Café nation? Exploring the growth of the UK café industry
Abstract
The UK café industry has experienced significant growth over the last decade. With over 18 800 outlets, and a turnover of £7.2 billion recorded in 2014, the industry represents an important component of the retail sector. Industry commentators forecast that the industry will continue to grow and that there will be 27 000 outlets by 2020. This article provides an overview of the UK café industry and highlights the key drivers of it's rapid growth. It explores the ways that a new economic geography is quietly made as the café industry refashions our high streets. The article culminates by presenting an illustrative typology of café types which comprise the café industry in the UK, highlighting the need for greater research into the landscape of the café industry as it develops, and the roles that café spaces play in different communities.
Introduction
It is estimated that in 2013 around 1.7 billion cups of coffee were bought in the UK (Houlder 2014). This figure is not surprising: walk down any high street in the UK and one is faced with a plethora of café choices, from the large international chains to the small independent artisan espresso bar. In 2014 the café industry in the UK achieved a turnover of £7.2 billion, outperforming the retail sector more broadly, with a market value that has more than doubled over the last decade (Allegra Strategies 2015b).
Although there have been reports from the corporate and consultancy literature charting the development and importance of the café market to the UK economy, geographers have passed only limited comment on the implications of this for our understanding of the geography of the economy, and our notion of high streets, public and community space. From an economic perspective, existing research has largely focused on the global commodity chains and production networks associated with coffee (Coe 2012; Macdonald 2007; Ponte 2002), the global expansion of coffee chains and the ‘Starbucks phenomenon’ (Dicum and Luttinger 2006), Starbuckization (Ritzer 2015) and more broadly on coffee consumption (Smith 1996; Grinshpun 2014). However, there remains a paucity of research examining the retail sector of this industry or its development in the economic and retail spaces of the UK, which is surprising given the rapid growth of the overall size of the sector (although see Laurier and Philo 2005; Lloyd and Payne 2012).
In order to address these research lacunae, this article draws on an extensive review of academic, consultancy and industry literature as well as interviews with café owners and observations to explore some of the features of its development. The article makes three key contributions. First it outlines the growth of the café industry in the UK, in particular examining the rapid growth of the three top café chains. Second, it considers the importance of the café industry for the UK, in particular the economic and social implications of these developments for the vitality of the high street. Third, based on a process of cataloguing cafés in a series of UK cities,1 it presents an illustrative typology of establishments that comprise the UK café industry to outline current trends taking place. The article concludes by highlighting the importance of further investigation of the café industry, as the UK makes a transition to a more multifaceted ‘café society’.
Considering café spaces
While there is little recent literature examining the growth dynamics of the café industry and its importance as a component of the retail sector (although for indication of the importance of the café on the high street see Wrigley and Lambiri 2015), more numerous examples exist of past work which examine the industry's social and cultural geographical dimensions.
Laurier and Philo (2006, 356) studied human behaviour in café spaces, showing how cafés are important sites of investigation because ‘events happen there, encounters happen there, day in, day out’, and that the diversity of encounters should be appreciated. They also explored how cafés act as informal work spaces, showing how in some cases cafés have become extension spaces for office activities (Laurier and Philo, 2006). As highlighted by Laurier et al. (2001, 195) ‘cafés are places where consumers are not simply served hot beverages but are also in some way partaking of a specific form of public life reiterating earlier accounts as cafés as ‘pre-eminently the theatre of neighbourhood life’ (Haine 1996, 163). Each individual café represents a different site of potential sociability, and therefore has the potential to take a different role in the community.
Tjora and Scambler (2013), along with other scholars from disciplines including anthropology, sociology and business studies, have made an explicit call for further research on café spaces, drawing on the work of Oldenburg (1999) to revitalise the concept of cafés as ‘third spaces’.2 They argue that a contemporary approach to studying café spaces is required in order to reflect a number of empirical trends, including: the rise in commercially viable cafés (Wrigley and Lambiri 2015); the potential for cafés to act as ‘third places’ (Oldenburg 1999); cafés as sites for sociability (Hall 2012); cafés as spaces of networking and more broadly, the development of a ‘café society’. These studies represent a number of recent efforts to begin to explore the human experience of the café and the importance of cafés in urban spaces.
