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Starbucks to add 100 new UK stores as Britons thirst for iced espressos

General view of a Starbucks coffee shop in London

LONDON (Reuters) - Starbucks is to open 100 new coffee shops across Britain this year, as the country's appetite for vanilla lattes, iced espressos and banana caramel muffins continues to grow despite the gloomy economic outlook.

The coffee shop chain said on Monday that its UK sales jumped 37% last year, exceeding pre-pandemic levels as shoppers and workers returned to town centres and offices after COVID-19, and as the group opened up new "drive thrus".

About 30 million pounds would be invested in Britain this year, said Starbucks, to fund the opening of the new outlets and renovate the existing estate of over 1,000 shops.

Starbucks expects "growth momentum" to continue said Duncan Moir, president of Starbucks operations in Europe, Middle East and Africa in a statement, although he added he was cautious on the macro-economic environment.

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Britain is heading for a shallow but fairly long recession, lasting more than a year, according to Bank of England forecasts, as households and businesses reckon with the after-effects of last year's surge in energy prices.

Starbucks said it was impacted by inflation last year with coffee, milk and packaging all costing more.

The new stores will include more smaller format stores and drive-thrus, said Starbucks.

Last year the chain increased pay for staff in its British stores.

Coffee shops are battling to keep their baristas. Costa Coffee on Monday followed rival Pret A Manger in raising pay for its British store staff for the third time in a year.

Starbucks, which first opened in Britain in 1998, reported revenues of 449.3 million pounds ($539 million) in the 12 months to Oct. 2 2022 in the UK, and also said it would open 300 new stores in the EMEA region.

($1 = 0.8335 pounds)

(Reporting by Sarah Young, Editing by Paul Sandle)