Starbucks is going cold on the Capital
STARBUCKS’ loss-making UK chain has closed dozens of outlets in London, marking a retreat from a city where it once dominated the coffee shop scene.
The Mail on Sunday can reveal that the US giant, which became synonymous with the Friends-style cafe culture in the late 1990s, has shuttered as many as 35 stores across the capital in the past 18 months.
The closures appear to be continuing and a number have been directing customers to other stores in recent weeks. The emergence of the rout in London follows a recent financial statement that it had set aside £20million for ‘lease provisions’ in Britain.
It complained of ‘ongoing pressures’ and ‘the changing consumer landscape, high rents and political uncertainty’.
London has also been hit hard by a rapid rise in business rates.
Starbucks UK, which has
repeatedly come under fire for its tax planning, plunged to a £17.2million loss for the year to September 2018 as a result of provisions for renegotiating leases and store closures.
Starbucks launched in Britain in 1998 with the purchase of 64 Seattle Coffee Company outlets for £12.5million. It accelerated a growing move to use coffee shops as a place to meet. Howard Behar, Starbucks international president, said at the time: ‘We hope to benefit from the pub culture in the UK to make Starbucks a natural meeting place.’
Despite the closures in London, Starbucks is understood to have increased overall coffee shop numbers in the UK by around 50 since 2017. It has opened smaller shops and ‘Drive Thru’ outlets outside Central London to adapt to changing consumer habits. It now has almost 1,000 in the UK where sales grew 4 per cent in 2018 to £378million.
Insiders said it is trying to tap more into the convenience market. It has launched Mobile Order & Pay – which allows customers to pay before collecting – and Starbucks Delivers in partnership with UberEats.
It is the latest change to hit the high street after a torrid time for clothing stores. Sources estimate Starbucks’ closures represent up to a fifth of its Central London outlets.
Robert Hayton, head of business rates at property adviser Altus Group, said ‘intense competition’ from independents had been a major problem. ‘Throw into the mix fragile consumer confidence and sharp increases in operational costs and you create a potentially lethal cocktail.’
Last year Starbucks shifted its European office to London and paid £4 million in corporation tax following intense pressure from campaigners.