Starbucks paid £20M to renegotiate leases and close UK stores as its cafe arm lost £17.2M

Starbucks' British store arm lost £17.2 million (about €19.2 million) in the year ended September 2018, a filing showed in June 2019 — a swing from a £4.6 million profit the year before. The company attributed the decline to falling cafe foot traffic in a downbeat economy and consumers who 'want coffee delivered to their homes or desks.'

Unwinding the store base was expensive: Starbucks took a £20 million hit renegotiating leases and closing unprofitable UK locations, where a shift to e-commerce and falling consumer confidence amid Brexit uncertainty had deepened a retail crisis. While shutting weak sites, it expanded drive-through outlets — over 100 owned and licensed already — and began London delivery through Uber Eats, with plans to extend across Europe and the Middle East.

Across Europe, Starbucks shifted more stores to franchisees — handing Latin American partner Alsea rights to France, the Netherlands, Belgium and Luxembourg — while its UK-registered licensing arm boosted profit through a Nespresso capsule deal with Nestlé. 'Doing business in EMEA continues to be challenging,' said EMEA president Martin Brok, citing 'the changing consumer landscape to high rents and political uncertainty.'

A £17.2M annual loss in the UK store arm (after £4.6M profit a year earlier) and a £20M hit from renegotiating leases and closing unprofitable stores.

The UK cafe business was built on high-street footfall just as consumers moved to delivery and e-commerce, leaving a store base sized for demand that was disappearing.

High UK rents magnified the exposure: every weak site was a lease that had to be paid, renegotiated or exited at a cost.

Brexit-driven political uncertainty and weak consumer confidence depressed cafe visits at the same time, turning a slow drift into an annual loss.

A store network sized for footfall becomes a liability when demand moves to delivery; the lease book has to shrink as fast as the traffic does.

As of the June 2019 filing, Starbucks was pressing on with closures, drive-through expansion and the Uber Eats delivery partnership; its UK store arm and European licensing operation together paid £22.6 million of UK tax that year, up from £13.7 million — a figure that had been a sore subject with British MPs who accused the company of tax avoidance, which Starbucks denied.