U.K. Coffee Chains Need Four Years to Recover From Covid Slump
Customers sit in a Costa Coffee Ltd. shop in Canterbury, U.K. (Photographer: Luke MacGregor/Bloomberg)

U.K. Coffee Chains Need Four Years to Recover From Covid Slump

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Coffee chains in the U.K. will take four years to recover after the coronavirus crisis erased about 2 billion pounds ($2.8 billion) in sales, market researcher Allegra Group said.

Temporary closures and takeaway-only trading cut sales by almost 40% last year for the U.K.’s branded coffee chain stores, which are dominated by companies including Costa Coffee and Starbucks Corp. The industry is expected to recover to pre-pandemic levels by 2024, although there’s “deep uncertainty” over the outlook, Allegra said in a report.

The U.K. coffee sector, which has the highest number of branded chain stores in Europe, has also faced headwinds from the economic fallout of Brexit, according to the researcher. Last year marked the first decline in sales and outlets in more than two decades, it said.

“The U.K. faced a perfect storm of many things that are not going right for the coffee segment and there is a lot more uncertainty in U.K. than in Europe,” Allegra founder and Chief Executive Officer Jeffrey Young said in an interview.

Other key figures:

  • Sales may increase to 3.6 billion pounds next year and exceed 5.3 billion pounds by 2025.
  • The number of outlets may increase slightly next year and exceed about 9,600 by 2025.

©2021 Bloomberg L.P.

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