Value in the spotlight as competition heats up in £6.1bn UK branded coffee shop market

Download our infographic on the UK branded coffee shop market | Photo credit: © World Coffee Portal

• Project Café UK 2025 shows the UK branded coffee shop market added 570 net new outlets over the last 12 months
• Costa Coffee remains the UK’s largest branded coffee chain with 2,671 outlets, followed by Greggs (2,610) and Starbucks (1,354)
• 71% of operators report positive sales growth over the last 12 months, a 7% year-on-year decline
• Project Café UK 2025 forecasts the total UK branded coffee shop market will exceed 11,450 outlets in 2026 and reach 13,260 by January 2030

UK branded coffee shop market continues to thrive

Twenty-five years since Allegra published its first branded coffee shop market report, UK coffee and café culture continues to thrive, inspire consumers and present new business opportunities for operators. World Coffee Portal’s annual survey of over 50,000 UK coffee shop consumers shows that the proportion making multiple coffee shop visits per week has increased from 56% to 60% over the last 12 months, marking a recovery from the height of the cost-of-living crisis.
 

Early morning coffee shop activity increased from 22% to 24% amid a rise in commuter footfall as more workers return to offices. Meanwhile, average coffee shop spend has risen 5% to £6.23, bringing it back above 2023 levels following last year’s unprecedented decline. In total, 119 UK-based coffee chains increased their store footprint over the last 12 months, while 40 saw net store closures.
 

Major UK operators strengthen value offer for price-conscious consumers

World Coffee Portal’s annual survey of UK industry leaders shows price consciousness is now perceived as the most important consumer trend in the UK branded coffee shop market – overtaking the growth of independent coffee shops. With the average price of a regular latte rising 5% to reach £3.64 over the last 12 months, many major coffee chains, including Costa Coffee, Greggs and Tim Hortons, have adjusted loyalty schemes to reduce spending thresholds for redeeming rewards, or have broadened perks to include free or discounted menu items.

Further demonstrating that market-wide price increases have unsettled previously loyal consumers motivated by routine, Starbucks has frozen beverage prices over the last year, Ole & Steen has introduced a pastry of the week for a set £2, while coffee and food to go chains Leon and Yolk have introduced value-focused subscriptions to compete with Pret A Manger’s Club Pret.

Specialty coffee, drive-thru and non-specialist operators gain ground

The UK branded coffee shop market is more competitive than ever before, with a host of boutique branded chains, a strong independent coffee shop segment and value-driven non-specialist operators vying for market share. In the specialty segment, WatchHouse, EL&N, Black Sheep Coffee and BEAR have all raised investment over the last 12 months to open more UK stores.

The UK drive-thru coffee segment also continues to grow, adding 51 stores over the last 12 months to reach 855 sites. UK drive-thru coffee market leader, Costa Coffee added 27 sites to reach 373 over the last year, with Starbucks, Greggs and Caffè Nero also investing in the format.

Meanwhile, non-specialist operators with premium coffee offers, such as McDonald’s, JD Wetherspoon and major supermarkets continue to ramp up competition with established branded coffee chains, particularly on value.

Plant-based dairy alternatives lose ground to milk

Lauded for their reduced environmental impact and promoted health benefits, plant-based dairy alternatives are now widespread in the UK branded coffee shop market, with major chains, such as Costa Coffee, Starbucks and Pret all removing non-dairy surcharges in recent years.

Project Café UK 2025 shows oat remains the favourite non-dairy beverage pairing among UK coffee consumers. However, with many consumers reconsidering the health benefits of these products, all plant-based dairy alternatives saw a year-on-year decline in popularity, with semi-skimmed and whole milk gaining favour over the last year.

UK operators cautious over short-term headwinds but remain optimistic for growth

UK operators continue to voice concern over high operational costs, including record high green coffee prices, greater wage and taxation burdens and persistently high energy costs. 71% of operators reported positive sales growth over the last 12 months, a 7% year-on-year decline.

Nevertheless, despite short-term apprehension there is long-term optimism for a broader economic recovery and further branded chain expansion. World Coffee Portal forecasts the total UK branded coffee shop market will exceed 11,800 outlets by January 2026 and more than 13,200 by January 2030 at five-year outlet growth of 3.0% CAGR. Sales are expected to exceed £8bn over the same period, representing five-year growth of 5.7% CAGR.

Commenting on the findings of Project Café UK 2025, Allegra Group Founder and CEO, Jeffrey Young said:

“The UK coffee shop market continues to be resilient, even in very difficult economic times as consumers face significant cost pressures and disposable income is limited. However, coffee remains a relatively small-spend purchase and one that UK consumers value highly as a treat, opportunity to socialise and a moment of human connection.

“We’re now seeing an emerging trend of boutique coffee operators scaling up alongside drive-thru and smaller stores offering new ways to enjoy the UK’s vibrant coffee culture. We expect the UK branded coffee shop market to continue its growth journey over the next 3-5 years.”

Project Café UK 2025 is World Coffee Portal’s latest research on the developments and trends impacting the UK branded coffee shop market. The report includes market sizing, consumer research, industry consultations, pricing, operator profiles and strategic analysis of the latest industry dynamics.

To purchase the report or to make an enquiry, contact: 

Ruth Thompson, Head of Global Partnerships 
rthompson@allegra.co.uk 
+44(0)20 7691 8800