Starbucks credits 'minimum wage' and rising taxes for £29 million losses
Starbucks has credited UK operation losses widening to £29.8 million on a number of factors - including reduced spending and 'changes to minimum wage'.
In 2025, the beloved American coffee chain made a major operating loss despite turnover rising by £30m to £556.3m, per accounts filed at Companies House.
Starbucks listed price increases, new loyalty schemes and the introduction of ‘freshly baked in-store food’ as the reason their sales increased so dramatically, as per The Telegraph.
However, revenue increasing by 5.8 percent did not stop the business’ operating losses widening to £29.8m, up from £27.5m in 2024.
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The company cited a ‘challenging consumer environment’ and a 7.8 percent increase in National Insurance contributions, alongside ongoing input cost inflation.
It said 'changes to minimum wage and employer National Insurance contributions' had added to pressure on its profit margins.
On 1 April, the national minimum wage rose by 4.1 percent, bringing the hourly rate to £12.71 in the UK.
One-off costs associated with its £750 million store closure programme carried out in September 2025 are also thought to have increased losses.
Last October, 10 Starbucks branches shut up shop in England and Scotland, including stores in Glasgow, Ilford, Holland Park, and Muswell Hill.
According to The Telegraph, 77 stores closed in the UK during the 2025 financial year.
Starbucks blamed dwindling profits on the price of unroasted coffee, which has increased by more than 35 percent since August 2025, The Grocer wrote.
Despite the business operating in a ‘tougher and more competitive market’, Starbucks EMEA president Duncan Moir has outined plans to open 500 stores in the United Kingdom in the next five years.
It’s expected that the first 75 of these will open amid the 2026 financial year.
“We’re seeing an encouraging process as we deliver on our Back to Starbucks plan, focusing on the fundamentals of the coffeehouse experience, improving customer service and product consistency, and building stronger digital and loyalty engagement,” said Moir.
The Back to Starbucks plan, launched by company chairman and CEO Brian Niccol in September 2024, is engineered to boost sales and address common customer issues, such as long waiting times.
This week, Starbucks unveiled its latest venture: a craft coffee concentrate in collaboration with the Global Coffee Alliance and Nestlé.
The premium product is made with high-quality arabica beans and promises to ‘delivers the signature taste Starbucks is known for’.
The concentrate will debut in two varieties: rich black and signature caramel in the UK, Japan and Korea before being rolled out to Europe and Asia in 2027.
Nik Dodi, Vice President Global Coffee Alliance at Starbucks, said: “The launch of Starbucks Coffee Craft highlights the strength and impact of the Global Coffee Alliance, bringing the Starbucks experience to life beyond our coffeehouse.
“By partnering with Nestlé we’re able to scale Starbucks coffee experiences into new formats and occasions, reaching more consumers around the world.”
Ella Scott