Other ethnographic studies of café spaces include the work of Hall (2012), who explored the role of Nick's Caff, a local café and eatery on Walworth Road, a diverse street in London. She shows how cafés can act as community hubs and provide ‘a base to consider the complexities of belonging’ (2012, 53). Another example of exploration of conviviality fostered by corporate café spaces comes from Jones et al. (2015, 649), who discuss the experiences of how ethnically diverse populations mix in urban places such as cafés, and the way such spaces were reconfigured according to their users’ needs, providing a space that can be ‘shared with an unfocused conviviality – together and alone at once’.
The work of Laurier and Philo (2005), Jones et al. (2015) and Hall (2012) represents significant steps towards understanding the importance of café spaces, but from an ethnographic perspective, considering the particularities of some café spaces. Given the growth and diversification of this industry, what is now needed is a more comprehensive understanding of industry dynamics, to explore their impact on the ‘rhythm of the city’ (Laurier 2008b), their role in fostering ‘conviviality in the public sphere’ (Laurier 2008a) and as sites of ‘everyday multiculture’ (Jones et al. 2015). What remains in the background of many of these studies is cafés as economic entities, and the café industry as a growth sector (in the UK and globally) that requires further exploration, alongside investigation of the impact this is having on different urban spaces.
The growth of the café industry in the UK
The presence of cafés in the UK is not a new phenomenon. For decades the neighbourhood café has been at the heart of town or high street (Hall 2012), but actually the café has a much longer history (Green 2014). The development of the café in the UK is thought to go back to the mid-17th century when they became meeting places for men to discuss business, politics and literature, known colloquially as ‘penny universities’ (making reference to the penny fee to enter) (Brandon 2011). The first café was thought to have been established in Oxford in 1650, with the first in London soon following in 1652. These places became popular, with more than 3000 across the country by 1675, providing spaces to facilitate ‘liquid networks’ among the business community (Green 2014). In the 18th century the popularity of cafés declined as other drinking establishments such as pubs and taverns became more popular, as cafés became seen as elite establishments and as coffee became a less important commodity as trading priorities turned to tea (Cowan 2005). It was not until the 1950s that cafés once again began to experience a rise, with steady growth in the 1990s following the introduction to the UK of high street chains, such as Starbucks, that are now so familiar. The growth continued in the early 2000s in both the number of chain cafés and independent specialty cafés; in 2001 coffee purchased out-of-the-home was acknowledged as a key consumer product as the latte was added to the Consumer Price Index (see ONS 2015).
According to Allegra Strategies, one of the most prolific commentators on trends in the café industry, one in five people in the UK now visit cafés on a daily basis, compared with only one in nine in 2009 (Allegra Strategies 2013), suggesting that cafés have now become an integral part of daily life for many. The growth of the café industry in the UK took off in the mid-1990s, with revenues doubling in size between 2006 and 2012, and increasing ten-fold between 1997 and 2012 (Allegra Strategies 2013). Even following the recession in 2008, the sector continued to experience strong sales growth, consistently outperforming other areas of the retail sector. In fact, the recession appears to have had a positive impact on the café industry – it coincided with a sharp rise in the number of cafés, from 10 685 in 2008 to 18 832 by 2014 (Allegra Strategies 2015b). The café industry continues to be one of the most successful retail sectors in the UK economy, and for some locations is seen as an element of retail to encourage, with local councils from Beverley in East Yorkshire to Coleraine in Northern Ireland encouraging the development of a café culture (Coleraine Times 2015; Hull Daily Mail 2015). Reasons for this have yet to be fully explored, although anecdotal evidence suggests that for consumers there is a growing trend in trips to cafés being seen as affordable treats, given reduced household disposable incomes (Wrigley and Lambiri 2015).
In 2014 the UK café industry was dominated by three international café chains, which collectively accounted for 86 per cent of the market: Costa Coffee (46.5%), Starbucks (27%) and Caffè Nero (13.7%) (Thomas 2014). Costa Coffee, owned by Whitbread, is the UK's largest café chain. Originally founded in 1971, by 2014 the company achieved sales of £708.1 million (a 19.6% year-on-year increase), in addition to £99.6 million in international sales (Whitbread 2014). The company has over 1755 outlets in the UK and 1106 overseas in over 30 countries (in addition to over 3500 self-service machines). In the UK, 177 new stores opened in 2013–14 alone and 334 opened globally, with plans to open hundreds more in the UK and international markets (Grant 2015).
