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Costa Coffee is redesigning its stores and opening drive-though cafes to encourage people to keep drinking its cappuccinos and lattes in spite of rising prices and a weakening economy.
"Nobody will be immune if the economic environment worsens," said John Derkach, managing director of the coffee chain, adding businesses come under more pressure to give customers something they really need in a deteriorating economy. "That's why we're making our appearance better."
Costa, which has some 780 stores in the UK - making it the country's biggest coffee chain - is creating what it describes as more "comfortable" stores with leather couches, wooden tables placed several feet apart and low-hanging lamps.
People are more likely to think £2.25 is a reasonable price to pay for a cup of coffee if they buy it in "a great environment", Derkach said. All new Costa stores will be fitted with the furnishings, with about half its stores fitted out by the end of the year.
Although Costa's like-for-like sales were running at 6 per cent in the first quarter, analysts expect them to have slowed in the second quarter.
Whitbread, the hotel and restaurant group that has owned Costa since 1995, will update the market on recent sales soon. Costa accounts for about 8 per cent of Whitbread's operating profits.
Costa's refurnishing emulates similar moves by McDonald's, which has brought designer armchairs, long narrow tables and striped wallpaper into its restaurants over the past few years. The changes helped boost sales.
Costa has been raising the price of its coffee to compensate for the rising cost of milk and coffee beans.
"Just about every foodstuff is increasing in cost at the moment," Derkach said, adding that the group cannot afford to be complacent if it wants to meet its goal of doubling the number of stores its owns globally - about 1,100 - over the next five years.
Costa expects to open most of its new stores in international markets, particularly China, Russia and the Middle East, and this year plans to move into the Czech Republic, Slovakia, Hungary and Turkey.
It is also still expanding in the UK and is now following the lead of Starbucks and setting up drive-through coffee shops. It opens its first drive-through - which will also have a café in which people can sit down - in Ashford, Kent in October.
"We don't know if it will be a big idea or not," Derkach said.
Jeffrey Young, managing director of research group Allegra Strategies, said coffee chains were following the path taken by fast food chains, many of which have drive-throughs, as they expand.
"They want to access consumers in different ways," Young said.
Starbucks opened its first drive-through in April in Cardiff.
Islandrive, an independent coffee store, opened a drive-though in November at the Thurrock shopping park in Essex.
- Financial Times
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