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Coffee Shops - UK - February 2011

Visiting coffee shops is a well-established habit amongst consumers, with many seeing it as an affordable regular treat which is also driven by consumers’ continuing demand for convenience products. However, operators in the market are having to battle with rising raw ingredient costs and a turbulent economy, and one of the primary concerns for coffee shops is that they are losing their USP as more and more non-specialists focus on expanding their hot drinks ranges and improving the product quality.

  • Creating warm, inviting interiors needn't have to involve expensive redesigns. In fact, in many instances brands would do well to tackle the basics first with many consumers still critical of venues’ general hygiene and facilities, and a quarter of coffee shops users stating that a greater number of flexible seats affects how often or which particular coffee shops they visit.
  • Coffee shops are losing their USP as non-specialists continue to focus on improving, and expanding their own hot drinks ranges: whilst around a quarter of consumers have visited Costa Coffee or Starbucks in the last three months, some 15% have chosen to a hot drink from a fast food/sandwich shop (eg Pret a Manger, McDonald’s).
  • In response, coffee shops should re-establish their ‘specialism’. For example, extending the use of seasonal product launches/speciality/signature drinks should help improve the frequency of visits to coffee shops, as, at present, only around a quarter of consumers are described as heavy users.
  • By tapping into the Mintel Inspire trend Mood from Food, coffee shops could bolster sales of speciality tea (currently only 4% of users have ordered them in the last three months, compared to 50% who have ordered a cappuccino/latte/mocha) by promoting these teas as mood enhancers as well as being functional products.
  • Coffee shops are arguably failing to engage with older consumers. Around 7% of consumers are lapsed (do drink hot drinks out of home but haven’t in the last three months). These consumers tend to be over-55s, socio-economic group D, Moderate Means, third age single/retired single.
  • A focus on simplicity could help coffee shops target these older consumers who tend to prefer the straight forward drinks choices.

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Table of contents

  1. Issues in the Market

      • Main issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • Love your coffeehouse
                • Coffee to go-go
                • Market in Brief

                  • Coffee shop usage
                    • Where?
                      • What consumers order in coffee shops
                        • Drinks
                          • Food
                            • Enticements for visiting coffee shops
                              • Market size and share
                                • Modernisation plans
                                  • An increasingly competitive marketplace
                                  • Internal Market Environment

                                    • Key points
                                      • Trends in the price of coffee
                                        • Figure 1: Trends in the price of coffee, January 2008-January 2011
                                      • UK’s coffee consumption
                                        • Figure 2: Per capita consumption of coffee in selected countries, 2005 and 2009
                                      • Coffee/tea drinking habits
                                        • Figure 3: Usage of instant coffee, 2010
                                        • Figure 4: Usage of fresh ground coffee, 2010
                                        • Figure 5: Usage of tea, 2010
                                      • Ethical issues
                                        • Figure 6: Sales of fair trade hot beverages in the UK (both in and out of home), 2005-09
                                      • Customer service and training
                                      • Broader Market Environment

                                        • Key points
                                          • The economic situation
                                            • Figure 7: GDP quarterly percentage change, Q1 2004-Q4 2010
                                            • Figure 8: GfK NOP Consumer Confidence Index, January 1988-December 2010
                                          • Consumer spending priorities
                                            • Figure 9: Consumer spending priorities, December 2009 and December 2010
                                          • Taking account of demographic differences
                                            • Figure 10: Forecast adult population trends, by lifestage, 2005-15
                                        • Competitive Context

                                          • Key points
                                            • In-home
                                              • Coffee machines
                                                • Figure 11: Trends in ownership of filter coffee makers and espresso machines, 2007-10
                                              • In-home innovations
                                                • Foodservice brands – retail products
                                                  • Trends in hot chocolate innovations
                                                    • Speciality teas
                                                      • Children’s menus
                                                        • Price differences
                                                          • Out-of-home
                                                            • Greggs
                                                              • JD Wetherspoon
                                                                • McDonald’s
                                                                  • PizzaExpress’s Living Lab
                                                                    • Pret A Manger
                                                                      • Sainsbury’s ‘Fresh Kitchen’
                                                                        • Hotels
                                                                          • Motorway services and garage forecourts
                                                                            • Wild Bean Café
                                                                              • Coffee Nation
                                                                                • Coffee shop chains fighting back
                                                                                • Who’s Innovating?

