Costa Coffee says it may cut up to 1,650 UK jobs, and cites long-term uncertainty caused by pandemic

• Up to 1,650 UK jobs are at risk at Britain's biggest coffee chain.
• Though most of its stores have reopened, the coffee and sandwich chain said it isn't sure when trade will return to pre-pandemic levels as its customers continue to work from home.
• Costa is considering removing the assistant store manager role from its UK branches to cut costs.

Costa Coffee, Britain's largest coffee chain, has warned it may cut up to 1,650 UK jobs as part of a desperate plan to rein in its costs.

The pandemic has hit the food and drink industry hard. The coffee and sandwich chain, which Coca Cola bought from Whitbread for $5.1 billion in 2018, closed most of its UK branches for six weeks during lockdown.

While around 2,400 – or nearly 90% – of its UK stores have reopened, some are operating a takeout-only service.

Customers have returned to the UK-based chain after the government introduced initiatives to help the hospitality industry, such as VAT reductions and the "Eat Out to Help Out" scheme, which offered diners discounted meals in August. Despite this, the company still faces "high levels of uncertainty as to when trade will recover to pre-Covid levels," it said in a statement.

Part of Costa's cost-cutting measures include possibly removing the assistant store manager role from all branches. In total 1,650 jobs are at risk, though it will try to find these staff alternative roles within the company, the chain said.

It has also frozen all pay increases within its support center and cut all non-essential spending.

Though all staff were put on the UK government's Coronavirus Job Retention Scheme – which furloughed workers at 80% of their pay, with Costa topping up the rest – this scheme is coming to an end in October. From September the government is also reducing their contribution to the furlough scheme to 70%, meaning Costa have to pay more for its staff still on furlough.

Other coffee chains have suffered as commuters – one of their core customer groups – continue to work from home. Rival Pret A Manger announced last week that it will cut around 2,800 jobs – or a third of its UK workforce – after a 74% sales slump during the pandemic. Pret has also reduced store opening hours, cut staff hours, and made plans to close 30 of its 440 UK stores.

Costa has around 4,000 stores in 30 countries. In the UK, Costa employs around 16,000 staff in its wholly-owned coffee shops. Costa also has a network of 1,100 UK franchise stores that employ an additional 10,500 people.