Calls for a consumer boycott of Starbucks coupled with cost of living pressures, dearer commodity prices and competition from new operators weighed on sales at the coffee chain’s UK arm last year, pushing the business into a loss.

Starbucks UK recorded a 4 per cent drop in sales to £525.6 million for the 52 weeks to September 29, due to a “challenging consumer environment,” causing the company to fall into a £35.2 million pre-tax loss, against a £16.9 million profit a year earlier.

To reflect its weaker financial performance, the group paid corporation tax of £1 million, down from £7.2 million the previous year.

The coffee company, which arrived in Britain in 1998 through the acquisition of Seattle Coffee Company, blamed misconceptions about the group’s position on the Israel-Hamas war for affecting footfall in some locations during the first half of the year.

The coffee chain was named on a list of companies to boycott for its perceived support for, investment in, or links to, Israel.

In response, the US-listed company said: “We have no political agenda. We do not use our profits to fund any government or military operations anywhere — and never have.”

It also wrestled with new entrants into the UK’s “highly competitive” coffee market as well as cost of living pressures squeezing disposable income. A weaker consumer environment coincided with inflationary pressures for commodities such as dairy and cocoa and wage inflation.

Duncan Moir, president of Starbucks Europe, Middle East and Africa (EMEA), said: “It has been a difficult period for the sector. We navigated significant macroeconomic pressures including inflationary headwinds which have also had an impact on consumer confidence.

“We are focused on regaining momentum by strengthening and scaling how we integrate technology
across the business, building on the popularity of our Starbucks Rewards programme and further
optimising our menu to ensure we continue delivering on our core offering every time.”

The business, which opened 100 new stores last year, has 1,240 coffee shops in the UK, which comprise 378 company-owned stores and 862 run by licensees. The company has outlined plans to open a further 80 shops this year.

Starbucks EMEA reported an 8.8 per cent fall in revenues to $388 million in 2024. It made a pre-tax profit of $114.6 million, down from $141.1 million a year earlier. As the business is headquartered in London, Starbucks EMEA had to pay UK corporation tax of $37.5 million, up from $36.4 million. It ended the year with 4,862 shops in 42 markets, up from 4,582 sites, and plans to open a further 150 shops in the next year.

Starbucks, which was founded in Seattle in 1971, is the world’s biggest coffee shop operator, with about 32,000 stores globally.

In January, the company reported a smaller-than-expected fall in first-quarter sales in early signs of the struggling coffee chain benefiting from efforts by Brian Niccol, its new chief executive, to revive demand. It said global-like-for-like sales declined by 4 per cent in the quarter, which was an improvement on the 7 per cent drop in the previous quarter. Starbucks reported $36.2 billion in revenue last year. The company said it would not introduce any further price rises this year as it looks to appeal to consumers paring back on big non-essential spending and to ward off competition from upstart brands.