U.S. QSRs, Coffee Brands Flourishing in the United Kingdom

Subway, McDonald's and Starbucks are planning to open hundreds of new stores and create more than 8,000 jobs over the next few years in the United Kingdom.

January 31, 2012

LONDON - Subway, Starbucks and McDonald??s are planning to expand aggressively over the next few years in the United Kingdom, The Guardian reports.

Last week, Subway announced that it would open 600 new stores over the next three years, creating up to 6,000 jobs, while McDonald??s said it would create 2,500 jobs this year. Meanwhile, Starbucks is rumored to have 300 new stores representing 5,000 jobs in development over the next five years.

Subway has grown more than five-fold in the U.K. since 2004 to its current 1,400-store count, and its founder, Fred DeLuca, is bullish on long-term prospects. "Everybody eats three times a day; it's only a question of where they choose to eat. The longer-term trends are that people eat out more often," he said.

Just as Subway??s $5 Footlong promotion helped spur growth for the company in the U.S., its ?3 lunch ($4.72) deals have resonated among U.K. consumers seeking affordable treats. Accordingly, sales at British Subway stores jumped 10% over the past three months alone.

DeLuca said that despite the company??s fast growth in the U.K., it is hardly at risk of over-expanding: "When we get to 2,000 stores, we'll have about one store for every 30,000 people (in the U.K.). That's actually quite low density for us. In the US we have one store for every 12,000 people."

Despite England??s downturn, specialty coffee chains like Starbucks have reported strong sales, increasing 10% to ?2.1 billion last year.

"Coffee shops continue to be important to consumers who visit as part of their desire to socialize and have a regular affordable treat," said Jeffrey Young, managing director of research firm Allegra Strategies.

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