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Back from the brink: Hotel Chocolat eyes UK and US expansion after reversal of fortunes

Following its ‘best-ever’ Christmas sales, the retailer has announced plans for a further 25 new outlets in the UK - plus another crack at the US market with two store openings

Image shows a Hotel Chocolat outlet in the UK
Hotel Chocolat has announced plans to expand in the UK - and North America. Image: Shutterstock

If you walk down any UK high street or through a shopping mall, you will likely encounter a Hotel Chocolat outlet. 

Rewind to late 2023, when things were not looking so sweet for the company. Failed attempts to enter the Japanese market and ambitious plans to move into the US, along with inflation and tight consumer spending, saw the company post losses of £800k in the year to 3 July 2023, from a £21.7m ($26.9m) profit the previous year.

Mars acquisition

Then came the £534m acquisition by US confectionery giant Mars at the end of that year. With its global footprint and commercial clout, the company pledged to invest in Hotel Chocolat.

That promise has come true. This week, the company announced that it is planning 25 new UK stores and two outlets in Chicago, the chocolate capital of the US, reaffirming its belief in Hotel Chocolat's inherent value and potential.

What went wrong in the US and Japan?

Hotel Chocolat previously operated five stores in New York City before exiting the US market in July 2022. This decision was influenced by financial challenges, including a significant drop in the company’s share value.

The company's initial expansion into Japan, which began in 2018, also faced significant challenges. The company encountered difficulties due to pandemic-related restrictions and supply chain issues, leading to the insolvency of its Japanese business and a substantial write-off of almost £30 million, cocoaradar.com understands.

Hotel Chocolat signed a subsequent agreement with Tokyo-based Eat Creator to operate 11 in-store cafés in Japan as part of a joint venture. Hotel Chocolat holds 20% equity in the venture.

The premium chocolatier opened its first shop in north London in 2004 and has since expanded rapidly. It is now a successful omnichannel business with brick-and-mortar stores for in-person sales.

Sustainable cocoa

The company sources sustainable cacao directly from its own farm in Saint Lucia and farmer cooperatives in Ghana.

This week, Hotel Chocolat announced total year-on-year sales grew 10.4% overall in the four weeks to 29 December 2024, a “record,” the business said. Hospitality sales at its UK Velvetiser cafés also went up 33% year-on-year.

In a media statement, CEO and co-founder Angus Thirlwell said, “This Christmas was our most successful to date, a testament to the dedication of our manufacturing-distributing and retailing teams in particular.

“Despite consumers continuing to feel the pinch, they went for quality this Christmas, and we posted strong sales across our accessible price points from the £5.95 chocolate-filled table cracker right up to our £200 Velvetiser experience hamper.”

He confirmed that the Chicago stores are “being fitted out” in time for the important Easter trading season.

With its omnipresence on the high street secured, it has avoided the fate of other well-known chocolate retailers like Ferrero-owned Thorntons, which closed all of its retail stores in 2021 partly due to the impact of the COVID-19 pandemic. The company restructured to focus on online sales and supermarket distribution.

While further success in the UK is assured for Hotel Chocolat, cracking the US will take more resolve, even with Mars’ backing. 

Bloomberg reports that US consumer confidence suddenly dropped in January to a four-month low, partly down to renewed pessimism about the labour market and the outlook for the broader economy.

While chocolate sales remain strong in the North American market, recent trends indicate consumers increasingly opt for more affordable chocolates and candies over premium options. 

Analysts say rising prices and economic considerations primarily drive this shift.


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