The Rise of Coffee Rivals
Big name cafe chains are struggling to keep their revenues amidst the rise in popularity of smaller rivals like Blank Street Coffee and Black Sheep Coffee.
This is the type of commercial development candidates are expected to analyse in training contract and vacation scheme applications. We explain how to approach more stories like this in our Commercial Awareness hub.
Big name cafe chains are struggling to keep their revenues amidst the rise in popularity of smaller rivals like Blank Street Coffee and Black Sheep Coffee. The number of coffee shops in the UK rose by over 2% last year, with most of these new coffee shops falling under the smaller rivals category.
Coca-Cola had recently attempted to sell Costa Coffee, Starbucks last year closed some of its UK stores, and Pret A Manger wrote down £553 million in goodwill (an accounting confession that the company’s brand/reputation is no longer worth as much).
Larger cafe chains are failing to keep up with the trends that engage a younger population with coffee places. An example is how Blank Street introduced matcha to its menu back in 2023, subsequently then promoting this more heavily in 2024. It was not until last week that Costa introduced an equivalent nationwide matcha offering.
What does this mean for the hospitality industry?
- Higher prices at larger coffee chains leads consumers to buying at independent coffee shops that propose similar prices with a more unique experience
- Consumers that still want cheap coffee are increasingly turning to fast-food places like McDonald’s and Greggs
- The coffee shop industry will likely become more fragmented with consumer preferences for certain chains varying per region.
Knowing the story isn’t enough. In applications and interviews, firms expect you to explain why this matters commercially and how it affects clients. The Commercial Awareness Starter Pack shows you exactly how to do this using a simple, repeatable framework.
How to use this in applications
The coffee shop industry in the UK has historically been seen as one run by incumbents like Costa and Starbucks, however even this industry can be shaken up by new players. The strategic response for an incumbent is often a mix offootprint changes (closing or relocating underperforming sites), renegotiating leases, and tightening supplier arrangements to protect margins. That combination creates legal work across real estate (break clauses, assignments, dilapidations, rent concessions), commercial contracts (supplier renegotiation, pricing and exclusivity terms), and brand strategy (menu rollouts, marketing compliance, franchise consistency). A firm advising in this space would help the business move fast without getting stuck in costly lease disputes or rigid contracts while it repositions for the next phase of growth.
It is worth also thinking about how small players are abandoning their specialty of remaining small in favour of upscaling to face up to the likes of Costa and Pret. As smaller brands scale, the legal risks shift from ‘getting stores open’ to ‘scaling without breaking’. Rapid expansion means negotiating multiple leases quickly, standardising fit-out and service contracts, and protecting the brand as it enters new regions where customer preferences vary. If the market keeps fragmenting, challengers may also face opportunities to acquire sites, teams, or smaller operators to expand footprint efficiently. That’s where legal advice becomes a growth lever: clear leases, correct supplier contracts, IP protection for brand and menu assets, and support on acquisitions or partnerships.
You can watch the video explainer of this news below:
We explain how this story can be discussed in written applications and interviews. Register now for free to unlock the full article.
Register now to unlock the full free article