Starbucks, the US-based coffee chain originally established in Seattle in 1971, has experienced rapid global expansion to be considered the largest global coffee chain, with over 21 500 stores in more than 50 countries (Starbucks 2015). Starbucks entered the UK market after the acquisition of the London-based Seattle Coffee Company stores in the UK in 1998 (Starbucks 2014); since then, it has grown to over 800 outlets UK-wide (Starbucks 2015). In 2014 Starbucks UK achieved revenues of £399 million, a slight decline from 2012 (£413 million) (Anderson 2015). The decline is suggested to be in part, alongside growth in competition, attributable to the backlash of the ‘tax avoidance scandal’ in which a number of large multinational companies were investigated after it was revealed the amounts paid in UK corporation tax were very small despite large profits being gained (Anderson 2015).
Caffè Nero, established in 1997 in London, joined the London Stock Exchange in 2001 and has experienced rapid growth since (Caffè Nero 2015b). Between 2006 and 2014 the company more than doubled the number of stores, to 590 by 2014, with 170 stores in the last two years of that period alone (Caffè Nero 2015a). The majority of the company's 650 stores are in the UK, but it also operates in six other countries: the USA, Turkey, Poland, Cyprus, Ireland and United Arab Emirates. In 2014 Caffè Nero achieved revenues of £227.9 million, growth of 151 per cent since 2006, and 43 per cent from 2010 (Caffè Nero 2015a).
There are of course many other chains, although none that have reached the scale of the ‘Big 3’ in the UK market. These include Café Ritazza (owned by SSP) (42 outlets in the UK and 119 across 32 countries), which tends to be focused in transport hubs; Coffee Republic (203 outlets in 10 countries); Pumpkin café (also owned by SSP, 126 outlets), often found in many train stations; Pret-a-Manger (350 stores in four countries); and EAT (110 outlets in the UK) (Coffee Republic 2014; EAT 2015; SSP 2015).
Moreover, the desire for consumption of coffee products and demand for café-like spaces is recognised by a wide range of food retailers beyond the café chains themselves. This is evidenced by fast-food chains such as McDonald's launching their ‘upmarket down to earth’ McCafé range, or KFC and Burger King developing agreements with Seattle's Best Coffee (which is in turn owned by Starbucks) to supply coffee products to their stores. This indicate recognition of a change in consumer habits that have driven a rising café industry, in which other businesses seek to gain a share.
While the ubiquitous presence of café chains like Costa, Starbucks and Caffè Nero has been attributed to the development of ‘clone towns’ (New Economics Foundation 2005), the proliferation of independent cafés has been strong in many cities across the country, sometimes developing in clusters as in the Northern Quarter in Manchester or Bold Street in Liverpool (Rees 2015). In some cases, these clusters are used to promote a place to visitors, such as when the Leicester tourist board produced a recent café culture guide to the city (Visit Leicester 2015). Growing café cultures in cities across the UK are also evidenced by the emergence of ‘coffee guides’ to different regions and an increasing number of coffee festivals across the country, including London, Manchester, Edinburgh, Glasgow, Bristol and more, as well as coffee tours in cities (Rees 2014 2015), all showing how the industry is not only growing but how its activities are expanding too.
Indeed, recognition of the role of the café in the modern economy has gone as far as to suggest it reflects new modes of industrial organisation and production, namely, ‘the flat white economy’, named after the supposed favourite drink of the digital-oriented creative workers driving growth in cities like London (McWilliams 2015). Furthermore, the café increasingly provides a space for small, local businesses to conduct meetings or carry out other work, and with the rise of mobile working a place to work too (Johns and Gratton 2013).
To sum up, while the UK café industry is dominated by a small number of large international café chains, which have become ubiquitous in the centres of towns and cities, there are a growing number of independent stores and chains – sometimes using alternative approaches, contributing to a more multifaceted and diverse composition of the UK café industry, providing new spaces for economic production and consumption.
The importance of cafés for the UK high street
The role of cafés in driving and improving the economy of the high street in the UK was recognised in recent reviews of the health of UK high streets (DCLG 2012 2013). These reviews highlighted that these types of establishments could be used ‘to help revitalise town centres, boost economic performance, support regeneration, and build community pride and social integration’ (DCLG 2013, 6). Furthermore, the reviews suggested that the presence of cafés typically provides a 3–5 per cent boost to the local economy, as consumers stay in the area longer, often making other purchases (Wrigley and Lambiri 2015). Cafés have been cited as ‘ignition brands’, making the high street a more attractive place for people to spend time and consequently for businesses to invest. This is particularly significant given the wider economic context of decline in household disposable income in the aftermath of the recession, which posed a significant threat to high street businesses (ONS 2011).
