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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 market is resilient…
              • …and will continue to thrive
                • Figure 1: UK coffee shops market, value sales and forecast, 2013-23
              • Companies and brands
                • Overall store count continues to grow
                  • Third-wave coffee shops expanding fast
                    • Figure 2: Selected UK coffee shops’ market share, by outlet numbers, 2015-18
                  • The consumer
                    • Non-specialists are challenging coffee shops
                      • Figure 3: Participation in types of venues visited, October 2018
                    • Costa most visited
                      • Figure 4: Venues visited, October 2018
                    • Coffee is particularly popular amongst over-45s
                      • Figure 5: Types of hot drinks bought out of home, October 2018
                    • Four in five coffee drinkers want a personalised coffee drink
                      • Figure 6: Interest in customisation, October 2018
                    • Caffeine-free complements health-boosting hot drinks
                      • Figure 7: Drinks trends, October 2018
                    • Room for improvement when it comes to food options
                      • Figure 8: Attitudes towards coffee shops, October 2018
                    • Most have a negative view of the coffee served at a fast food café
                      • Figure 9: Correspondence analysis of coffee shops, October 2018
                    • What we think
                    • Issues and Insights

                      • Can an own-brand coffee shop model work in the grocery channel?
                        • The facts
                          • The implications
                            • Tailored offerings will be key to survival in challenging retail conditions
                              • The facts
                                • The implications
                                  • Opportunities for coffee shops to premiumise tea
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Coffee shops market continues to thrive
                                          • Sugar reduction work well underway
                                            • Public supports legislation to tackle single-use cups
                                            • Market Size and Forecast

                                              • Value of coffee shops market expected to hit £3.75 billion this year
                                                • Figure 10: UK coffee shops market, value sales and forecast, 2013-23
                                              • Market faces tough competition from non-specialists
                                                  • Figure 11: UK coffee shops market, value sales and forecast, 2013-23
                                                • Forecast methodology
                                                • Market Drivers

                                                  • PHE publishes category-specific targets for sugar reduction
                                                    • Coffee prices fall amid oversupply
                                                      • Public supports legislation to tackle single-use cups
                                                      • Companies and Brands – What You Need to Know

                                                        • Overall store count continues to grow
                                                          • Third-wave coffee shops growing fast
                                                            • Grab-and-go and deli food-focused formats
                                                              • Standout sustainable schemes
                                                                • McCafé now the biggest ad spender for out-of-home coffee
                                                                  • Costa Coffee is a brand with staying power
                                                                  • Market Share

                                                                    • Overall store count expected to grow by 9.3% in 2018
                                                                      • Figure 12: Selected UK coffee shops’ market share, by outlet numbers, 2015-18
                                                                    • Third-wave coffee shops growing fast
                                                                      • Figure 13: Department of Coffee, Rathbone Place (London)
                                                                    • Ones to watch
                                                                    • Key Players

                                                                        • Branded chains
                                                                          • Costa Coffee
                                                                            • Figure 14: Key financial data for Costa Limited, 2015-18
                                                                          • Caffè Nero
                                                                            • Figure 15: Key financial data for Caffè Nero Group Ltd, 2015-17
                                                                          • Starbucks
                                                                            • Figure 16: Key financial data for Starbucks Coffee Company (UK) Ltd, 2015-17
                                                                          • Coffee#1
                                                                            • Figure 17: Key financial data for Coffee#1 Limited, 2015-17
                                                                          • Third-wave coffee shops
                                                                            • SOHO Coffee Co.
                                                                              • Figure 18: Key financial data for SOHO Coffee Shops Limited, 2015-17
                                                                            • Joe & The Juice
                                                                              • Figure 19: Key financial data for Joe & The Juice UK Limited, 2016 and 2017
                                                                            • Taylor St Baristas
                                                                            • Launch Activity and Innovation

