Costa’s sales grew slower in the first quarter of 2017 compared to 2016

Whitbread reports that the coffee franchise is responding to increased competition on the high street

Costa’s sales grew slower in the first quarter of 2017 compared to  2016

Grabbing a hot cup of Joe has become an essential part of many Brits’ morning routine. However, with the popularity of caffeinated hot drinks on the rise, the competition between different coffee houses has grown too. That’s one of the reasons why Costa, the cafe franchise, is now reporting that it had quite a lacklustre start to 2017.

Whitbread, the owner of the chain, has just released its figures for the first quarter of the year. The results show that Costa’s like-for-like sales grew by only 1.1% in the first 13 weeks leading up to June 1, down from a 2.6% growth during the same period in 2016. The total sales were up 8.7%. But the results don’t mean that the company isn’t growing. For instance, Costa opened 60 new locations in the UK in the first quarter, expanding its network to a total of 2,270 British stores, of which 624 are franchises. Globally, the chain opened 92 new stores, meaning that Costa now has 3,590 stores worldwide, which includes 1,721 franchises.

In response to increasing competition from artisan coffee houses and restaurants, Costa has previously announced plans to move away from the high street and open more drive-through stores and coffee shops in travel hubs in the upcoming years. These efforts continued during the first quarter with the installation of 300 more Costa Express machines.

Additionally, the first quarter saw Costa up its game even more by firing up a new roastery in March. This £38m investment meant that the Costa’s roasting capacity grew from 11,000 tonnes of coffee per annum to 45,000 tonnes per annum.

Commenting on the results, Alison Brittain, CEO of Whitbread, said: “Our continued drive to grow and innovate in our core UK businesses, focus on our strengths internationally and build capabilities to support long-term growth combined with our ongoing cost efficiency programme gives us confidence that we will make further good progress this year.”

With its willingness to try new things and continued trust in its franchisees, we’re certain that Costa has more than a shot at remaining a force to be reckoned with in the years to come.

Eric Johansson
Eric Johansson