Costa Coffee Reports Doubled Operating Losses as Market Pressures Intensify

Costa Coffee has reported operating losses exceeding £13.5 million for 2024, representing more than a doubling from the £5.8 million losses recorded in the previous year. The deterioration in financial performance contrasts sharply with the chain’s pre-pandemic profitability, when annual profits regularly reached £100 million.

Financial filings submitted to Companies House reveal the extent of operational challenges facing the Coca-Cola owned coffee chain. The figures emerge as parent company Coca-Cola continues exploring a potential disposal of the Costa Coffee brand, approximately seven years after acquiring the business for nearly £4 billion. Market valuations for a prospective sale have declined substantially, with current expectations not exceeding £2 billion, whilst recent reports indicate pricing concerns regarding preferred bidder TDR Capital.

Costa Coffee attributes the financial underperformance to intensified competition from rival coffee house brands and reduced high street footfall. Rising coffee bean costs and broader inflationary pressures on operational expenditure have further compressed profit margins throughout the year. Clive Black, analyst at Shore Capital, observed the chain may have reached maximum market penetration in the United Kingdom, rendering it particularly vulnerable to competitive pressures.

Black identified the proliferation of independent, artisanal coffee establishments offering enhanced customer experience, superior ambience and improved food offerings as significant competitive factors. These establishments present less corporate alternatives that resonate with consumer preferences. Market data indicates average coffee prices have increased approximately 75 pence since 2022, rising above £4, with numerous outlets charging £5 or more. Costa Coffee implemented a limited-period promotional arrangement with Co-op retail locations last autumn, offering beverages at £1.

A company statement emphasised Costa Coffee delivered like-for-like revenue growth during 2024 and demonstrated operational resilience despite inflationary headwinds. The company continues investment in its United Kingdom estate and global brand expansion. The aggregated results form part of The Coca-Cola Company’s consolidated reporting.

Since acquisition by Coca-Cola in 2019, Costa Coffee has maintained revenue growth trajectory and aligns with the parent company’s strategy to provide comprehensive beverage portfolios across consumption occasions. The financial results nonetheless highlight structural challenges facing legacy high street coffee chains operating in increasingly competitive and fragmented markets.