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Want to own a coffee shop? What you need to know

Here's everything you need to know as we take a look at the thriving independent coffee sector.

With over 400 billion cups consumed per year, coffee is the world’s most sought after commodity (after crude oil).

Sterotypes may suggest that Brits only drink tea from cups and saucers with their little fingers extended, however, approximatley 70 million cups are consumed each day in the UK. 

As customer’s palates become more sophisticated, they are demanding ‘the best coffee experience … [and] coffee is fast becoming the reason why we visit certain places, something we plan our days around... the main ingredient’ according to The London Coffee Festival Magazine.

Industry insight

After 17 years of consecutive growth, the coffee shop industry remains as one of the most successful in the UK economy.

Estimated at 20,728 outlets, the coffee shop market in the UK is booming. Showing a significant sales growth of 10% and a total turnover of £7.9 billion since 2015, according to Allegra’s latest report.

There are currently three leading brands with 54% of the chain outlet share. Last year Costa Coffee held the greatest market share with 1,670 outlets, Starbucks came second with 790 followed by Café Nero with 560 shops.

The branded coffee shop segment is forecast to exceed £5.7 billion by 2020 and it is predicted that the UK coffee shop sector will exceed 30,000 outlets and produce a £15 billion turnover by 2025.

According to Allegra Strategies ‘Britain’s coffee shop sector remains one of the most successful in the UK economy’ and is set to keep expanding.

Café culture 

Coffee shops have become our preferred social hubs and meeting places. Where people once went to the pub to catch up, they are now turning to the more family friendly coffee shop.

And as café culture takes the UK by storm, our tea drinking nation is rapidly becoming a nation of coffee drinkers. It is now estimated that visitors drink an estimated 2.2 billion cups of coffee per year in coffee shops.

Chief executive of Whitbread (Costa) Andy Harrison hints at a recession-proof investment in The Telegraph: ‘The coffee shop market has grown at about 5pc per annum throughout the recession even in the most economically challenged parts of the UK’.

He also believes that the rise in internet shopping has greatly benefited the sector, as people no longer head to the shops for a day out; they'd rather meet up with their friends and spend a morning or afternoon in a coffee shop.

The market may be dominated by the well-known high street giants but there’s still plenty of room for independent contenders. Jeffrey Young, managing director of Allegra Strategies, claims:

‘There are still thousands and thousands of places in the UK that don't yet have a decent coffee experience’.

 Jeffrey Young, managing director of Allegra Strategies

The demand will continue to grow as more and more places cultivate their coffee scene - making buying a coffee shop lucrative Investment.

Independent artisan coffee is leading the way

In the same way that craft beers have become a popular trend reviving the brewing industry, artisan coffee has done the same for coffee culture. People are no longer content with a quick cup of instant coffee or a mediocre chain cappuccino.

According to The London Coffee Festival Magazine, independent coffee is a booming industry in the UK. The publication places the capital at the top for indie coffee destinations, specifically ‘beyond zone 1’ where ‘you find yourself in the domain of the venerable neighbourhood café’.

Specialising in ‘hand crafted coffee with community spirit’, these little independent shops often have an edge on the cloned chain store.

Their success stems from a real effort to stand out from the crowd. Here’s how they do it:

Supporting local talent

Of course great coffee is number one on the agenda but the savvy independent coffee shop owner will source locally make cakes and provide an interesting breakfast and lunch menu (ideally made with local produce) in order to engender that all important 'community spirit'.

It is this sence of belonging that will keep the locals coming back. Many coffee shops also opt to hang the works of local artists on the walls, provide a 'book swap' space and host community events.

Aesthetic

It works in any coffee shop owner’s favour to cater to different customer demographics. Some larger venues provide an out of office workspace, tapping into to the lifestyle of an emerging freelance workforce. Free wifi is a must.

Many people go to a coffee shop for a home from home experience (with undeniably better coffee) so creating a cosy atmosphere with sofas, cushions and soft lighting will draw in the crowds

Minimalist coffee shops are also becoming a big trend. With focus on design, ultra-chic factory style interiors are becoming a popular choice – allowing people to feel part of the process behind the making of their caffiene fix.

Approach

Coffee shops often rely on repeat custom. People will sample a few before they choose their regular shop, so make sure yours stands out.

Small talk and service with a smile go a long way. Building up a rapport with the baristas is a perk for the customer and is certainly a way to encourage repeat custom. As an independent, you will have more time than the frenetic staff of a busy coffee chain to build up a relationship with your customers. Make the most of it.

Trends in the sector:

If you’re considering starting or buying a coffee shop, keeping up with the latest coffee trends is essential:

Quality roasts  

Stocking a range of roasts, from full bodied blends, to crisp and citrusy, to sweet and mellow – allows you to cater to the customer’s differing palates and establish what’s popular.

Nowadays people care more about where their coffee comes from now than ever before. Try out sustainably sourced beans form different locations and provide information about them. You with thus create a sense of intimacy from source to mug.

Short and strong

Following European trends, people now want their coffee smaller and stronger, with intense roasts becoming the latest craze.

Cold Brew

Popular in the warmer months, this alternative to the iced coffee uses time instead of heat. The coffee is brewed over a 12-20 hour period at room temperature, then served over ice.

Milk substitutes

More and more coffee shops are expanding their dairy free range.  Soy is no longer the singular option; the latest milk free options include almond and coconut milk.

The coffee ‘movement’

Typically a nation of tea drinkers, we’re battling the stereotype - and last year Brits spent £730 million on coffee.

You could even go as far as calling it an obsession or a 'movement' heralded by the rapidly growing coffee culture fanatics.

The first wave of the movement was all all about consumption – based on the regular ‘grab and go’ ‘anything will do as long as it’s got caffeine in it’ mentality.

The second wave was about enjoyment - why not spend that extra 30p on adding syrup to your latte?

The third is the epitome of coffee appreciation, centred on the origins, process and methods behind what’s in the cup.

Many consumers are riding the third wave without even realising it, so when running a coffee shop it’s important to remember these three and endeavour to cater to them all.

The competition's hotting up

Coffee shops ‘now have far more criteria driving destination choice than ever before. Branded chains are having to work hard to maintain consumer share’ according to Jeffrey Young.

With the growing consciousness of the coffee connoisseur and with artisan at the vanguard of the coffee revolution, owning a coffee shop will likely prove to be a lucrative investment.

Got the caffiene buzz? Take a look at our coffee shops for sale.

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Melanie Luff

About the author

Melanie Luff is an in-house journalist and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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