While the coffee shop chains Costa Coffee, Starbucks and Caffe Nero dominate the market in the UK, increasingly there is growing competition from regional chains that have adopted strategies of substantial geographic expansion. One such chain is Coffee #1 which is now thought the be the 5th largest coffee chain in the UK, behind Costa Coffee, Starbucks, Caffè Nero and Coffee Republic (Statista, 2016). Regional chains like Coffee #1, or Boston Tea Party, or Soho Coffee, Department of Coffee and Social Affairs are providing competition to the dominant high street chains (IGD, 2017).
The first Coffee #1 was opened in Cardiff in 2001, and by 2011 had grown to 5 stores when it was bought by the Cardiff based brewer SA Brain (BBC, 2015). By 2015 there were 57 Coffee #1 stores concentrated in south Wales and south west England, and over 70 by the beginning of 2017, with plans to open a further 15-20 this year (Barry, 2016b). The initial plan was to have 50 by 2015 and a further 50 over 5 years (BBC, 2014).
“We have a very simple strategy driving the business, to focus on giving our customers what they want; outstanding coffee, great service and a comfortable environment.” Scott Waddington, CEO of SA Brain & Co (Sands, 2015).
Many of the Coffee #1 venues I have visited have an almost ‘pub feel’ to them, a mix of seating and tables in an environment that looks a bit like a pub, bookshelves along the walls, imitation fireplaces, and various similar types of décor – the only difference is that when going to the bar I come back with a double espresso rather than a pear cider. It seems the company have captured that interest from consumers who want that kind of comfortable environment but don’t want to have to visit a pub to do so. I’ve written in a recent blog post about how coffee shops are being heralded as the ‘new local’ taking over the role of community spaces that pubs once held. In the case of the brewer SA Brain, it seems this trend has been recognised and so they have sought to ensure they are present in both the pub and coffee shop market.
The Chief Executive of SA Brain points out that “The business [Coffee #1] complements what we do [in the brewery industry]. At the end of the day it’s serving food and serving beverages to customers, which is what we do in our pubs.” (BBC, 2014). While the Coffee #1 company is still only a part of the SA Brains overall income, it is considered an important ‘growth story’ (BBC, 2014). Growth was driven by an aggressive programme of Coffee#1 store openings and the continued implementation of a five-year business plan.SA Brains have also replaced the Costa Coffee previously served in 95 of its pub venues with coffee from its own brand Great Little Coffee Company.
Much like other chains, Coffee #1 has faced some resistance to its expansion. A petition was launched after it was announced Coffee ‘1 intended to take over an old antiques centre in Warwick as the chain sought to establish a presence in the Midlands. There were 60 letter of objections claiming the town already had enough chain coffee shops.“We do not need yet another chain coffee shop to absorb more of our independent, established, historic cafes. These venues are run by families and are part of our community’. (Warwick Courier, 2016). Despite the petition Coffee #1 opened and has became a popular venue in the town.
Coffee #1 has been a success among its competitors receiving the title of best regional coffee chain of year in the Café Life Awards several years in a row, over other regional chains such as Boston Coffee Company or Soho Coffee (Barry, 2016b). Part of the reason for its success argues an equity analyst taking the BBC is that ‘Coffee in the UK, despite more and more places opening, still has a long way to go to catch up with more developed markets, like the US’ coupled with a combination of pressure on consumers’ disposable incomes, rising alcohol duties and the increased availability of relatively cheap beer at the supermarket chains‘ (BBC 2012). It will be interesting to see if there really is more room on UK high streets for yet another coffee chain. Does Coffee #1 provide the type of ‘third space’ people want when choosing where to have their coffee?
- Barry, S. (2016) Coffee #1 closes on of its first venues but it is still brewing up impressive expansion plans. Wales Online, 18/10/2016.BBC News (2012) Brains brewery plans to open 30 Coffee#1 shops. BBC News, 23/05/2012.
- BBC News (2014) Brains brewery Coffee #1 shops sales rise 55%. BBC News, 8/05/2014.
- IGD (2017) Costa: outperformance in a toughening landscape. IGD, 02 /02/2017.
- Sands, K. (2016) After 15 years this Cardiff coffee shop is closing its doors to make way for the new city bus station. Wales Online, 21/06/2016.http://www.walesonline.co.uk/news/wales-news/after-15-years-cardiff-coffee-11506950
- Statista (2016) Leading five coffee shop chains ranked by numbed of outlets in the United Kingdom 2016. Statista.
- Warwick Courier (2016) Petition launched against ‘coffee shop Warwick’ Warwick Courier, 18/07/2016.