The Rise of Independents, Allegra World Coffee Portal’s unparalleled research on the UK’s innovative and diverse independent café market, reveals the £2.49bn segment achieved 1.4% sales growth over the last 12 months. Reflecting difficult trading across the wider UK café market, the segment grew just 0.6% to an estimated 7,066 outlets – down from 4% the previous year
The £2.49bn UK independent coffee shop segment reached 7,066 stores last year but outlet growth slowed to 0.6%, down from 4% the previous year
Inspiring stores increase spend
The UK’s independent cafés have proved agile and resilient in the face of sustained market challenges over the last 18 months. Many independent operators have responded by enhancing service credentials and pivoting propositions to accommodate the growing importance of health & wellness, environmental concerns and a desire for local, community-based experiences.
Purchasing beverages and food in-store and socialising were cited by consumers surveyed as the primary motivations behind their last coffee shop visit. With average spend rising from £3.77 to £6.27 among those spending 20 minutes or more in-store, independents must continue playing to their strengths on coffee quality, in-store ambience and locally tailored propositions.
Independents remain influential
The UK independent café segment continues to punch above its weight when it comes to shaping market innovation. London remains the nucleus of UK café development, with the number of independent cafés in the capital growing 700% over the last decade.
Successful and influential London-based independents, such as EL&N, Megan’s and Saint Espresso, have graduated into branded chains with five or more sites. Longstanding businesses, such as Kaffeine, and relative newcomers, such as Roslyn, continue to push the envelope on quality, consistency and service.
Oat milk is now the most popular dairy alternative paired with beverages at independent cafés, with major branded chains, such as Costa Coffee and Pret A Manger following suit to adopt the plant-based milk.
Cafés tread carefully amid tough trading
Independents have borne the brunt of tough trading conditions in the UK café market. Less able to exploit economies of scale enjoyed by branded coffee chains, independent cafés are especially vulnerable to the impending curtailment of casual European workers due to Brexit. Natural events, such as sustained inclement weather and the recent coronavirus outbreak have further impinged the segment’s narrow operating margins.
The tough economic climate is reflected in tightening consumer spend; 41% of industry leaders surveyed believe consumers are more price conscious than 12 months ago – a 14% rise on the previous year.
Despite the challenging market, outlet expansion and store improvements remain a priority for many independent cafés. 45% of owners surveyed aspire to add at least one additional outlet, while 13% are seeking to redevelop an existing site.
The independent outlook
World Coffee Portal forecasts cautious independent café segment growth to 7,500 outlets by 2024 at 1.3% CAGR. The upcoming national living wage rise presents a challenge in the short-term, while the outcome of ongoing EU trade negotiations, especially with regards to labour, is a longer-term concern.
Commenting on the findings, Allegra Group Founder & CEO, Jeffrey Young, said:
“Despite tough times for UK hospitality, independent coffee shops will remain a source of inspiration and innovation for the wider UK café market for many years to come.”