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Costa Coffee announces 1,650 jobs are at risk due to coronavirus impact
3 September 2020, 12:15 | Updated: 3 September 2020, 13:52
Costa Coffee could cut up to 1,650 staff as it looks to cut costs amid continued uncertainty over when trade will fully recover following the lockdown.
It told staff on Thursday that it has started consultations which could impact more than a 10th of roles.
The move comes a week after rival Pret A Manger revealed it was slashing 2,800 roles as part of a restructure of its UK business.
Costa closed nearly all of its 2,700 UK stores for six weeks during the pandemic but had now reopened around 2,400 sites.
The Coca Cola-owned chain said trade is "returning" after being boosted by the Government's VAT reduction on food and non-alcoholic drinks and the recent Eat Out to Help Out scheme.
However, it said the proposed job cuts had been driven by "high levels of uncertainty as to when trade will recover to pre-Covid levels".
Neil Lake, managing director for Costa Coffee UK and Ireland, said: "Today's announcement to our store teams was an extremely difficult decision to make.
"Our baristas are the heart of the Costa business and I am truly sorry that many now face uncertainty following today's news.
"We have had to make these difficult decisions to protect the business and ensure we safeguard as many jobs as possible for our 16,000 team members, whilst emerging stronger ready for future growth.
"As a proud member of the UK high street, we remain committed to the role Costa plays in supporting the economic recovery of the country, but today I want to say a huge thank you to all of our team members that are affected by this announcement and we will be supporting you throughout this process."
Britain's dominant services sector grew at its fastest pace for more than five years in August but firms ramped up job cuts up in the face of the pandemic.
The closely followed IHS Markit/CIPS services purchasing managers' index (PMI) recorded a score of 58.8 in August - up from 56.5 in July and marking the sharpest increase since April 2015.
A reading above 50 indicates expansion in the sector.
Chris Williamson, chief business economist at survey compiler IHS Markit, said: "A further surge in service sector business activity in August adds to signs that the economy is enjoying a mini boom as business re-opens after the lockdowns, but the concern is that the rebound will fade as quickly as it appeared.
"The current expansion is built on something of a false reality, with the economy temporarily supported by measures including the furlough and Eat Out to Help Out schemes. These props are being removed.
"The burning question is how the economy will cope as these supports are withdrawn.
"Worryingly, many companies are already preparing for tougher times ahead, notably via further fierce job cutting, the rate of which re-accelerated in
the service sector in August to a pace exceeding that seen at the height of the global financial crisis."