Have we reached ‘peak coffee’? Horizons reports industry slowdown

By Hannah Thompson contact

- Last updated on GMT

Have we reached ‘peak coffee’? Horizons reports industry slowdown
The coffee shop sector could be reaching its peak, amid a wider slowdown in new entrepreneurial activity in foodservice, according to the latest Ones to Watch report from consultancy Horizons.

The biannual report for October 2016 found that although coffee was still dominating the small brands arena, the number of new coffee outlets was at just 9.8 per cent, compared to 11 per cent for the same time last year, with Horizons suggesting this could point to the coffee market “reaching its peak”.

Small coffee brands continuing to grow rapidly included Bobs and Berts, Grind and Co, and Red Kiosk.

New brands down

Overall, Horizons found the number of new concepts across restaurants and foodservice was down compared to previous years, and there were fewer expanding groups. ‘Dessert bars’ – sites that specialise in ice cream, waffles, cakes and milkshakes ‒ was the fastest-growing sector.   

The Horizons Ones to Watch survey tracks the emergence and growth of new eating out brands.

To qualify for inclusion in the report, groups must have between five and 25 sites. Brands included must also have shown growth of at least 20 per cent in the past three years combined.       

The latest study (October 2016) found that there were just seven new brands who qualified for inclusion, compared to 12 new concepts in April 2016, and 30 new brands this time last year.   

Just one brand had grown too large ‒ growing to over 25 sites ‒ to be included, compared to eight brands in April’s survey, and four in November 2015.

This pointed to a slowdown in the industry’s entrepreneurial spirit, Horizons suggested.

Desserts doing well

However, the report still found a number of concepts bucking the slowdown trend, with a growing number of ‘dessert cafés’ making an impact.  

Kaspa’s Café ‒ which specialises in ice creams, waffles, crepes, milkshakes and sundaes ‒ grew from two sites in 2013 to 25 in 2016, while Treatz Dessert parlour grew from one site in 2013, to seven by 2016.

Other concepts shown to be growing well also included burgers and meat sites – including Argentine grill group Cau (growing from three sites to 20 since 2013), burger concept Burger Shack (zero to 18), pizza and cider group The Stable (four to 17), juice bar Joe & The Juice (five to 17), and Asian noodle bars Chozen Noodle (four to 16).

Casual dining group Coast to Coast also grew significantly (nine to 21), while Wahaca – which has this week been forced to close most of its site due to a norovirus outbreak – also grew, from 11 to 23 sites overall between 2013 and October 2016.

Other groups found to be expanding well included Chicken Shop (1 to ten), Red’s True Barbecue (one to eight), and Churchill’s Fish & Chips.   

Nicola Knight, Horizons analyst, said: “Overall, there is still growth in the number of new concepts included in Ones To Watch but at just seven new brands, a total of 190, this is fewer than we have seen in its five year history.”

"This slowing of entrepreneurial activity may be the beginning of a more general slowdown in the foodservice sector, even a short recession across the economy with Brexit being the key reason behind the uncertainty. It shows that fledgling operators are currently being more cautious in their expansion plans."

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