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UK Coffee Shops market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Coffee Shops market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this Report

This Report covers branded chains and independents serving coffee beverages as core products. They are based on the European and North American coffee shop models, typified by Starbucks, Costa Coffee, Caffè Nero and Coffee Republic, offering a wide variety of coffee drinks. Other items are usually on sale, such as pastries, tea and coffee beans. Some venues may also serve breakfast and lunch as well, such as sandwiches and hot boxes.

Coffee shops include venues such as individual stores, kiosks and concessions. These may operate in a number of locations – motorway service areas (MSAs), health clubs and hospitals, for example, as well as standalone outlets. However, they must be independent of the facility they are located in.

This Report does not include other establishments that sell coffee, such as restaurants, tea shops or traditional cafés, except as a means of comparison. Nor does it include sandwich shops, such as Pret A Manger or Greggs, although these are mentioned in the consumer research for comparative purposes.

Expert analysis from a specialist in the field

Written by Trish Caddy, a leading analyst in the Foodservice sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Younger Millennials aged 18-27 and parents of under-16s make up the core consumers of the coffee shops market. Younger Millennials are drawn to new product lines, and parents care about ethical sourcing and premium quality experiences. As a group, they are spreading their budget across a larger number of establishments that are selling coffee, including non-specialists that have expanded into low-cost coffee alongside their food offerings, which threatens to take chunks off the coffee shops market share. Trish Caddy
Foodservice Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Coffee shops face headwinds…
              • …but there are opportunities for growth
                • Figure 1: UK coffee shops market, value sales, 2012-22
              • Companies and brands
                • Opportunities in consumer goods
                  • Food and drink concepts
                    • Coffee shop technologies
                      • The consumer
                        • Coffee shop usage
                          • Figure 2: Outlets used to buy hot drinks out of home, October 2017
                        • Most popular drinks
                          • Figure 3: Most popular drinks bought out of home, October 2017
                        • Interest in menu features
                          • Figure 4: Menu features that drive interest, October 2017
                        • Motivations of independent users
                          • Figure 5: The factors that drive independent coffee shop users to visit, October 2017
                        • Behaviours towards coffee shops
                          • Figure 6: Behaviours towards coffee shops, October 2017
                        • What we think
                        • Issues and Insights

                          • Attracting older generations
                            • The facts
                              • The implications
                                • New-wave loyalty
                                  • The facts
                                    • The implications
                                      • Meal deal potential
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Modest growth expected
                                              • The opportunities presented
                                                • The challenges faced
                                                • Market Size and Forecast

                                                  • The coffee shops market is worth £3.4 billion in 2017…
                                                    • Figure 7: UK coffee shops market, value sales, 2012-22
                                                  • …and is forecast to reach £3.7 billion by 2022
                                                    • Figure 8: UK coffee shops market, value sales and forecast, 2012-22
                                                  • Forecast methodology
                                                  • Market Drivers

                                                    • The challenges
                                                      • Soft Drinks Sugar Levy due in 2018
                                                        • Business rates
                                                          • Rising inflation
                                                            • National Living Wage and National Minimum Wage
                                                              • Coffee production comes under pressure
                                                                • The opportunities
                                                                  • Growth of the workforce
                                                                    • Growth of the ageing population
                                                                      • Figure 9: Trends in the age structure of the UK population, 2011-16 and 2016-21
                                                                      • Figure 10: Trends in food behaviours which consumers do all of the time, April 2016-November 2017
                                                                      • Figure 11: Trends in healthy food factors, April 2016-November 2017
                                                                  • Companies and Brands – What You Need to Know

                                                                    • Consumers' perceptions of selected restaurant brands
                                                                      • Why are big brands moving into the grocery sector?
                                                                        • New on the food menu
                                                                          • New on the drinks menu
                                                                            • Examples of brands that are growing
                                                                            • Market Share

                                                                              • Costa Coffee leads a congested market
                                                                                  • Figure 12: Selected UK coffee shops, market share by outlet numbers, 2015-17
                                                                                • Independent operations rival big names
                                                                                  • Figure 13: Selected independent coffee shops, by outlet numbers, 2017
                                                                              • Company Profiles

                                                                                  • Branded chains
                                                                                    • Costa Coffee
                                                                                      • Figure 14: Key financial data for Costa Limited, 2015 and 2016
                                                                                    • Starbucks
                                                                                      • Figure 15: Key financial data for Starbucks Coffee Company (UK) Ltd, 2014-16
                                                                                    • Caffè Nero
                                                                                      • Figure 16: Key financial data for Caffè Nero Group Ltd, 2015 and 2016
                                                                                    • Coffee#1
                                                                                      • Figure 17: Key financial data for Coffee#1 Limited, 2015 and 2016
                                                                                    • SOHO Coffee Co.
                                                                                      • Figure 18: Key financial data for SOHO Coffee Shops Limited, 2015 and 2016
                                                                                    • Third wave coffee
                                                                                      • Workshop Coffee
                                                                                        • Black Sheep Coffee
                                                                                          • Ones to watch
                                                                                            • Tim Hortons
                                                                                              • Second Cup
                                                                                                • Nespresso
                                                                                                  • easyCoffee
                                                                                                    • 200 Degrees Coffee
                                                                                                      • Wayne’s Coffee
                                                                                                      • Launch Activity and Innovation

