Costa Coffee has declared 2025 a year of “strong progress” after parent company Coca-Cola scrapped plans to sell the chain to a private equity buyer.
The UK’s second-largest coffee chain grew revenue by five per cent to £1.3bn last year, reversing a period of financial difficulty and returning to operating profit.
Coca-Cola had been seeking around £2bn for Costa, with Asda owner TDR Capital, Gail’s owner Bain Capital and private equity firm Apollo reportedly among the potential buyers.
The sale process was abandoned in January after bidders failed to meet Coca-Cola’s expectations, leaving the chain to pursue its turnaround under existing ownership.
Costa chief executive Philippe Schaillee said the firm’s investment plan has begun to pay off, with branch refurbishments and product innovation paying off in higher sales and improved productivity.
He said: “These results demonstrate the strength of the Costa brand and the dedication of our hard-working teams, who serve great coffee with heart every day, and reinforce our focus on building sustainable long-term growth.”
The firm delivered an operating profit of £20m in 2025, overturning a £13.5m loss in 2024 which it blamed on “soft footfall and growth of value-led competitors”, according to its latest accounts.
Costa’s statutory profit did slip by seven per cent to £62m, highlighting that challenges remain despite the broader operational improvements recorded during the year.
Cheaper coffee chains have taken greater dominance of the market in recent years, just as up-market firms like Blank Street have emerged on UK high streets.
Earlier this month, Greggs overtook Costa to become the country’s biggest branded coffee destination, with 2,737 outlets compared to Costa’s 2,707, marking a significant milestone in the competitive UK coffee market.
Costa is now slowing its expansion plans, having opened 79 new UK stores in 2025, and hopes to open between 40 and 50 new sites across the next year.
As of December 2025, Costa was the UK coffee chain with the highest proportion of sites within a five-minute drive of another brand, at 73 per cent.
The group is instead focusing on an extensive refurbishment programme, having refreshed 1,063 stores in the UK and Ireland since 2023, including 305 last year, with around 210 further sites planned for 2026.
Costa said its investment in Matcha and Ube drinks is driving customer growth, adding that its iced drinks were particularly popular during the summer heatwaves.
The firm said: “Costa is deliberate with innovations ensuring that innovations have staying power that Costa can scale really well. That’s the advantage of Costa’s scale: when we see something customers genuinely want, we can make it accessible to millions of people.”
Schaillee added: “2025 was a year of strong progress for Costa Coffee, with revenue growth, improved profitability and Costa Limited returning to operating profit.”
The group serves more than 4m cups of coffee every day and has 6m active members of its loyalty scheme, underlining its continued relevance among British consumers.
Coca-Cola (KO) originally acquired Costa for £3.9bn from Whitbread, the FTSE 100 owner of Premier Inn, back in 2018, a deal that positioned it as a major player in the global coffee sector.