While the recession had widespread negative impacts on the UK economy, and in particular the UK high street, the café industry bucked the trend by exhibiting continued patterns of growth. This has been attributed to a combination of factors, including increased vacancies of previously inaccessible properties and reduced business rates trying to encourage businesses in particular areas (Wrigley and Lambiri 2015). In their review of evidence of change in the UK high street, Wrigley and Lambiri (2015) acknowledge that more data is needed in order to clarify what is happening in the retail and leisure spaces of high streets, and the impact of such spaces at a range of spatial scales.
It should be highlighted that much of the ‘data’ on the café industry stems from a relatively small number of sources, often closely linked to the industry, such as the publications of Allegra Strategies (2014 2015b). While the figures have been used in this article to indicate the rise of the industry, they should be viewed with a critical eye, as the data and future forecasts presented are likely to show a positive image for the industry. The growing number of ‘independent café guides’ (Rees 2014 2015. Allegra Strategies 2015a), which may seem to introduce people to the various options a city or region has to offer, are likely to be reflective of those companies that could pay for their inclusion in the publication, and therefore not truly representative of the café landscape across the city; and of course the inclusion of what is classed as an excellent café is subjective. However, since the data from these publications are currently what is available, it forms a useful starting point to indicate the pace of growth and dynamics in the industry. What is needed is a more a critical investigation into the growth of the industry to profile the landscape for cafés in different urban communities.
Spaces of consumption … and community
A number of drivers for the expansion of the café industry can be identified, including changes in awareness and consumption of coffee; the impact of the recession; the shift to a more leisure-oriented high street; the rise of mobile working; the decline of pubs; and a growing demand for ‘safe spaces’.
The way in which coffee is being consumed in the UK has changed – there are more visits to coffee shops, where previously consumers might have consumed instant coffee at home or at work, fuelling the growth of cafés (Thomas 2014). Although the café industry has continued to grow, coffee consumption levels are now lower than they were in 2006: Britons consume 2.8 kg per head, compared with 7 kg in Germany, 7.1 kg in Sweden and 5.5 kg in France (International Coffee Organization 2014). This suggests that it is not just a change in the volume of coffee consumption habits that is driving the growth of cafés, but a wider change in consumption habits.
The rise in cafés has also coincided with a decline in British pubs – it is estimated that 4500 pubs closed between 2009 and 2013, while in the same time period 3800 coffee shops opened (Smithers 2014). The Campaign for Real Ale (CAMRA) claimed that in 2013, 31 pubs in the UK were closing every week (Smithers 2014). And even some brewery companies have expanded into the café market, in Wales and South West England, one of the fastest growing café chains is Coffee#1 is owned by the Welsh brewer chain SA Brain (BBC 2015). The CEO of Whitbread (owners of Costa Coffee) believes cafés are playing a role in British society that would have previously been met by pubs, fuelled by a rise in female spending power – whereas pubs were seen as an evening domain, coffee shops are open all day and provide a more family-oriented environment (Thomas 2014). These are very broad generalisations but they do hint at a changing dynamic in public spaces that may be contributing to a rise in cafés. It also supports suggestions that cafés are increasingly seen as ‘safe spaces’ to meet and socialise, particularly for younger people (Warner et al. 2013). This is coupled with an increasing range of cafés opening in the evenings and offering entertainment or activities such as games, live music or supper clubs (Roberts 2014). Some of these cafés have clearly moved beyond being simply places of consumption to become places of social interaction, as suggested by Jones et al. (2015), Hall (2012), Oldenburg (1999) and others. This is demonstrated by the emergence of alternative independent cafés that cater not only for different purposes but for various different communities.
One example is a new independent international café chain that recently entered the UK, Ziferblat, originating from Russia, which operates on a pay-as-you-go concept. Here customers pay for the time they spend in the café, not what they consume (Ziferblat 2015). Ziferblat has opened stores in several countries, including the UK, Russia, Ukraine and Slovenia, with branches in London, and more recently Manchester and Liverpool (Heward 2015; Wright 2015). This form of pay-as-you-stay café has been referred to as an ‘anticafé’ (von Poll 2014), for its novel approach to charging customers.
