Costa’s coffee shops return to profit with iced drinks and matcha on the menu

Costa Limited, the main coffee shop arm of the Coca-Cola Group, has returned to profitability following a revamp of its high street outlets and the introduction of new menu items such as iced drinks, matcha and fresher pastries. The company, which operates 2,700 outlets in the UK and Ireland out of a global total of 4,000, also opened 50 new outlets in the UK last year, marking its first net increase in several years.

Plans are underway for an additional 50 new UK outlets this year, including more drive-thrus and traditional high street locations.

A growing trend among younger consumers towards decaf coffee and alternatives to caffeine has contributed to sales growth. Concerns about caffeine consumption in the afternoon are driving this shift. Costa Limited has emerged as the leading seller of matcha in UK cafes. The chain reported an operating profit of £20m in the year to 31 December 2025, up from £5.8m in 2024 and a loss of £13.5m the previous year. Revenue increased by 5% to nearly £1.3bn, up from 1% growth in 2024.

Global sales for the parent company, Costa Group, which also sells coffee beans, pods in supermarkets, and coffee machines to households and offices, rose by 3.5% to £1.74bn. The global operating profit increased by 30% to £101m. Costa Group CEO Philippe Schillie credited the strong performance to a decade-high growth in visits to Costa coffee shops.

Schillie highlighted the popularity of the Velvetino, a low-calorie iced coffee favored by younger drinkers. He emphasized that the coffee shop is no longer just a morning destination but also an afternoon and evening spot, offering a range of drinks suitable for any time of day. Costa is investing in the remodelling of approximately 250 stores annually, with the goal of updating more than 1,200 of its 1,700 company-owned outlets.

These changes include the addition of more digital self-order kiosks, already present in 200 UK outlets, and the promotion of Podio office coffee machines. The CEO noted that Costa is now the UK's third-largest brand in home coffee machines and sees immense potential in this market.

The company's strong performance comes amid a global climate phenomenon, El Niño, which is affecting coffee and cocoa production in Latin and South America, potentially impacting coffee prices. Schillie acknowledged the importance of being prepared for these fluctuations. Costa's renewed focus on growth and innovation comes after its parent company, Coca-Cola, officially confirmed in February that it would not pursue a sale of the chain after unsuccessful bids fell short of expectations.