 12 months ended 29 September 2024, compared to a £16.9m ($21.5m) profit the year previously. Starbucks also reported a 9% fall in gross profit and a 4% year-on-year fall in UK revenues to £525.6m ($668.9m).
In commentary accompanying its results, Starbucks said a challenging trading environment, including high raw material costs, softer consumer spending and ‘widely discussed misperceptions’ about the chain’s stance on the Israel-Gaza conflict, had negatively impacted its performance.
Starbucks also highlighted the UK’s ‘highly competitive’ branded coffee shop market as a factor in reduced footfall to its stores, with increased investment in domestic specialty coffee chains challenging the local trading landscape.
World Coffee Portal’s Project Café UK 2025 report shows specialty operators WatchHouse, Black Sheep Coffee, Knoops, Redemption Roasters and BEAR all raised investment over the last 12 months to fund UK expansion.
The UK remains Starbucks’ largest market in the Europe, Middle East and Africa (EMEA) region. The Seattle-based coffee chain ended the year with 1,240 stores, an addition of 100 net new sites, and has since acquired its largest UK franchisee, 23.5 Degrees, adding a further 113 stores to its company-owned UK estate.
Starbucks expects to open a further 80 net new UK stores by the end of September 2025, retaining a focus on key drive-thru and high-footfall city centre locations.
“It has been a difficult period for the sector. We navigated significant macro-economic pressures including inflationary headwinds which have also had an impact on consumer confidence. Despite this, we achieved our goal of opening 100 new stores in the UK. We remain committed to further expanding our presence and are today announcing that we will open an additional 80 stores in the UK this year,” said Duncan Moir, President, Starbucks EMEA.
Starbucks UK profits during the period were also impacted by ongoing investments in technology, social media and its Starbucks Rewards loyalty programme, as well as increases in staff wages.
“We are focused on regaining momentum by strengthening and scaling how we integrate technology across the business, building on the popularity of our Starbucks Rewards programme, and further optimising our menu to ensure we continue delivering on our core offering every time,” Moir added.
World Coffee Portal research shows Starbucks is the third largest branded coffee chain in the UK, behind Costa Coffee and food-focused Greggs, which both operate over 2,600 UK stores. Alongside a growing specialty coffee segment, Starbucks also faces greater competition from London-based Caffè Nero, whose parent company The Nero Group bolstered its UK footprint with the strategic acquisitions of 200 Degrees Coffee and FCB Coffee in the fourth quarter of 2024. The Nero Group now operates 800 UK stores across its coffee shop portfolio.