                                                                                  • Key points
                                                                                    • Venues
                                                                                      • New concepts/old brands
                                                                                        • Cross-collaborations
                                                                                          • Pubs
                                                                                            • Roadside catering/MSAs
                                                                                              • New entrants to the market
                                                                                                • New product launches
                                                                                                  • The flat white
                                                                                                    • Other developments
                                                                                                      • Technological advances
                                                                                                      • Market Size and Forecast

                                                                                                        • Key points
                                                                                                          • Figure 12: Market size and forecast of coffee shops, at current and 2010 prices, 2005-15
                                                                                                        • Examples of financial performance
                                                                                                          • Going forward
                                                                                                            • Figure 13: Market size and forecast of coffee shops, best and worst case scenarios, 2005-15
                                                                                                          • Methodology
                                                                                                          • Market Share

                                                                                                            • Key points
                                                                                                              • Figure 14: Leading operators in the UK coffee shop market, 2010
                                                                                                            • Administrations
                                                                                                              • Expansion plans
                                                                                                              • Companies and Products

                                                                                                                  • The big three
                                                                                                                    • Costa Coffee
                                                                                                                      • Financial performance and strategy
                                                                                                                        • Figure 15: Financial performance of Costa Limited, 2009 and 2010
                                                                                                                      • Recent menu changes
                                                                                                                        • Recent advertising campaigns
                                                                                                                          • Other new developments
                                                                                                                            • Future intentions
                                                                                                                              • Starbucks
                                                                                                                                • Background information
                                                                                                                                  • Financial performance
                                                                                                                                    • Figure 16: Financial performance of Starbucks Coffee Company UK, 2008 and 2009
                                                                                                                                  • Recent menu changes
                                                                                                                                    • Other developments
                                                                                                                                      • Caffè Nero
                                                                                                                                        • Financial performance
                                                                                                                                          • Figure 17: Financial performance of Caffè Nero Group Limited, 2008 and 2009
                                                                                                                                        • Future intentions
                                                                                                                                          • Other major players
                                                                                                                                            • AMT Coffee
                                                                                                                                              • Financial performance
                                                                                                                                                • Figure 18: Financial performance of AMT Coffee Limited, 2008 and 2009
                                                                                                                                              • Recent price promotions and advertising campaigns
                                                                                                                                                • Other market developments/new developments
                                                                                                                                                  • BB’s Coffee & Muffins
                                                                                                                                                    • Financial performance
                                                                                                                                                      • Coffee Republic
                                                                                                                                                        • Recent price promotions and advertising campaigns
                                                                                                                                                          • Recent menu changes
                                                                                                                                                            • Other market developments/new developments
                                                                                                                                                              • Caffè Ritazza
                                                                                                                                                                • Recent price promotions and advertising campaigns
                                                                                                                                                                  • Recent menu changes
                                                                                                                                                                    • Other market developments/new developments
                                                                                                                                                                      • Puccino’s Worldwide
                                                                                                                                                                        • Recent menu changes
                                                                                                                                                                          • Smaller players
                                                                                                                                                                            • Boston Tea Party
                                                                                                                                                                              • Café Thorntons
                                                                                                                                                                                • Caffè Fratelli
                                                                                                                                                                                  • Esquires Coffee Houses
                                                                                                                                                                                    • Love Coffee
                                                                                                                                                                                      • Monmouth
                                                                                                                                                                                        • Muffin Break
                                                                                                                                                                                          • SOHO Coffee Co.
                                                                                                                                                                                            • Vending machines
                                                                                                                                                                                              • Coffee Nation
                                                                                                                                                                                                • Financial performance
                                                                                                                                                                                                  • Figure 19: Financial performance of Coffee Nation Limited, 2009 and 2010
                                                                                                                                                                                                • Recent price promotions and advertising campaigns
                                                                                                                                                                                                  • Recent menu changes
                                                                                                                                                                                                    • Other market developments/new developments
                                                                                                                                                                                                    • Brand Communication and Promotion

                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                        • Embracing mainstream media
                                                                                                                                                                                                          • Figure 20: Advertising expenditure on selected coffee shop brands, 2006-09
                                                                                                                                                                                                          • Figure 21: Advertising expenditure on selected coffee shop brands, by media type, 2009
                                                                                                                                                                                                        • ATM price promotions
                                                                                                                                                                                                          • Online marketing/advertising
                                                                                                                                                                                                            • Website usage
                                                                                                                                                                                                              • Figure 22: Total unique visitors for selected coffee shop brands, November 2008-November 2010
                                                                                                                                                                                                              • Figure 23: Average minutes per visit for selected coffee shop brands, November 2008-November 2010
                                                                                                                                                                                                            • Facebook campaigns
                                                                                                                                                                                                              • Location-based mobile promotions
                                                                                                                                                                                                              • Brand Elements

