UK cafes and coffee shops: the coffee brands lose money, the burger franchisees bank it

About 149 UK counter-service cafe and fast-food companies publish a full profit-and-loss, booking £8.5bn of combined reported turnover (a total that includes one miscoded facilities group and McDonald’s franchisor fee income) — and the category sign over the door is a lie. It says cafes and coffee shops; the money says burgers and fried chicken. Starbucks turned £556M of UK sales into a £41.3M pre-tax loss, and Tim Hortons’ UK master franchisee lost another £21.1M as it shrank. Meanwhile a bench of companies nobody has heard of — Edge Restaurants, Demipower, P A Crocker — quietly kept 3–8p in the pound running McDonald’s and KFC counters under franchise. The median company in this map keeps barely half a penny of every pound it takes at the till, the thinnest margin of any consumer trade we’ve mapped, and most of the giants in the table cut headcount last year. Figures are approximate — verify against a company’s own accounts before relying on any single number.

Read the names before the numbers

Three things reshape how you should read every table below.

First, “cafes” here means the counter trade — and the counter trade is fast food. The category catches everywhere you order at a counter and no alcohol licence hangs on the wall: coffee shops, sandwich bars, and the entire McDonald’s, KFC and Subway economy. The result is that Britain’s burger and chicken franchisees file shoulder-to-shoulder with the coffee chains, and they are most of the money.

Second, the famous cafe brands mostly aren’t here. Costa and Black Sheep Coffee present themselves in their accounts as coffee roasters; Greggs classes itself as a baker; Pret A Manger as a retailer; Gail’s sits among the licensed restaurants we cover in the UK restaurants map. What remains is the pure counter-service corner of a much bigger trade — with one anomaly: ISS Facility Services (£744M, 11,938 staff) is a facilities-management group — cleaning, security and workplace catering — that happens to classify itself here. It is not a cafe business, and we set it aside from the narrative.

Third, never compare the brand’s margin with the operator’s. McDonald’s Restaurants is franchisor and operator at once: its £1.82bn of turnover mixes till sales from company-run restaurants with rent and royalties collected from its franchisees, so its 6.6% margin is part property-and-brand economics — the pattern our restaurants map calls “the money is in the brand”. A franchisee’s turnover is till sales alone, and 3–5% is a good year. Same golden arches, different business.

The giants: one brand, many disguises

† Fieldrose’s latest accounts cover a 15-month period (October 2023 to December 2024) after a year-end change — annualised turnover is roughly £113M, which would place it below Fortress and AG Restaurants in this ranking. That is also why its year-on-year columns are blank.

Set ISS aside and the table is one brand wearing many disguises. Below McDonald’s own £1.82bn sit five McDonald’s vehicles in the giants alone — four confirmed franchisees plus Capital Arches, a joint venture that McDonald’s Restaurants itself majority-owns per the PSC register — and more further down. Add up the identifiable McDonald’s names across this map — the brand company plus its confirmed franchisees — and about £2.6bn, roughly a third of the visible counter trade, rings up under golden arches; the true share is higher, because several more of the anonymous “Restaurants Limited” vehicles in these tables are almost certainly franchisees too.

The coffee side of the ledger is harder reading. Starbucks loses £41.3M on half a billion of sales through its company-operated stores — but that loss is struck after roughly £40M of royalty and licence fees paid to a fellow Starbucks group company for the brand, so on a pre-royalty basis the UK stores run close to break-even. TH UK & Ireland, which built the Tim Hortons estate with its own capital as master franchisee, loses £21.1M while shrinking — turnover down 6%, staff down 13% — though the loss narrowed from £33.7M the year before and includes about £7M of store impairments and onerous-lease provisions. Caffè Nero shows coffee can work at scale: £21.9M of profit on £366M, growing sales 10% while trimming 4% of staff. But mind the comparison: Nero owns its brand, and Starbucks UK rents its own from its parent — the gap between Nero’s plus-£22M and Starbucks’ minus-£41M is partly group structure, not just operations.

And read the two right-hand columns down the page: McDonald’s −8% staff, Nero −4%, Fortress −20%, Crocker −6%, Tim Hortons −13%. Most of the giants cut headcount last year — seven of the ten with prior-year data, with Kyra (+13%), Frenchcroft (+5%) and ISS (+1%) the exceptions — mostly while holding or growing revenue. That is what defending a sub-5% margin against wage-floor and payroll-cost rises looks like, one rota at a time. (Dashes mean no comparable prior-year figure in our data.)

The shape of the market: scale is the only shelter

Most trades we map have a healthy small tier. This one doesn’t. Below £1M of turnover, only 25% of companies make money — the actual independent cafes in this map, and three-quarters of them are loss-making. Profitability climbs steadily with scale: 43% in the £1–5M band, 61% at £5–25M, 62% at £25–100M. The shelter is volume — multi-site operators spreading rent, rotas and waste over enough counters to survive the arithmetic that kills the single-site cafe.

The best-run operators are franchise families

Rank the profitable £5–100M operators by turnover and you get a roll call of franchise dynasties, not coffee entrepreneurs. Demipower — a family business that opened its first KFC in 1989 and is now the brand’s second-largest UK franchisee — appears twice, through two group entities. You can spot the franchise counters by headcount: roughly fifteen to twenty-five staff per £1M of sales, a part-time workforce two to three times as labour-dense per pound as a Starbucks.

…and 8 more profitable operators between £18M and £33M, including the map’s margin outliers: NNA (14.7% on £25.3M), Burton & Speke (11.9%) and Taco - Time (9.0%). One entry we’ve pulled out of the ranking: Taco Bell UK and Europe books £21.0M at a 12.7% margin with just 31 staff — its accounts are filed in US dollars ($28.1M of turnover, converted here at the period-average rate), and that is a brand-and-support company living on fees, not a counter operator, so its margin is not comparable with anyone else’s in this table.

