Coffee chains are reporting mixed fortunes
We are hearing some positive news from familiar, high-street food and drink chains that trade is returning to near pre-pandemic levels. It is what we all wanted to hear after such a turbulent period. However, it has come at a price, with some larger coffee chain outlets openly admitting that they have benefitted from the loss of neighbouring competitive trade. The Eat Out To Help Out scheme, which gave diners big discounts, boosted sales in August 2020. However spending on takeaway hot drinks remained at 50% of 2019 levels. There are now some question marks amongst business leaders as to whether the traditional high street will ever be the same again, or have shopping and eating out habits changed for good?
Survival of the fittest?
Coffee chains were, as they readily admit, forced to be agile during the pandemic; opening as soon as possible after lockdown with some negotiating very favourable lease terms into 2022; deals that their independent counterparts may have been unable to secure. Coffee chains were also very quick to take advantage of assistance available through investors, landlord and government schemes.
Black Sheep Coffee co-founder and co-CEO Gabriel Shohet expects last year’s sales of £13 million to double next year*, helped by new café openings. Nottingham based 200 Degrees is progressing expansion plans that were formulated before Covid-19 closed them down.
Common challenges face both large coffee chains and independent coffee houses
The one thing that all the coffee chains agree on is that recruitment for re-opening has proved challenging. Rod Darby, co-founder and CEO of 200 Degrees recently told The Times newspaper “Hiring has been very difficult, far harder than normal,” he said. “We have a strong brand appeal and normally people are keen to work for us. We’ve also had problems with shop fittings, with some materials hard to find and contractors finding subcontractors hard to come by.”
Are office workers buying their coffee on the high street, or out of town?
According to The Times, ‘Gabriel Shohet, Black Sheep’s co-founder and co-CEO, is backing a further recovery in city and town centre sites but Rob Darby, co-founder and CEO of 200 Degrees, is more cautious about the high street. He sees out-of-town destinations such as designer outlets as more promising prospects.’ Pret A Manger has big expansion plans too including franchises in suburban areas, having recently secured a £100 million investment, despite sales collapsing from £708 million to £299 million in 2020.*
Uncertainty makes for a challenging trading environment and with the larger coffee chains failing to agree where the opportunities for growth lie, we will continue to watch this space with interest.
As experts in sourcing, roasting, packing, and delivering customised coffee products, Lincoln & York delivers tailor made packages for your specific requirements. If you would like to understand how you could enhance your coffee offer to become more competitive on quality and/or price, please contact our experienced team.
*Source: The Times. Sept 23 2021. Richard Tyler. ‘Coffee chains take a mixed approach to return of office workers.’