Coffee Franchises UK – Here in Britain, we might be known as a nation of tea drinkers – however coffee now seems to have overtaken tea as the UK’s drink of choice
2017 research reported that Britons were now spending up to £2210 in our nation’s coffee shops, with a reported 80% of adult Britons visiting a coffee shop at least once a week. And with apparently 83% of the US population as coffee drinkers, it seems that coffee as a favoured staple is here to stay.
In light of these kind of statistics therefore, it’s unsurprising that when it comes to franchising, the coffee shop sector is soaring. The BFA Natwest Report into the UK Franchising Industry released at the end of 2018 reported a huge leap in the number of units operated by the coffee giants Costa and Starbucks in the UK – Costa Coffee had just over 170 units 10 years ago, and now has 2,300. There are currently around 400 franchised Starbucks stores in the UK – here in the UK Starbucks does operate a franchise model of operation and only only about one in five Starbucks in Europe, the Middle East, and Africa are company-run, differing significantly from its mode of operation in the US where a large proportion of it’s units (over 50%) are still corporate-owned.
But apart from our general love for the drink, what other factors are contributors to the success of the coffee franchise sector?
Firstly, for any would-be franchisee a coffee shop franchise is an attractive business proposition as coffee houses now play such a vital role in many people’s daily lives. Not only have coffee shops become a place to meet and hang out with friends (some might say they’ve taken over the place of the pub as the “local”), they’ve also become hubs for business and work meetings and also places of work for solo entrepreneurs – I know many of my entrepreneur friends who will regularly set up their office for the day in a coffee shop, ordering breakfast, refills and lunch over the course of the day!
Coffee drinkers have also become much more sophisticated in their tastes – just stand and take a look at the menu in your local coffee shop next time you’re there. From different blends to added flavor shots, iced drinks to coffee beans with ethical provenance – this gives business owners not only more option to expand the range on offer without diluting the core product offering, but also means that consumers are willing to pay high prices for a premium coffee product and profit margins can be significant. You can also add into this mix millennials as a core coffee consumer – a recipe for business success, as it is reported that millennials represent a worldwide purchasing power of $200 billion and of course they are hyper-social online.
One of the great advantages of a coffee shop franchise model for both franchisor and franchisee is that, with the right franchisee on board, it’s a franchise enterprise which is easily scaleable. Find success with a first franchise branch and then it’s easy then to open more within a short distance and appoint managerial staff to run them. The reality is that most people won’t walk far for coffee. This then means that one franchisee can quite realistically operate a number of franchise units within a relatively short geographical distance. This multi-unit franchise approach has big benefits for both parties in the franchise relationship – scope for significant business growth for the franchisee and reduced costs for the franchisor. In territories where Starbucks does operate a franchise model, it only actively recruits franchisees with multi unit management experience for this reason.
The major criticism often levied at the coffee franchise giants is that they lack the local personality of an independent coffee shop. However the savvy brands have generally taken what steps they can to inject a local feel into their franchise branches to counter these arguments – comfy seating, cosy decor, local community noticeboards, names on cups (a big brand favorite!)…. all devices with the aim of making customers feel as if they’re spending their money in an independent business rather than with a large conglomerate. Surely another feature that also attracts coffee consumers to the large franchise names is also reliability and speed – we’re often looking to grab a coffee on the go and it feels “safer” to dash into a well known name where we can feel confident they can deliver our flat white in a minute or two and we’ll be out of the door again, rather than risk venturing into the unknown when we don’t know how long they’ll take to deliver our drink?
And sticking with the theme of coffee on the go – one other exciting new development in the coffee franchise world over the past five years must be the growth in the mobile coffee sector. Mobile coffee units operating out of trucks, or bikes such as Coffee-Bike are able to exploit a previous huge gap in the market for good quality coffee where it was previously inaccessible – taking coffee to public events and festivals and to office workers who are sick of vending machine coffee in plastic cups! And with a number of new franchise brands now taking advantage of this, the low overheads involved in a mobile operation surely make this an attractive proposition for a coffee-loving potential franchisee – with the advantage of it easily being an owner-operator franchise venture.
So in light of all of the above, whether your drink of preference is a skinny cappuccino, a hazelnut praline latte or a coconut flat white (my own current coffee of choice), it certainly seems as if the coffee franchise industry will be continuing to brew its recipe for success for some time to come!