18 Oct 2020
Posted in Consumer
UK coffee and tea sector sees £1.2bn downwards revision for 2020 due to COVID-19, risking collapse of cosy coffee culture, says GlobalData
As the UK faces a ‘second wave’, there are rising concerns around how COVID-19 is impacting the UK’s coffee and tea shops – with big names such as Costa and Pret-a-Manger announcing plans to cut more than 1,500 and 3,000 jobs, respectively. The sector has shrunk from £6.6bn in 2019 to a COVID-19-adjusted forecast of £5.4bn by the end of 2020 – equating to a shocking 18% loss*1, says GlobalData, a leading data and analytics company.
Lucy Ambler, Consumer Analyst at GlobalData, comments: “The UK Government’s tier system, and the announcements to ‘work from home if you can’ in many areas, will produce further blows to an already struggling sector that is lacking the usual ‘lunch time rush’ from office workers.
“GlobalData’s Consumer Intelligence Center’s latest figures note a 52% reduction in the number of people eating out for their midday meal compared to pre-COVID*2. As travel restrictions continue to tighten across the country, consumers are adopting increasingly cautious behaviour in traditionally busy areas, where many coffee/tea shops are located. The even tighter lockdown restrictions that prevent households mixing indoors in Tier 3 areas – may increase this downward trend.”
Simple but effective steps such as better advertising additional safety measures and implementing technological innovations such as apps that allow consumers to order to the table may increase footfall by reassuring safety. Furthermore, with 73% of people predicting a worsening economic situation over the next month*3, businesses also need to take an immediate active response to encourage customers to return.
Ambler continues: “Bolting down the hatches and hoping to ride out the storm is no longer an attractive option, and actively implementing value-focused approaches is imperative – particularly now the ‘Eat Out To Help Out’ scheme has come to a close. Pret-a-Manger’s promising £20/month subscription service, for example, has seen a positive response thus far – as has Starbucks’ revamped ‘star’ reward system, which is advertised as giving better value for money. Reward schemes are nothing new, but it just might be the ticket that keeps the trade coming amid stricter lockdowns.”
While supporting local businesses has become more important for many people since COVID-19 emerged, it is not looking like the coffee and tea shop sector forecasts will pick up in the coming months. GlobalData reports upon the arrival of the ‘new normal’, wherein one in five are aiming to continue to work from home, while 52% aspire to cook more at home.*2”
Ambler concludes: “The pandemic’s widespread knock-on effects are evolving long-term consumer behavior and so coffee culture as we know it must meet these changing preferences – whether this is by tapping into online delivery services or at-home subscriptions. Either way, it appears the UK’s ‘café culture’ evolution out of the shops and into our homes is here to stay.
*1 GlobalData’s COVID-19 Impact Market Model – Foodservice – UK
*2 GlobalData’s Bi-weekly COVID-19 Recovery Tracker – Week 8 (published 23 September) – UK
*3 Combined responses: I will eat lunch out “slightly less often”, “significantly less often”, “stop altogether”