Fear for major UK coffee shop chain with 2,700 cafes as huge sale called off
The coffee shop is facing mounting fears for its future after a £2 billion sale dramatically collapsed, leaving the beloved British chain with 2,700 cafes in limbo
A beloved British coffee chain with 2,700 cafes is facing mounting concerns for its future after a £ 2 billion sale dramatically collapsed. Costa Coffee, the well-known high-street brand, was set to be sold off by its American owners, soft-drinks giant Coca-Cola, for a staggering £ 2 billion - but the deal has now collapsed.
The failed sale had attracted heavyweight bidders, including the bigwigs behind trendy bakery chain Gail's and restaurant favourite Pizza Express. Costa has more than 2,700 outlets across the UK and Ireland, but has floundered since its purchase by Coca-Cola amid fierce competition from rivals.
A tidal wave of trendy new outlets, such as Blank Street and Grind, has been winning over younger customers. Latest accounts of the beleaguered coffee chain show losses doubled to a shocking £13.5million in the year to December 2024 despite raking in £1.2billion in sales.
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But in July last year, outgoing Coca-Cola boss James Quincey was forced to admit that the investment his company had made in the chain had "not quite delivered".
Dan Coatsworth, head of markets at AJ Bell, told the Mail that the firm "has gone off the boil" and that the soft-drinks giant Coca-Cola "will be reluctant to sell it for beans".
He added: "We're in an era where companies are focusing on what they do best, and for Coca-Cola that means fizzy drinks rather than lattes. It always felt like Costa was low down the priority list for Coca-Cola, left to go cold like an undrunk cappuccino. It will now have to give the brand more love if it is to stand any chance of getting a more reasonable takeover offer."
The Financial Times first revealed the sale was on the rocks, with UK coffee shops battered by soaring bean prices, spiralling staffing costs and Chancellor Rachel Reeves's crippling hike to employers' National Insurance last year. The collapsed deal leaves Costa in limbo as Coca-Cola faces mounting pressure to turn around the struggling chain or face further losses.
Industry insiders warned that without a buyer, Costa faces an uncertain future as it battles to compete with younger, trendier rivals snapping at its heels. The coffee giant's fate now rests in the hands of Coca-Cola bosses, who must decide whether to pump more cash into the flagging brand or accept a lower offer from potential buyers.