Founded in 2011, the owner of this chain claims that he was seeking to create a ‘social network in real life’ to create a space that felt homely where you could meet, work or simply spend time. At the Manchester branch there are activities from knitting to Bollywood dancing; all activities that encourage interaction with other people and lead to novel uses of café spaces. Another novel feature of Ziferblat is that it provides a space for consumers to interact with the café space in a different manner to conventional cafés – consumers can cook food and make drinks in a common kitchen, as well as hold events and meetings. The business model is not about paying for consumption, but paying for the space inhabited, providing a different kind of opportunity for social interaction, a different type of café space. This is just one example that illustrates a broadening landscape of café types, features, functions and business models.
A typology of cafés
This section presents an illustrative typology more suited to form a framework for the investigation of the impact of different cafés on communities, and to consider the different dynamics of the components of the UK café industry. The different types are distinguished at this stage by their organisation and outlet network, rather than pure function. This attempts to more explicitly consider the type of business and take into account the different international and domestic forms. The typology is based on research that included an extensive review of consultancy and industry documents, including periodicals such as Caffeine, Caffe Culture, Boughton's Coffee House and Café Europa, as well as semi-structured interviews with café owners in eight towns and cities across the UK, observations, and a process of cataloguing cafés in the case study cities.
The typology shown in Figure 1 differentiates between cafés that are part of larger international networks (either specifically related to cafés or more broadly in retail and hospitality), and those with their networks or locations focused on the UK domestic market. While the international chains dominate in terms of market share, there are a growing number of independent cafés, some of which have become very successful and indeed expanded into multi-outlet ventures that represent an important component of the independent sector. Then there are a number of cafés with a particular theme or agenda; Ziferblat or the cat cafés are two examples (Leatherdale 2015). Finally, a more recent trend is the rise of independent coffee roasters that sometimes have a café included in their premises as an additional outlet to their coffee sales (Caffe Culture 2015).
Of course, within each of these categories there are a range of different features, activities and styles that can be found – particularly within the independent sector, which could range from a 1940s themed café in a small town to a boutique espresso bar in a trendy area of an urban suburb or an independent roaster with a small café inside. In reality a plethora of places can be considered part of the café industry, from an independent espresso bar, fast food restaurant or international café chain, to an artisan tea shop with bakery, with significant variation in between, as well as the potential for some cafés to fit in more than one type. However, this typology presents a framework to begin to consider the impact of cafés on spaces and communities, the different types of consumers that use these spaces and the range of economic and social purposes (of both production and consumption) that they fulfil. Furthermore it offers a starting point to begin investigating the industry that is not guided by the consultancy reports, but instead by empirical evidence of existing cafés and their activities.
Conclusions
This article has outlined various facets of the UK café industry, illuminating how the industry has grown rapidly over the last decade to represent one of the most successful parts of the high street retail sector. The industry's continued growth, even during the stringent economic conditions that followed the recession, make it particularly interesting for investigation to try and understand why and how it was able to do so. The evidence discussed here goes some way towards illustrating that the UK has been experiencing a growing number of café spaces as part of a development of a ‘café society’, which raises a number of questions about what role these places play in different locations and for different communities – are they simply places of consumption or more complex sites of community interaction and creation? As explored here, there have been some efforts to highlight cafés as an important component of the high street, from the retail perspective (Wrigley and Lambiri 2015) to the social (Jones et al. 2015), but as yet these have not been explored in depth, and further work is required to begin to address some of the arguments outlined by Tjora and Scambler (2013) for understanding the importance of cafés in contemporary society.
The typology of cafes suggested in this article provides a starting point for a more systematic exploration of the cafe industry in the UK. This is important within the context that much existing data and knowledge is drawn from consultancy literature which will inevitably paint the industry in a positive light. By moving on to undertake a more systematic investigation of the industry, it will be possible to understand more about its dynamics and drivers, in what ways the UK has developed its own café culture, the potential implications this has for the high street economy and urban spaces, the way that people use these spaces, and the importance of different types of cafés for communities. The primary purpose of this article has been to highlight the rapid growth of the café industry in the UK and how this growth, in its own increasingly diverse way, is reshaping UK consumption (and even production) geographies. Nevertheless, much research is needed to understand the economic and social value of cafés to different spaces and people in the UK and beyond.
Acknowledgements
I would like to thank the Centre for Business in Society at Coventry University which provided funding for the 'Spaces of Community' research project on which this article is based. I would also like to thank Carlos Ferreira, Nick Henry and Marylyn Carrigan for their encouragement, and comments on earlier drafts of the paper. I am also grateful to the referees who provided constructive comments which helped to refine the contributions of this paper.