                                                                                                                                                                                                                • Brand map
                                                                                                                                                                                                                    • Figure 24: Attitudes towards and visits to coffee shop brands, December 2010
                                                                                                                                                                                                                  • Brand attitudes
                                                                                                                                                                                                                    • Figure 25: Attitudes, by coffee shop brands, December 2010
                                                                                                                                                                                                                  • Brand personality
                                                                                                                                                                                                                    • Figure 26: Coffee shop brand personality – macro image, December 2010
                                                                                                                                                                                                                    • Figure 27: Coffee shop brand personality – micro image, December 2010
                                                                                                                                                                                                                  • Correspondence analysis
                                                                                                                                                                                                                    • Brand experience
                                                                                                                                                                                                                      • Figure 28: Coffee shop brand visitation, December 2010
                                                                                                                                                                                                                      • Figure 29: Satisfaction with various coffee shop brands, December 2010
                                                                                                                                                                                                                      • Figure 30: Consideration of coffee shop brands, December 2010
                                                                                                                                                                                                                      • Figure 31: Consumer perceptions of current coffee shop brand performance, December 2010
                                                                                                                                                                                                                      • Figure 32: Coffee shop brand recommendation – Net Promoter Score, December 2010
                                                                                                                                                                                                                    • Brand index
                                                                                                                                                                                                                      • Figure 33: Coffee shop brand index, December 2010
                                                                                                                                                                                                                      • Figure 34: Coffee shop brand index vs. recommendation, December 2010
                                                                                                                                                                                                                    • Target group analysis
                                                                                                                                                                                                                      • Figure 35: Target groups, December 2010
                                                                                                                                                                                                                      • Figure 36: Coffee shop brand usage, by target groups, December 2010
                                                                                                                                                                                                                    • Group One – The Conformists
                                                                                                                                                                                                                      • Group Two – Simply the Best
                                                                                                                                                                                                                        • Group Three – Shelf Stalkers
                                                                                                                                                                                                                          • Group Four – Habitual Shoppers
                                                                                                                                                                                                                            • Group Five – The Individualists
                                                                                                                                                                                                                            • How Often Do People Use Coffee Shops?

                                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                                • Sit-in versus takeaway
                                                                                                                                                                                                                                  • Figure 37: Trends in visiting coffee shops, 2006-10
                                                                                                                                                                                                                                • Frequency of visiting coffee shops
                                                                                                                                                                                                                                  • Figure 38: Frequency of visiting coffee shops, 2007-10
                                                                                                                                                                                                                              • Who Uses Coffee Shops and Where Do They Go?

                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                    • Figure 39: Coffee shops visited, December 2010
                                                                                                                                                                                                                                  • Tapping into demographic differences
                                                                                                                                                                                                                                    • Figure 40: The ‘Big Three’ coffee shops visited, by gender, socio-economic group and lifestage, December 2010
                                                                                                                                                                                                                                  • Lapsed and non-users
                                                                                                                                                                                                                                    • Repertoire of coffee shops visited
                                                                                                                                                                                                                                      • Figure 41: Repertoire of coffee shops visited, December 2010
                                                                                                                                                                                                                                  • Food/Drink Ordered in Coffee Shops

                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                      • Figure 42: Food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                    • Speciality/herbal teas
                                                                                                                                                                                                                                      • Signature drinks
                                                                                                                                                                                                                                        • Capitalising on the popularity of seasonal food/drink
                                                                                                                                                                                                                                          • Food
                                                                                                                                                                                                                                            • Figure 43: Where people buy sandwiches, November 2009
                                                                                                                                                                                                                                        • Enticements for Visiting Coffee Shops

                                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                                            • Figure 44: Enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                          • Getting back to basics
                                                                                                                                                                                                                                            • Wi-Fi
                                                                                                                                                                                                                                              • Figure 45: Availability of Wi-Fi at coffee shops and selected competitors, 2011
                                                                                                                                                                                                                                            • Repertoire of enticements for visiting coffee shops
                                                                                                                                                                                                                                              • Figure 46: Repertoire of enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                          • Appendix – Internal Market Environment

                                                                                                                                                                                                                                              • Figure 47: Trends in usage of instant coffee, 2006-09
                                                                                                                                                                                                                                              • Figure 48: Selected attitudes towards drinking coffee in the home, by detailed demographics, December 2009
                                                                                                                                                                                                                                          • Appendix – Broader Market Environment

                                                                                                                                                                                                                                              • Figure 49: Consumer spending priorities, by detailed demographics, August 2010
                                                                                                                                                                                                                                          • Appendix – Competitive Context

                                                                                                                                                                                                                                              • Figure 50: Ownership of filter coffee maker and espresso machine, by detailed demographics, 2010
                                                                                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                              • Figure 51: Coffee shops market size and forecast, by worst and best case scenario, 2010-15
                                                                                                                                                                                                                                          • Appendix – How Often Do People Use Coffee Shops?

                                                                                                                                                                                                                                              • Figure 52: Visiting coffee shops, by detailed demographics, 2010
                                                                                                                                                                                                                                              • Figure 53: Frequency of visiting coffee shops, by detailed demographics, 2010
                                                                                                                                                                                                                                          • Appendix – Who Uses Coffee Shops and Where Do They Go?