                                                                              • Food-focused formats
                                                                                • Grab-and-go
                                                                                  • Delicatessen
                                                                                    • Standout menu options
                                                                                      • Vegan
                                                                                        • Alcoholic coffee
                                                                                          • Figure 20: Sandows cold-brew concentrate for coffee cocktails
                                                                                        • Mini portion
                                                                                          • Figure 21: Nutrition information of a hot chocolate drink by Costa Coffee
                                                                                        • Standout sustainable schemes
                                                                                          • Ban on cups
                                                                                            • Eco-conscious Costa
                                                                                              • Cup Club
                                                                                                • Paper cup charge
                                                                                                • Advertising and Marketing Activity

                                                                                                  • McCafé continues to win big with humour
                                                                                                    • Caffè Nero drives recruitment and brand metrics
                                                                                                      • Figure 22: Advertising expenditure, by selected coffee shops, 2014-18
                                                                                                    • McDonald’s goes bigger on digital
                                                                                                      • Figure 23: Advertising expenditure, by selected coffee shops, by media type, 2014-18
                                                                                                    • Costa drives awareness of its recycling efforts
                                                                                                      • Nielsen Ad Intel coverage
                                                                                                      • Brand Research

                                                                                                          • Brand map
                                                                                                            • Figure 24: Attitudes towards and usage of selected brands, September 2018
                                                                                                          • Key brand metrics
                                                                                                            • Figure 25: Key metrics for selected brands, September 2018
                                                                                                          • Brand attitudes: McCafé offers the best value but lacks consumer trust
                                                                                                            • Figure 26: Attitudes, by brand, September 2018
                                                                                                          • Brand personality: McCafé outranks the other brands as the most accessible
                                                                                                            • Figure 27: Brand personality – Macro image, September 2018
                                                                                                          • Caffè Nero and Starbucks need to stand out more as they are too samey
                                                                                                            • Figure 28: Brand personality – Micro image, September 2018
                                                                                                          • Brand analysis
                                                                                                            • Costa Coffee is a brand with staying power
                                                                                                              • Figure 29: User profile of Costa Coffee, September 2018
                                                                                                            • McCafé still can’t shake off McDonald’s unhealthy image
                                                                                                              • Figure 30: User profile of McDonald’s McCafé, September 2018
                                                                                                            • Pret a Manger outranks the other brands as the most healthy
                                                                                                              • Figure 31: User profile of Pret a Manger, September 2018
                                                                                                            • Caffè Nero needs to improve its value proposition
                                                                                                              • Figure 32: User profile of Caffè Nero, September 2018
                                                                                                            • Starbucks has to increase brand transparency
                                                                                                              • Figure 33: User profile of Starbucks, September 2018
                                                                                                          • The Consumer – What You Need to Know

                                                                                                            • Buying hot drinks out of home: specialists vs non-specialists
                                                                                                              • Costa most visited
                                                                                                                • Coffee is particularly popular amongst over-45s
                                                                                                                  • Four in five coffee drinkers want a personalised coffee drink
                                                                                                                    • Caffeine-free complements health-boosting hot drinks
                                                                                                                      • Consumers are lukewarm about the savoury food served at coffee shops
                                                                                                                        • Most have a negative view of the coffee served at a fast food café
                                                                                                                        • Buying Hot Drinks Out of Home

                                                                                                                          • Three in four bought hot drinks out of home
                                                                                                                            • Figure 34: Overall participation in buying a hot drink out of home, October 2018
                                                                                                                          • Usage of specialists versus non-specialists on a par
                                                                                                                            • Figure 35: Participation in types of venues visited, October 2018
                                                                                                                        • Venues Visited

                                                                                                                          • One in three bought from Costa Coffee
                                                                                                                            • Figure 36: Venues visited, October 2018
                                                                                                                          • One in four visited independents
                                                                                                                            • Figure 37: Type of independent venues visited, October 2018
                                                                                                                          • One in four bought hot drinks from fast food chains
                                                                                                                            • Figure 38: Outlets used, by outlets used, October 2018
                                                                                                                          • One in three Younger Millennials visited Starbucks
                                                                                                                            • Figure 39: Venues visited, by age, October 2018
                                                                                                                          • Caffè Nero customers are connoisseurs
                                                                                                                          • Types of Drinks