The pattern across the genuine operators is remarkably tight: 3–5.5% is the standard return for running someone else’s brand well, 7–8.5% is exceptional (JRA Family Restaurants, the two Alderforce companies), and nobody escapes the band by much. Franchise economics are designed that way — the brand takes its royalty and rent off the top, the wage floor takes its share off the bottom, and the operator lives on what’s left.

Growth, read with care

In a franchise economy, headline growth usually means restaurants changing hands, not trade won — sites bought from other operators or taken over from the brand. The growth table is dominated by exactly that: operators nearly doubling revenue while earning almost nothing on it. Bpnc grew 97% and kept 0.6p in the pound; Principle Restaurants grew 61% for 0.5p; A F A Restaurants reached £86.7M — within sight of the giants table — and kept £90k, a 0.1% margin. Expansion in this trade buys revenue long before it buys profit.

The one entry that breaks the pattern is JRA Family Restaurants: +24% turnover, +8% staff, and an 8.5% margin — the only company in the table growing fast and keeping a real share of the till. Everyone else is either buying growth at a sliver above breakeven or below it. The staff columns tell you which expansions are real counters opening (Bpnc +88%, Luma +55%) rather than accounting reshuffles — but real counters at half a penny of margin are still a bet that scale will eventually pay, in the one trade where the size-distribution chart says it might.

Market structure: a third of the map is one brand

On paper the top five companies hold 43% of the visible turnover. In practice the concentration is worse than it looks, because the fragmented-seeming middle — a dozen “Restaurants Limited” vehicles at £30–180M each — is substantially one franchise system. Count the identifiable McDonald’s entities together and roughly a third of the counter trade flows through a single brand; add KFC’s franchise families and the two coffee majors, and the “fragmented” cafe trade resolves into a handful of brand systems plus a genuinely fragmented, mostly unprofitable small tier.

Family-owned, buyout-free — for now

This is one of the least financialised maps we’ve drawn. Of the 149 companies, 108 are individual-owned against 35 corporate-owned, and only about 5% carry a Holdings/Bidco/Topco-style name — the fingerprint of a buyout — versus roughly 15% in our pubs map. The counter trade is still a family business: franchise vehicles built by an operator, often passed down, with the brand relationship rather than leverage as the organising structure. The vintage chart says the same thing — the big cohorts are the 2000s (49 companies) and 2010–15 (31), each wave minted as operators bought restaurants and incorporated vehicles to hold them; only 8 companies have appeared since 2021, because the way in is buying counters, not starting them.

What the map shows

1. The “cafe” category is really the fast-food franchise economy. The famous coffee brands mostly file elsewhere; what’s left is McDonald’s, KFC and the coffee majors — and about a third of the visible turnover rings up under golden arches alone.
2. Coffee at scale loses money; burgers under franchise make it. Starbucks: −£41.3M on £556M (a loss struck after ~£40M of intra-group brand royalties). Tim Hortons’ master franchisee: −£21.1M and shrinking, though narrowing. The McDonald’s and KFC franchise families: a steady 3–8p in the pound. Caffè Nero’s UK company (+£21.9M) is the exception on the coffee side.
3. The margin band is brutally tight by design. The median company keeps about half a penny per pound; even the best-run franchisees rarely clear 5%, because royalty and rent come off the top and the wage floor off the bottom.
4. Most of the giants are cutting staff. Seven of the ten giants with prior-year data reduced headcount last year while holding revenue — the labour-cost squeeze made visible, one rota at a time.
5. Small is the graveyard. Only 25% of sub-£1M companies — the actual independent cafes — make money, and profitability climbs with every band of scale. This is the rare map where the little guys do worst.
6. Growth means counters changing hands. The fastest growers keep 0.1–0.9p per pound of the revenue they add; JRA Family Restaurants (+24% at an 8.5% margin) is the only fast grower earning a real return.

Methodology and caveats

This covers only the 149 UK counter-service cafe and fast-food companies that publish a full profit-and-loss; the long tail of independent cafes files abridged accounts with no figures, and several of the best-known brands — Costa, Pret, Greggs, Gail’s, Black Sheep — classify themselves as roasters, bakers, retailers or licensed restaurants and appear in other maps (see the UK restaurants report). ISS Facility Services classifies itself in this category but is a facilities-management group; it is excluded from the narrative, and combined-turnover claims that set it aside say so. McDonald’s Restaurants mixes company-run till sales with rent and royalties from franchisees, so its margin is not comparable with a franchisee’s — and the combined-turnover total therefore counts some franchisor fee income alongside the same franchisees’ till sales; Taco Bell UK and Europe is a brand-and-support company whose fee margin is likewise excluded from operator comparisons, and it files in US dollars — its figures are converted at the period-average rate. Fieldrose’s latest accounts cover a 15-month period to December 2024 after a year-end change; the giants table footnotes this, and its as-filed figures also sit inside the combined-turnover total. Capital Arches Group is majority-owned by McDonald’s Restaurants per the PSC register — a McDonald’s-controlled joint venture rather than an independent franchisee. The two Demipower entities are one family group and would double-count if summed. Franchise labels are drawn from public brand and company statements where identifiable; vehicles we could not confirm are described generically, and some are certainly franchisees of the same systems. Dashes in the year-on-year columns mean no comparable prior-year figure in our data. Figures are approximate — verify against a company’s own accounts before relying on any single number. This is analysis, not financial advice.