                                                                                                        • New opportunity in retail
                                                                                                          • Figure 19: Examples of coffee shop-branded products, 2017
                                                                                                        • New on the drinks menu
                                                                                                          • Cold brew and nitro cold brew
                                                                                                            • Year-round frozen drinks
                                                                                                              • Cocktail-style iced drinks
                                                                                                                • New chocolate-based drinks
                                                                                                                  • Dairy-free options
                                                                                                                    • New on the food menu
                                                                                                                      • Breakfast options
                                                                                                                        • Plant-based items
                                                                                                                          • Starbucks launches lunchtime meal deal
                                                                                                                            • New in coffee shop technology
                                                                                                                              • Behind-the-scenes marketing
                                                                                                                                • Voice ordering
                                                                                                                                  • Smarter mobile apps
                                                                                                                                    • New coffee shop formats
                                                                                                                                    • Advertising and Marketing Activity

                                                                                                                                      • Mobile usage drives digital spend
                                                                                                                                        • Figure 20: Advertising expenditure, by media type, 2013-17
                                                                                                                                      • Costa Coffee uses movies to reach customers
                                                                                                                                        • Figure 21: Advertising expenditure by selected coffee shop operators, 2013-17
                                                                                                                                      • Caffè Nero explores outdoors and digital
                                                                                                                                        • Figure 22: Advertising expenditure by selected coffee shop operators, by media type, 2013-17
                                                                                                                                      • McCafé ramps up advertising activity
                                                                                                                                        • Figure 23: Advertising expenditure by McDonald's – McCafé, 2015-17
                                                                                                                                      • Nielsen Ad Intel coverage
                                                                                                                                      • Brand Research

                                                                                                                                          • Brand map
                                                                                                                                            • Figure 24: Attitudes towards and usage of selected brands, October 2017
                                                                                                                                          • Key brand metrics
                                                                                                                                            • Figure 25: Key metrics for selected brands, October 2017
                                                                                                                                          • Brand attitudes: McCafé delivers value for money
                                                                                                                                            • Figure 26: Attitudes, by brand, October 2017
                                                                                                                                          • Brand personality: McCafé stands on a par with Costa Coffee as accessible brands
                                                                                                                                            • Figure 27: Brand personality – Macro image, October 2017
                                                                                                                                          • Pret A Manger is seen as the healthiest brand of all
                                                                                                                                            • Figure 28: Brand personality – Micro image, October 2017
                                                                                                                                          • Brand analysis
                                                                                                                                            • Costa Coffee receives the most positive endorsements from its customers
                                                                                                                                              • Figure 29: User profile of Costa Coffee, October 2017
                                                                                                                                            • McDonald’s McCafé represents excellent value for money
                                                                                                                                              • Figure 30: User profile of McDonald’s McCafé, October 2017
                                                                                                                                            • Starbucks needs to do more to improve brand commitment
                                                                                                                                              • Figure 31: User profile of Starbucks, October 2017
                                                                                                                                            • Pret A Manger is the healthiest brand of all
                                                                                                                                              • Figure 32: User profile of Pret A Manger, October 2017
                                                                                                                                            • Caffè Nero fails to strongly differentiate itself in a highly competitive market
                                                                                                                                              • Figure 33: User profile of Caffè Nero, October 2017
                                                                                                                                          • The Consumer – What You Need to Know

                                                                                                                                            • Consumer usage habits
                                                                                                                                              • Most popular coffee shop drinks
                                                                                                                                                • Identifying interests in menu features
                                                                                                                                                  • Understanding the motivations of independent coffee shop users
                                                                                                                                                    • Examining the behaviours towards coffee shops
                                                                                                                                                    • Usage Habits

                                                                                                                                                      • Four in five bought hot drinks out of home
                                                                                                                                                        • Figure 34: Any outlets used to buy hot drinks out of home, by generational groups, October 2017
                                                                                                                                                      • Costa is the most widely used brand
                                                                                                                                                        • Almost one in four bought from a fast food chain
                                                                                                                                                          • Figure 35: Outlets used to buy hot drinks out of home, October 2017
                                                                                                                                                        • One in four visited an independent coffee shop
                                                                                                                                                            • Figure 36: Any outlets used, by any outlets used, October 2017
                                                                                                                                                          • Understanding the types of customers
                                                                                                                                                            • Figure 37: Repertoire of outlets used to buy hot drinks out of home, October 2017
                                                                                                                                                        • Most Popular Drinks

