Who Will Win the Coffee and Bakery Roll-Out Race?
Against a challenging backdrop for UK hospitality, some sectors seem to be having a much better time of it. The coffee and bakery sector in particular has very strong growth stories emerging, each showcasing a different business model and expansion strategy: GAIL’s is approaching 200 bakeries, built around vertically integrated production and a neighbourhood feel. Cornish Bakery has found white space in regional towns and tourist hubs. Blank Street has pursued small footprints, Eversy’s automated coffee machines, sleek branding and an innovative drinks offer. The Coffee and % Arabica demonstrate how a focused speciality coffee offer and strong aesthetic can fuel international growth. Grind has built an omni-channel coffee platform, whilst Paris Baguette, now over 4,000 locations globally, demonstrates the power of franchising discipline and infrastructure. Looking at them together, certain themes emerge, but the overriding finding is that there are many paths to glory, especially when your core product offer consists of affordable, habitual, high-margin treats. I have taken a closer look at each to explore what we can learn and where the opportunities might lie for investors.
I will start by looking at a couple of concepts less covered by our industry press: % Arabica and The Coffee. Both could easily be mistaken for independents, yet each has achieved surprising scale, and quickly. Despite their small UK estates, worldwide % Arabica has grown to around 242 stores across 29 markets, while The Coffee, a brand I had not even heard of until I stumbled across one abroad recently, has more than 350 stores across 25-plus countries. The art of both models lies in their simplicity: each has a tightly focused coffee offer, a small food counter and strong brand appeal built around Japanese influence and a clear design aesthetic. % Arabica is Japanese, while The Coffee is Japanese-inspired with a Japanese logo, but was founded in Brazil. For both brands, a laser-focus alongside strong design, brand development and efficient ops, have fuelled their franchise roll-out.
On the franchise theme, another concept that puts the scale of even our largest UK bakery-café businesses into perspective: Paris Baguette has just seven sites in the UK but more than 4,000 worldwide, with well over 3,000 in South Korea, the brand’s home market, (not, surprisingly, Paris or even France!). A far cry from the simplicity of % Arabica and The Coffee, Paris Baguette has a fully fledged bakery offer with a huge range of breads, pastries, cakes and sandwiches. Its London sites are high-profile and prominent, including Battersea Power Station, Canary Wharf and Westfield London. The company opened its first UK sites as company-owned stores before partnering with BH Property Brothers on its franchise expansion, targeting 200 locations over the next ten years. Its more complex offer is powered by a formidable production and supply-chain operation. Franchisees buy into the wider Paris Baguette ecosystem which includes proprietary manufacturing and regional distribution so products are simply baked and finished in store. Scaling an offer of this breadth consistently requires a sufficiently large and capable core business, alongside a company culture and team entirely dedicated to franchisee success.
Another international entrant garnering considerable interest is Blank Street. It is quite a different proposition, putting technology first through Eversys machines, which automate grinding and extraction to produce “barista-quality coffee” at the push of a button. While I am sceptical that they replicate the quality of an expertly brewed barista coffee, what they do offer is speed and consistency. When a considerable proportion of sales comes from milky, flavoured lattes and matcha drinks, these qualities are more important than a beautifully crafted coffee. Success comes from its streamlined operation, compact shops, distinctive and instantly recognisable mint-green branding, and strong marketing potential driven by beverage innovation. Small footprints, automation and lean team have created an efficient, reliable and highly repeatable model. Having launched from a single Brooklyn coffee cart in 2020, and entered the UK in 2022, Blank Street has expanded impressively quickly to more than 100 locations worldwide, including more than 55 in the UK.
Coming back to one of our national hero brands, GAIL’s is a well-studied success story, but continues to evolve and therefore reveal new learnings. A key facet of its success is its vertically integrated model, rooted in the group’s origins as artisan wholesale bakery The Bread Factory, before the GAIL’s bakery opened in 2005. This gives it a level of product quality and control superior to much of the high street. Alongside this, is its neighbourhood feel and bountiful displays. Bread and coffee are strong, high-frequency anchors, meaning GAIL’s can rely on a relatively concentrated base of affluent local customers who visit often. This, in turn, allows it to operate a high density of locations. Back when they had 12 sites, I worked on a scalability assessment where we had put the rollout potential at around 180, which they have now exceeded. Through the development of new formats, they have proved that they can work in an array of different location types - including airports (given their recent Gatwick opening) and stations. One watch-out for the brand is British resistance to perceived gentrification and “chainification” - the risk that growing ubiquity dulls the brand’s shine. In the long-term, this may create opportunity for more left-field expansion, using GAIL’s brand and / or operating power to grow through new formats, channels, sub-brands and markets rather than relying solely on ever-increasing UK site density.
Another home-grown success, and one less well known among Londoners, is Cornish Bakery, now at 75+ sites. It is very different from GAIL’s: there is no bread anchor, but instead a range of familiar British favourites, including pasties, sausage rolls, scones, tea and coffee, all served in attractive, modern cafes. What is interesting is how this distinctly British but modern positioning creates a broad, multigenerational appeal. It is familiar, unintimidating and offers something for everyone. Its model has proven successful in locations with very little around them other than a dog-walking beach and a corner shop. That creates very compelling potential for scale, compounded by its successful foray into non-traditional formats such as motorway services and events venues. Its location strategy is also distinctive, targeting less saturated places rather than joining the dogfight for the same corner unit in the same market town as all the other bakery cafes. Cornish Bakery is now testing its RISE format, extending the offer into brunch, lunch and early evening (with wine!). Time will tell whether this unlocks opportunity or adds unnecessary complexity.
The final homegrown model I want to focus on is Grind, which has taken a very different approach, focused less on store rollout and more on building an omnichannel coffee platform. Grind now appears on British Airways flights and in its lounges, at Dubai Airport, throughout Soho House’s global estate and in workplaces through Compass. Its products are also sold through more than 10,000 retail outlets, including Tesco, Waitrose, Sainsbury’s, Co-op and Ocado. This sits alongside a relatively small physical estate of 11 UK sites, three trucks and a Dubai franchise. Its current sales mix is reported as 35% from stores, 40% online and 25% from grocery and B2B. In this model, the cafés act as shop windows, building awareness to support the other channels. The model is interesting, but its ultimate success remains to be proven. Turnover grew 18.5% to £35.3m in the year to April 2025, but the business recorded an EBITDA loss of £5.9m and a pre-tax loss of around £9m as it invested in grocery, B2B, marketing and manufacturing. Grind says its established cafés and online business are profitable, so the key question is whether its newer channels can achieve sufficient scale and become sufficiently profitable for the strong returns its shareholders are no doubt expecting.
To conclude, we at Juniper are strong believers in the continued growth of the coffee and bakery market, and while there is no single recipe for success, some clear themes emerge. Brand and design are particularly important in this sector, with WatchHouse and HAGEN deserving shout-outs in this regard. We are also seeing two divergent models succeed: narrow, drinks-led offers and much broader bakery propositions. The former requires absolute focus on operational efficiency and consistency whereas the latter require significant operational infrastructure and, where franchising is involved, dedicated systems to support partners and maintain quality. The ability of these concepts to travel is another encouraging feature. Localisation remains important, but the core appeal of coffee and many pastries crosses markets well. Finally, growth does not need to come solely from opening conventional stores or entering new countries. Travel formats, grocery, online, workplace catering and hospitality partnerships all provide further routes to grow.