                                                                                                                                                                                                                                              • Figure 54: Most popular coffee shops visited, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 55: Next most popular coffee shops visited, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 56: Coffee shops visited, by most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 57: Coffee shops visited, by next most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                            • Repertoire of coffee shops visited
                                                                                                                                                                                                                                              • Figure 58: Repertoire of coffee shops visited, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 59: Coffee shops visited, by repertoire of coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 60: Food/drink ordered in coffee shops, by repertoire of coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 61: Enticements for visiting coffee shops, by repertoire of coffee shops visited, December 2010
                                                                                                                                                                                                                                          • Appendix – Food/Drink Ordered in Coffee Shops

                                                                                                                                                                                                                                              • Figure 62: Most popular food/drink ordered in coffee shops, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 63: Next most popular food/drink ordered in coffee shops, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 64: Coffee shops visited, by most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 65: Coffee shops visited, by next most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 66: Coffee shops visited, by other food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 67: Food/drink ordered in coffee shops, by most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 68: Food/drink ordered in coffee shops, by next most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 69: Food/drink ordered in coffee shops, by most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 70: Food/drink ordered in coffee shops, by next most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 71: Food/drink ordered in coffee shops, by other food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                          • Appendix – Enticements for Visiting Coffee Shops

                                                                                                                                                                                                                                              • Figure 72: Most popular enticements for visiting coffee shops, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 73: Next most popular enticements for visiting coffee shops, by demographics, December 2010
                                                                                                                                                                                                                                              • Figure 74: Other enticements for visiting coffee shops, by demographics, December 2010
                                                                                                                                                                                                                                              • Figure 75: Enticements for visiting coffee shops, by most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 76: Enticements for visiting coffee shops, by next most popular coffee shops visited, December 2010
                                                                                                                                                                                                                                              • Figure 77: Enticements for visiting coffee shops, by most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 78: Enticements for visiting coffee shops, by next most popular food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 79: Enticements for visiting coffee shops, by other food/drink ordered in coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 80: Enticements for visiting coffee shops, by most popular enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 81: Enticements for visiting coffee shops, by next most popular enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 82: Enticements for visiting coffee shops, by other enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                            • Repertoire of enticements for visiting coffee shops
                                                                                                                                                                                                                                              • Figure 83: Repertoire of enticements for visiting coffee shops, by detailed demographics, December 2010
                                                                                                                                                                                                                                              • Figure 84: Enticements for visiting coffee shops, by repertoire of enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 85: Coffee shops visited, by repertoire of enticements for visiting coffee shops, December 2010
                                                                                                                                                                                                                                              • Figure 86: Food/drink ordered in coffee shops, by repertoire of enticements for visiting coffee shops, December 2010

                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                          • Advertising Standards Authority
                                                                                                                                                                                                                                          • Asda Group Ltd
                                                                                                                                                                                                                                          • Bank of England
                                                                                                                                                                                                                                          • Barclaycard
                                                                                                                                                                                                                                          • Burger King UK Ltd
                                                                                                                                                                                                                                          • Café Ritazza
                                                                                                                                                                                                                                          • Caffé Nero Group Plc
                                                                                                                                                                                                                                          • Coffee Nation
                                                                                                                                                                                                                                          • Coffee Republic Plc
                                                                                                                                                                                                                                          • Costa
                                                                                                                                                                                                                                          • Food Standards Agency
                                                                                                                                                                                                                                          • International Coffee Organization (ICO)
                                                                                                                                                                                                                                          • J. Sainsbury
                                                                                                                                                                                                                                          • JD Wetherspoon
                                                                                                                                                                                                                                          • Kantar Media
                                                                                                                                                                                                                                          • Marks & Spencer
                                                                                                                                                                                                                                          • McDonald's Restaurants Limited (UK)
                                                                                                                                                                                                                                          • Nestlé UK Ltd
                                                                                                                                                                                                                                          • Ofcom
                                                                                                                                                                                                                                          • PizzaExpress Limited
                                                                                                                                                                                                                                          • Pret A Manger
                                                                                                                                                                                                                                          • R Twining and Company Limited
                                                                                                                                                                                                                                          • Rainforest Alliance
                                                                                                                                                                                                                                          • Seattle Coffee Company
                                                                                                                                                                                                                                          • SOHO Coffee
                                                                                                                                                                                                                                          • Starbucks Coffee Company UK Ltd
                                                                                                                                                                                                                                          • Tesco Plc
                                                                                                                                                                                                                                          • Waitrose
                                                                                                                                                                                                                                          • Whitbread PLC
                                                                                                                                                                                                                                          • Wm Morrison Supermarkets

                                                                                                                                                                                                                                          Coffee Shops - UK - February 2011

                                                                                                                                                                                                                                          £1,995.00 (Excl.Tax)