Costa Coffee attracts nearly 4m customers a week

'We're the taxman's favourite coffee shop,' says Whitbread boss as coffee chain sees sales surge amid Starbucks boycott

Costa Coffee sales rose by 7.1% in the last three months against the backdrop of protests and boycotts against its closest rival Starbucks because of the US chain's controversial tax arrangements.

"We have been the UK's favourite coffee shop for some time; we remain the taxman's favourite coffee shop too," declared Andy Harrison, chief executive of parent company Whitbread.

Harrison said it was impossible to attribute Costa's increasingly strong performance to the controversy surrounding Starbucks's tax affairs, but he noted that Costa had enjoyed a record week last week, with UK stores – excluding franchised shops – taking £10m and attracting 3.8m customers. The weather may have played a part too – cold but dry, a perfect blend for coffee shop sales.

Harrison said he had seen the results of a YouGov brand preference survey, conducted at the end of October, shortly after a Reuters report highlighted Starbucks' low UK tax payments. "They show Starbucks have taken a bit of a knock as a result [of public outrage]," he said, although he was not able to release the precise figures.

More than 40 Starbucks stores were the target of a protest last weekend by UK Uncut. Starbucks's aggressive accounting measures have allowed it to pay just £8.6m in tax since launching in the UK around 14 years ago. Costa UK's accounts for last year showed similar sales, but a tax charge of £15m.

Starbucks has also been criticised for plans to pare back staff terms and conditions, including cutting paid lunch breaks, sick leave and maternity benefits for thousands of its British workers.

Harrison on Tuesday claimed Whitbread's 40,000 staff were among the most satisfied on the high street and in the hotel industry, with recent workforce surveys suggesting "employee engagement" was at record levels.

Costa's rise to the title of Britain's largest coffee shop chain – it now has more than 1,200 outlets in Britain – has not been without controversy itself,with increasing signs that some communities do not want the near-ubiquitous brand on their high street. In October, Costa ditched plans for a store in Totnes, Devon, in the face of fierce local opposition.

Nevertheless, Costa is one of the few high street retailers which still has ambitious plans to add new stores across Britain, creating hundreds of jobs – particularly for young adults who face the toughest job market in generations.

Like-for-like sales growth of 7.1% for Costa in autumn compared with 6.8% growth earlier in the year. Total sales across Costa's global business were up 25.5%, with roaring growth in China easing off – though remaining in double-digit growth. Harrison said this was slightly better than the experience of other groups such as McDonald's and Yum, the US group behind Taco Bell and KFC.

Across the wider Whitbread group, third-quarter comparable sales were up 3.3%, with the group's Premier Inn hotel chain making gains against declining revenues in the hotel industry.


Simon Bowers

The GuardianTramp

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