Specialist coffee shops battle restaurants for coffee market share

Specialist coffee shops are battling to hold their share of coffee sales as quick-service restaurants target cappuccino and latte drinkers.

That's according to the latest research from the NPD Group, which has lifted the lid on the intense competition for the coffee business in Britain's foodservice industry.

NPD said that Britain's high-street coffee chains have increased their individual coffee servings by 21% since the year ended June 2008, but that other foodservice operators such as quick-service restaurant outlets have managed to do so three times faster, at 63%. Pubs have also been getting in on the act and have increased servings by 18% since 2008.

QSR outlets have viewed investment in coffee for breakfast and snacking as a way of entering new eating opportunities during different day-parts. Coffee specialists have, according to NPD's research, attempted to respond by taking a bite of the lunch business, which generates over 50% more spend than that produced by customers who just want snacks. However, their success in this area has been limited, with coffee shops only able to make marginal increases in their share of food servings to date, despite 27% of their traffic being generated at lunchtime.

Other foodservice operators are also undercutting coffee specialists by as much as £1.30 on a regular Americano, meaning that coffee specialists have to find other items to sell in order to maintain their profit margins, according to NPD.

There were 659 million visits to coffee shops in the year to June 2017 - an increase of 120 million or 22% since 2008. This is a greater increase than visits to the QSR sector, which have risen by 10% between 2008 and 2017.

So far, coffee shops have managed to maintain market share to provide some 41% of coffee servings in Britain's QSR sector - a similar level to recent years.

Britain's high-street coffee outlets now account for 6% of the visits of the entire British foodservice industry.

He added: “Consumers can grab a coffee anywhere, so the message for the specialist coffee shops is that they must stand out to compete. Coffee shop chains tend to look alike and have a similar menu and ambience. If there were no branding outside or inside the shops, it would be difficult for consumers to know for sure which outlet they were in. Some of the new, independent coffee businesses are adopting a fresh approach with brighter, sharper interiors, a more inviting atmosphere and appetizing menu boards.”

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