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MILAN – Last week, the Financial Times confirmed that Coca-Cola had shelved (at least for the time being) its plans to sell Costa Coffee – the world’s second-largest coffee shops chain – after finding none of the offers received to be adequate. This is despite the fact that the iconic brand – founded in 1971 by Italian brothers Sergio and Bruno Costa – was put on the market at a price just over half of that paid in 2018 to acquire it from British leisure giant Whitbread.
However, if Athens cries, Sparta does not laugh. Even Starbucks – the second largest competitor in the UK, with over 500 owned coffee shops and a further 900 franchises – is not doing very well. Not as well as it used to, at least.
Last year, for example, it had to close some of its UK outlets as part of a wider global restructuring programme.
Pret A Manger, a fast food and bakery chain with a significant coffee offering, is also facing challenges. In fact, the chain has written off a third of the value of its 2018 acquisition by European investment group JAB, last September.
Is the British market becoming saturated, partly due to ongoing economic difficulties?
In reality, the number of coffee shops in the UK increased by 2.4% in the nine months to September 2025 (source: Meaningful Vision). Growth was driven mainly by premium chains such as Black Sheep Coffee.
“Some of those bigger brands have stretched themselves to a level of ubiquity,” said Scott Martin, a former executive at Costa and founder of start-up Unity Coffee, in an interview with the Financial Times.
“You could look at those major brands and think that the UK coffee market is struggling — but there are parts of this industry that are thriving . . . and that’s those smaller, more agile businesses.”
Black Sheep Coffee is a prime example of this. Founded in London in 2013, the chain has grown gradually through acquisitions and various rounds of funding, expanding into four countries overseas (France, the US, the United Arab Emirates and the Philippines).
Last August, it announced an expansion plan that will more than double the current number of outlets, with deals for over 150 new franchise outlets. Interestingly, in an era of 100% Arabica, Black Sheep Coffee is going against the trend by focusing primarily on speciality Robusta beans.
There are other noteworthy success stories, as well
For example, Blank Street, a matcha specialist founded less than four years ago, has already reached the milestone of 40 outlets and tripled its turnover to almost £36 million (€41.5 million) in the 2024 financial year.
Then there is WatchHouse, a chain of specialty coffee shops, which aims to increase its store count from 21 to 30 by the end of the year.
According to analysts, the varying fortunes of the brands we have mentioned are also attributable to the changing tastes of young people, which smaller chains are able to intercept more swiftly and effectively.
Rising costs and taxes are also a factor, weighing heavily on large chains despite the economies of scale they can rely on and forcing them to raise their prices, bringing them closer to those of high-end chains
Furthermore, as Martin himself notes, price increases have not always been matched by improvements in the quality or variety of the coffee drinks. That has prompted some consumers to favour more upscale brands that offer “the feeling of an artisanal experience”, says AJ Bell analyst Danni Hewson in the same FT article.
In a nutshell, thrifty British consumers opt for budget chains such as McDonald’s or Greggs. Those with more sophisticated tastes and greater purchasing power choose trendy establishments and specialty chains.
“People don’t need to go to a coffee shop for coffee,” concludes Trish Caddy, a food service analyst at Mintel, meaning successful chains “need a unique edge”.
