Despite being a common fixture on the high street, in the UK we have seen a decline in Brand Love for coffee shops this year. In response to the changing market, some brands are hiking up prices and downsizing their store networks.
Starbucks and Costa have been considerably impacted by the recent changes, with Starbucks being pushed out of the Top 10 Most Loved Brands. Both companies recently increased prices to cope with rising costs of raw materials and operating expenses. Adding to the challenges, Starbucks appointed a new CEO following the resignation of its previous executive. The former CEO’s tumultuous 17-month tenure was marked by union clashes and commercial downturns, highlighting the brand’s ongoing struggles.
But what impact has this had on satisfaction, and will it drive customers elsewhere for their caffeine hit?
In April, 17% of consumers perceived Starbucks as a ‘guilty pleasure,’ but currently, that figure stands at just 10%. There’s also a pattern of negative spontaneous associations, including terms like ‘expensive’ and ‘overpriced.’ The financial difficulties and adjustments Starbucks has made have led to a loss of engagement and brand fatigue. Similarly, Costa’s ‘guilty pleasure’ associations have fallen by over 11% in the past four months.
Grounds for celebration
On the opposite end of the coffee counter, Gail’s, Caffè Nero, and Coffee #1 are seeing notable rises in Brand Love, driven by their focus on indulgent experiences that resonate with customers.
When looking at approaches to loyalty schemes, Caffè Nero maintains customer engagement through seasonal extras and interactive challenges. The brand achieved record sales in 2024 thanks to its improved summer menu, which focused on premiumization and Italian authenticity.
Gail’s saw a 20% increase in Brand Love over the past year, with associations of ‘premium,’ ‘having a treat,’ and ‘guilty pleasure’ all increasing. Gail’s rewards its loyal patrons with a free loaf of bread upon completing a full stamp card. This unique reward differentiates Gail’s from competitors who typically offer another free coffee. By encouraging customers to try its bread, Gail’s has effectively evolved existing coffee customers into bakery customers, unlocking a new revenue stream and expanding its customer base.
Additionally, Gail’s offers a free sweet treat for those that haven’t visited in a while – a delightful incentive to re-engage with the brand. Who doesn’t love that?
The final sip
The coffee sector is undergoing significant changes, with some brands facing negative value perceptions due to price hikes, while others succeed by offering indulgent experiences and innovative loyalty schemes. Gail’s and Caffè Nero have demonstrated that by focusing on premium customer experiences and loyalty schemes, brands can increase consumer engagement and better align with their customers’ expectations.
Click here to check out the full The UK’s Most Loved Eating Out Brands 2024 report.
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