                                                                                                                                                          • Italian-style espresso-based drinks popular among middle age groups
                                                                                                                                                            • Middle-aged women are drawn to café latte
                                                                                                                                                              • Figure 38: Any drinks bought out of home, by any outlets used, October 2017
                                                                                                                                                            • Middle-aged men are drawn to cappuccino
                                                                                                                                                              • Figure 39: Italian-style espresso-based drinks bought out of home, by age and gender, October 2017
                                                                                                                                                            • Chocolate-based drinks attract young consumers
                                                                                                                                                              • Hot chocolate
                                                                                                                                                                • Figure 40: Chocolate-based drinks bought out of home, by age, October 2017
                                                                                                                                                              • Mocha
                                                                                                                                                                • Figure 41: English breakfast tea bought out of home, by generational groups, October 2017
                                                                                                                                                              • Older Millennials are buying English breakfast tea
                                                                                                                                                                • Figure 42: Most popular drinks bought out of home, October 2017
                                                                                                                                                              • Understanding the types of drinkers
                                                                                                                                                                • Figure 43: Repertoire of most popular drinks bought out of home, October 2017
                                                                                                                                                            • Menu Interest

                                                                                                                                                              • Cake and breakfast meals make a sweet deal
                                                                                                                                                                • Cake and coffee/tea deals for older groups
                                                                                                                                                                  • Figure 44: Interest driven by cake and coffee/tea deals, by age, October 2017
                                                                                                                                                                • Breakfast meal deals for people in work
                                                                                                                                                                  • Figure 45: Interest driven by breakfast meal deals, by working situation and location, October 2017
                                                                                                                                                                • Decaf drinks for parents
                                                                                                                                                                  • Figure 46: Interest driven by premium decaffeinated tea/coffee, by parental status, October 2017
                                                                                                                                                                • Mocktails for parents and younger audiences
                                                                                                                                                                  • Slushies for younger customers and parents
                                                                                                                                                                    • Low-calorie meals for women
                                                                                                                                                                      • Londoners fuel demand for non-dairy milk
                                                                                                                                                                        • Figure 47: Interest driven by dairy-free milk options, by region, October 2017
                                                                                                                                                                      • Younger Millennials are drawn to cold brew and loose tea
                                                                                                                                                                        • Cold brew or nitro cold brew coffee
                                                                                                                                                                          • Loose tea infusion
                                                                                                                                                                            • Figure 48: Menu features that drive interest, October 2017
                                                                                                                                                                        • Independent Coffee Shop Users

                                                                                                                                                                            • Over-45s are drawn to friendly customer service
                                                                                                                                                                              • Product knowledge important in customer service
                                                                                                                                                                                • Single-origin is akin to concept of terroir in wine
                                                                                                                                                                                  • Shop design elevates experience around coffee
                                                                                                                                                                                    • Ethical labels help independents distinguish from rivals
                                                                                                                                                                                      • What makes independent coffee shops ‘cool’
                                                                                                                                                                                        • Figure 49: The factors that drive independent coffee shop users to visit, October 2017
                                                                                                                                                                                    • Behaviours towards Coffee Shops

                                                                                                                                                                                      • Consumers would cut back if prices increased
                                                                                                                                                                                        • Mix-and-match meal deals are appealing to most
                                                                                                                                                                                          • Coffee shop proximity to where consumers live
                                                                                                                                                                                            • Understanding consumers’ interest in loyalty schemes
                                                                                                                                                                                              • Turning points into charity donations
                                                                                                                                                                                                • Passing on rewards to other people
                                                                                                                                                                                                  • Swapping for non-food rewards
                                                                                                                                                                                                    • Send offers based on purchase history
                                                                                                                                                                                                      • Using geolocation to send offers
                                                                                                                                                                                                        • Millennials and parents seek premiumisation
                                                                                                                                                                                                          • They enjoy sweet treats
                                                                                                                                                                                                            • Figure 50: Behaviours towards coffee shops, October 2017
                                                                                                                                                                                                          • They seek premium food/drink
                                                                                                                                                                                                            • Figure 51: Behaviour towards coffee shops, any “yes”, by any venues visited, October 2017
                                                                                                                                                                                                        • CHAID Analysis

                                                                                                                                                                                                          • Methodology
                                                                                                                                                                                                            • Let people pass on their loyalty rewards to others
                                                                                                                                                                                                              • Figure 52: Coffee shops – CHAID – Tree output, October 2017
                                                                                                                                                                                                              • Figure 53: Coffee shops – CHAID – Table output, October 2017
                                                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                              • Abbreviations
                                                                                                                                                                                                                • Consumer research methodology
                                                                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                                                                  • Forecast methodology
                                                                                                                                                                                                                      • Figure 54: Best- and worst-case forecasts for UK coffee shops market, 2017-22