The UK branded café market
In 1997, there were 778 branded outlets in the UK, and by 2005 this has grown to 2,428 which equates to growth of over 200%.
- 29.1% of cafés are owned by branded chains in 2005
- In comparison, only 7.8% of cafés were owned by branded chains in 1997
This growth has been achieved due to a number of factors, including:
- Expansion beyond metropolitan areas to suburban locations – 62.8% of branded chains are now outside London, compared to 51.1% in 1997
- Development of a flexible format – with branded chains operating high street outlets; in-store concessions; mobile units at transport locations and shopping centre stores
The top 2 branded café chains account for over 50% of the market, indicating how competitive the UK branded café market is:
- Starbucks – 26% value market share
- Costa Coffee – 23% value market share
- Caffé Nero – 8% value market share
What is driving the demand for cafés?
Traditionally, the UK has been seen as a tea drinking nation and coffee has not played a large part of our culture. There have been a number of lifestyle and societal changes that have prompted the growing demand for coffee:
- Move from hot beverage seller to lifestyle seller
- Move from a meal specific product served only at breakfast to a 24 hour product
- Move from a drink to a energy-provider/fuel for on-the-go lifestyle
How does our consumption at home differ to in cafés?
Looking at the differences between in and out of home consumption, it seems that trade essentially switches from tea drinking at home, to speciality coffee drinking outside of home.
Despite recent developments within the in-home hot beverages market that has seen the creation of speciality coffees for instant, single person consumption, consumption is still limited.
Hot Beverage Consumption: In Home vs. Out of Home
Source: IGD Consumer Research 2006
Which cafés are consumers regularly visiting?
The growth in branded café market is reflected in the outlets where consumers are visiting regularly, suggesting that format plays a significant impact in café culture:
- 29% of consumers visit branded cafés regularly
- 14% of consumers visit independent cafés regularly
- 10% of consumers visit supermarket cafés regularly
- 7% of consumers visit department store cafés regularly
- 6% of consumers visit fast food or forecourt cafés regularly
What motivations are driving consumer visits to cafés?
Research identified three broad groups into which motivations can be grouped: social, functional and indulgence. These motivations would affect the frequency of visit and the destination.
- Social – 32% of consumers visit cafés to meet friends and 18% to visit with their family
- Functional – 24% of consumers visit cafés for an energy boost, and 11% to get something for a meal replacement
- Indulgence – 16% of consumer visit cafés for a treat
