The collapse of Coffee Republic has hailed the start of a challenging time for the branded coffee chain market, a report has warned.
The study, by market analysts Key Note, found that the branded coffee chain sector has come under intense competition as consumers decrease their average spend in coffee shops and make fewer visits.
Based on a survey of 1,000 consumers and analysis of the UK and Ireland's major branded coffee and sandwich shops, the report found that 42% of respondents would be less likely to visit a branded store in the future as a direct result of the recession.
While 42% of respondents said they had visited a branded coffee shop in the last three months, 30% said they had visited these outlets less often than in the three months prior to the survey.
Only a fifth said they would choose a branded store over an independent one.
The report predicts that the effect of the recession, at least initially, will be to slow down the number of new openings by the larger chain operators.
"The recent strong growth in outlet numbers is thus forecast to fall significantly over the next five years, during a recession that could affect the market until 2012," the report warned.
"Profitability can also be expected to fall as operators are forced to offer lower prices in order to retain cost-conscious customers."
By Kerstin Kühn
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