Starbucks UK swings to US$44.8M pre-tax loss for FY2024

UK – Leading coffeehouse chain Starbucks UK has reported a pre-tax loss of £35.2 million (US$44.8 million) for the 12 months ended 29 September 2024, marking a sharp reversal from the £16.9 million (US$21.7 million) profit it recorded the previous year.

Starbucks has reported a 9% decline in gross profit alongside a 4% year-on-year drop in UK revenue, which fell to £525.6 million (US$676.5 million).

The company attributed this performance to a combination of economic and competitive challenges that affected consumer behaviour throughout the financial year.

The UK coffee market faced strong headwinds, driven primarily by ongoing cost-of-living pressures. Inflation and higher interest rates significantly reduced consumer disposable income, prompting a shift in spending habits.

Additionally, footfall in certain locations dropped in the first half of the year due to misperceptions related to geopolitical events in the Middle East.

Market competition also intensified, with new entrants and localised specialty coffee shops expanding aggressively across the UK.

Although coffee-related inflation began to stabilise compared to 2023, input costs for dairy and cocoa remained elevated in FY24, continuing to pressure profit margins.

Wage inflation also affected profitability, as Starbucks maintained its commitment to investing in its partners (employees).

Despite these hurdles, the company ended the year with 1,240 stores in the UK—an increase of 100 net new locations.

This expansion included the acquisition of 23.5 Degrees, the company’s largest UK franchisee, which added 113 stores and contributed to growth in the company-owned estate.

Starbucks has announced plans to open a further 80 net new stores in the UK by the end of September 2025.

Duncan Moir, President of Starbucks Europe, Middle East and Africa, acknowledged the difficult economic conditions and their impact on consumer confidence.

Nevertheless, he highlighted the brand’s achievement in meeting its expansion goals and reaffirmed Starbucks’ commitment to growth in the UK.

Moir also outlined key areas of focus, including scaling technology integration, enhancing the Starbucks Rewards programme, and optimising the menu to consistently deliver core offerings.

Looking ahead, Starbucks plans to introduce more customer-friendly features. In March 2025, it unveiled initiatives aimed at improving the in-store experience by increasing seating options and adding more power outlets to encourage longer visits.

These enhancements are part of a broader strategy to test new store formats in the US in response to declining sales.

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