                                                                                                                            • Older consumers more likely to order coffee
                                                                                                                              • Figure 40: Types of hot drinks bought out of home, October 2018
                                                                                                                            • Tea has mass appeal
                                                                                                                              • Half of Millennials bought hot chocolate
                                                                                                                              • Interest in Customisation

                                                                                                                                • Four in five coffee drinkers want a personalised coffee drink
                                                                                                                                    • Figure 41: Interest in customisation, October 2018
                                                                                                                                  • Men most interested in coffee variety and roast level
                                                                                                                                      • Figure 42: Interest in customisation, by outlets used, October 2018
                                                                                                                                    • Women most interested in added flavourings, milk type and toppings
                                                                                                                                    • Drinks Trends

                                                                                                                                      • Premium decaf coffee appeals to all
                                                                                                                                        • Figure 43: Drinks trends, October 2018
                                                                                                                                      • Millennials and women demand healthier syrups
                                                                                                                                        • Figure 44: Zero-calorie zero-sugar syrups, by TRKG
                                                                                                                                      • Costa reformulates its recipes to reduce sugar
                                                                                                                                          • Figure 45: Drinks trends, by types of hot drinks bought out of home, October 2018
                                                                                                                                          • Figure 46: Drinks trends, by gender, October 2018
                                                                                                                                        • Caffeine-free versus functional hot drinks
                                                                                                                                          • Figure 47: Caffeine-free hot drinks, by Local Hero Fulham (London)
                                                                                                                                          • Figure 48: Drinks trends, by generation, October 2018
                                                                                                                                        • London fuels demand for plant-based milk
                                                                                                                                          • Figure 49: Interest in hot drinks made with plant-based milk, by region, October 2018
                                                                                                                                      • Attitudes towards Coffee Shops

                                                                                                                                        • Digital kiosks give people more time to customise their orders…
                                                                                                                                          • Figure 50: Attitudes towards coffee shops, October 2018
                                                                                                                                        • …yet, three in four look for human connection
                                                                                                                                          • Room for improvement when it comes to food options
                                                                                                                                              • Figure 51: Any outlets used, by attitudes towards coffee shops, October 2018
                                                                                                                                            • Happy Hour boosts footfall
                                                                                                                                                • Figure 52: Attitudes towards coffee shops, by outlets used, October 2018
                                                                                                                                              • Co-working spaces help increase dwell time
                                                                                                                                                • Figure 53: Attitudes towards coffee shops, by outlets used, October 2018
                                                                                                                                                • Figure 54: Example of a coffee shop with dedicated working space
                                                                                                                                              • Scope for coffee shops to stay open later – CHAID Analysis
                                                                                                                                                • Figure 55: Coffee shops – CHAID – Tree output, October 2018
                                                                                                                                              • Scope to boost wet-led sales
                                                                                                                                                • Figure 56: Examples of late-night coffee shops in London
                                                                                                                                            • Perceptions of Different Venues

                                                                                                                                              • Most have a positive view of the coffee served at Costa
                                                                                                                                                • Figure 57: Correspondence analysis of coffee shops, October 2018
                                                                                                                                              • Most have a negative view of the coffee served at a fast food café
                                                                                                                                                  • Figure 58: Correspondence analysis of coffee shops, October 2018
                                                                                                                                                • Gender difference in perceptions
                                                                                                                                                  • Figure 59: Costa Coffee in-store branding, November 2018
                                                                                                                                                  • Figure 60: Examples of nitro cold-brew coffee
                                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                  • Abbreviations
                                                                                                                                                    • Consumer research methodology
                                                                                                                                                      • CHAID methodology
                                                                                                                                                        • Figure 61: Coffee shops – CHAID – Table output, October 2018
                                                                                                                                                      • Correspondence analysis methodology
                                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                                        • Forecast methodology
                                                                                                                                                            • Figure 62: Best- and worst-case forecasts for UK coffee shops market, 2018-23