Costa Coffee has returned to profit with iced drinks and matcha menu innovations, marking a significant turnaround for the UK coffee chain. The company's main coffee shop arm reported an operating profit of £20 million for the year ending December 31, 2025, a dramatic swing from losses of £13.5 million in 2024 and £5.8 million the year before.
How Costa Coffee Achieved a £20m Profit Turnaround
The revival was driven by a strategic overhaul of Costa's high street outlets and a broader menu that now includes iced drinks, matcha, and fresher pastries. These changes attracted younger consumers and boosted sales, particularly as demand for decaf and alternative beverages grew amid concerns about afternoon caffeine intake.
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Costa also expanded its footprint, opening a net 50 new UK outlets last year—its first net increase in several years. The chain now operates 2,700 outlets in the UK and Ireland out of 4,000 globally, employing about 20,000 people. It plans to add another 50 UK outlets this year, including more drive-thrus and high street locations.
Menu Innovation: Iced Drinks and Matcha Lead the Way
Central to Costa's recovery was its menu revamp. The chain says it is now the largest seller of matcha via cafes in the UK, capitalizing on the growing popularity of the green tea powder. Iced drinks also played a key role, especially among younger consumers who increasingly seek cold beverages and lower-caffeine options.
"Demand from younger consumers for decaf coffee and other alternatives is driving sales growth," noted a company spokesperson. This shift helped Costa differentiate itself in a crowded market where classic coffees face heavy competition from Greggs, Gail's, Caffè Nero, and numerous smaller operators.
Financial Performance: Revenues and Global Growth
Costa's revenues rose 5% to almost £1.3 billion, up from 1% growth in 2024. The strong performance lifted global sales at parent company Costa Group—which also sells coffee beans, pods, and machines—by 3.5% to £1.74 billion. Global operating profit jumped 30% to £101 million.
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Operating Profit (Costa Limited) | £20m | -£13.5m | Turnaround |
| Revenue | £1.3bn | ~£1.24bn | +5% |
| Global Sales (Costa Group) | £1.74bn | ~£1.68bn | +3.5% |
| Global Operating Profit | £101m | ~£78m | +30% |
Key Takeaways from Costa's Profit Recovery
- Menu diversification with iced drinks and matcha attracted younger customers.
- Outlet expansion added 50 net new UK locations, with 50 more planned.
- Revenue growth accelerated to 5%, up from 1% the previous year.
- Global profit surged 30% to £101m, driven by UK performance.
FAQ
What drove Costa Coffee's return to profit?
Costa's return to profit was driven by a menu revamp featuring iced drinks and matcha, plus the opening of 50 net new UK outlets and a 5% revenue increase.
How many outlets does Costa Coffee have?
Costa operates 2,700 outlets in the UK and Ireland out of 4,000 globally, employing about 20,000 people. It plans to open 50 more UK outlets this year.
Is Costa the largest seller of matcha in the UK?
Yes, Costa says it is now the largest seller of matcha via cafes in the UK, capitalizing on the growing popularity of the beverage.
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