Last year I wrote an article for the Conversation about if Britain had reached ‘peak coffee shop’, sparked by industry forecasts that suggested the number of coffee shops in the country was set to continue to grow at pace (to 32,000 by 2025, up from around 22,000 in 2017). The growth of the coffee shop industry has been considerable over recent years, with places like Costa Coffee and Starbucks a ubiquitous presence on the high street – although with rising competition from independents. Others have also questioned how long the growth can continue; James Hoffman (co-founder of Square Mile Coffee Roasters) has suggested that the rate of coffee shop growth may outstrip consumers (particularly for high quality coffee), and as such as may begin to see coffee shops close in the near future.
The coffee shop market leader that has emerged in the UK, is the Whitbread owned Costa Coffee, and more recently Natalie Olah from the Guardian asks more specifically ‘Have we reached peak Costa Coffee?’ after the company reported a fall in sales in the third quarter of 2017.
In the past I have been a regular visitor of Costa Coffee, it used to be my on-the-way-to-work coffee shop in a number of cities, in part because of the convenience, I developed a familiarity with the baristas, but also at the time I liked the coffee and occasional the blueberry muffin. I visit much less frequently now, in part because they changed the blueberry muffin and it really was a poor substitute, but more generally because my tastes for coffee have changed, and where possible I prefer to support independents. However, it was the proliferation of Costa Coffee shops several years ago which sparked an interest in the growing coffee shop industry. Drinking a Starbucks coffee in mirror image stores across the country and internationally was already the norm, but I started to notice a growing presence of Costa Coffee too, including Prague (and later Riga, seen in the pictures below) where I was doing some fieldwork at the time; it prompted an interest into the economic geographies of coffee shops that has eventually led to some of my research projects today – so in that sense I have a lot to thank Costa Coffee for.
Much like Starbucks is a familiar symbol seen everywhere from railways stations to the TV, Costa Coffee has now become a household name in the UK (it’s even set to have a branch open on the TV soap Coronation Street). I know several people who don’t go out for coffee, but go out for ‘a Costa’, becoming synonymous with the coffee shop experience.
Established in 1971 by two Italian brothers and later bought by Whitbread by 1995 the company has grown to around 2,300 stores which is over double that of Starbucks, the next leading coffee shop chain in the UK. The article from the Guardian highlights how the stores are often very close together, it cites the number in a series of shopping centres, but I’ve often been surprised at the number of stores so close together in towns and cities too. One familiar example for me is in the main high street in Kettering, a town in Northamptonshire which has two reasonably sized stores a minute walk away from each other; and they are always full!
Despite rapid growth Costa Coffee and the branded coffee shop chain sector in general appears to be slowing down, according to the article, this could be due to shrinking disposable incomes, or the rise of independent coffee shops. Perhaps we have started to reach peak coffee shop, or at least mainstream chain coffee shop?
So what has made Costa so successful? The article quotes some consumers who clearly like the familiarity of Costa, much in the same way people have become attached to Starbucks, the same has happened here. And the article quotes a representative from Whitbread who acknowledges that the ubiquity of Costa is what has made it so successful. You can get Costa Coffee in a number of formats in different types of stores all over the country, and beyond; when you arrive at Porto airport the first thing you see when you emerge out of the arrivals lounge is a Costa Coffee store! Although the article also highlights that in the future the competition for coffee shops in points of transit like airports and train stations may be starting to increase as some independents are beginning to move into this area, attracted by such high rates of footfall (a blog post on this topic will follow shortly).
In essence, the article suggests that Costa has been so successful because Costa Coffee is the ‘plain clothes alternative’ to some of the more specialty coffee shops that have emerged, and situates itself where pubs would have been in the past, acting as a centre of local community. This point about coffee shops being spaces of community was a central part, and indeed the title, of a recent research project; it sought to demonstrate how coffee shops were much more than places than of coffee consumption. The success of many coffee shops has in part because they have managed to become a mainstream part of everyday activity, as was highlighted by the coffee historian Jonathan Morris in the Guardian article, and because they represent ‘safer spaces’ than previous alternatives such as pubs. But then with the growth of specialty coffee shops we have seen in recent years, it suggests that many people don’t necessarily want the ‘plain clothes’, but something a bit different.
The article concludes that Costa Coffee has become a place which provides ‘no-airs-or-graces coffee, with a reassuring mass-produced quality to its store’, and clearly this has been a successful model for the company so far. But where does Costa Coffee go from here? Despite this acknowledgement from the company that their ubiquity is one of their strengths, it has also been recognised that there is a consumer element that are looking for higher quality products in their coffee shops, and a less standardised experience. Costa Coffee opened ‘Costa Fresco’ (on Tottenham Court Road in London) which does still have the familiarity of a standard Costa store but provides a wider range of food options, more of which are prepared on site, aiming to capture more of the lunchtime consumer market. It has also opened a Costa Coffee House (also in London) which aims to try and capture more consumers who are seeking high quality coffee, and more of a coffee experience in terms of how their coffee is prepared. These styles of stores have yet to roll out across the country, and perhaps they won’t, but it’s a sign that Costa Coffee have recognised that to continue to grow, at least in the UK market, they need to do something different. There are only so many standard Costa Coffee shops you can have in one high street or shopping centre. In August 2017, the Managing Director of Costa Coffee, was said to have recognised that the business needed a ‘shot of innovation’, new products, new premium blends and more investment to compete in a ‘challenging external environment’. As far as the company is concerned, we are not yet at peak Costa Coffee, and we will just have to wait and see what the rest of 2018 will bring.