Estimated at 131,000 outlets, the US coffee shop market* shows significant growth in 2016. The branded coffee shop chain segment increased by 3.1% in outlets and 7.4% in revenue over the past year to reach $41 billion. The market is set to reach $85 billion by 2025.
The Project Café2017 USA report from Allegra World Coffee Portal (WCP), reveals the growth is driven by the coffee-focused chain segment (e.g. Starbucks Coffee Company, Dunkin Donuts, Tim Hortons). This segment records an impressive 8.2% revenue growth to reach $29 billion across 26,784 chain outlets. The top 3 chain outlets account for a 65% share of the entire branded coffee shop chain segment with market leader Starbucks operating 12,938 outlets, and Dunkin Donuts and Tim Hortons operating 8,573 and 658 outlets respectively.
Artisan coffee transforms market dynamics as espresso-based coffee culture takes hold
While branded coffee shop chains account for 25% of the total market, the artisan coffee culture has been the key influencer in shaping the evolving landscape. The growth in boutique chains such as La Colombe, Blue Bottle and Bluestone Lane and the recent acquisition of small-sized artisan chains Stumptown and Intelligentsia signals a new era of competition.
With the rise of an espresso-based coffee culture and increased consumer expectations for quality and experience, Allegra WCP observes higher quality coffee standards across the market. As a result, even fast food chains such as McDonalds now offer a full range of espresso-based beverages.
The US is already a nation of coffee drinkers with consumption firmly embedded in American’s daily lives and this, together with wider availability of specialty coffee continues to underpin market growth. US coffee drinkers consume 23 cups of coffee a week in various locations. Regular coffee shop visitors consume 4 cups of coffee per week in coffee shops on average.
With the emergence of the rapidly expanding artisan scene, a growing number of Americans are becoming coffee connoisseurs demanding greater quality coffee wherever they are. 55% of the 5,000+ consumers surveyed by Allegra WCP state they would be willing to spend more for higher quality coffee in coffee shops, giving an average price ceiling of $3.18 per beverage. Millennials are the driving force in the increase of espresso-based beverage consumption and are much more likely to order cappuccino (19%) than a filter coffee (8%).
The report identifies that 66% of US consumers regularly purchase food in coffee shops and that the breakfast trade is particularly important for coffee operators. 34% of consumers visit coffee shops in the early morning and 30% mid-morning. As consumers increasingly turn to coffee shops for out of home food options, the market boundaries are blurring and so a compelling food offer is critical, a trend that the more successful chains are already responding to.
Future Market Growth
The US branded coffee chain segment is forecast to exceed $59 billion revenue across more than 39,600 outlets by 2021. Allegra WCP predicts the branded coffee chain market will exceed 45,000 outlets and revenue of $85 billion by 2025, with 3.3% predicted annual outlet growth.
The Future Marketplace
The coffee shop market is moving beyond artisan coffee to a greater level of professionalism. In an environment transformed by technology, urbanisation and instant access to information, consumers are becoming more sophisticated. Boutique chains such as Blue Bottle and Bluestone Lane have again risen the stakes, adopting more refined business practices to deliver higher standards of quality coffee, much to the delight of today’s discerning consumer.
The Project Café2017 USA Report is now available to purchase through Allegra World Coffee Portal Limited.
For more information and pricing, please call +44(0)20 7691 8800 or download a brochure
Project Cafe2017 USA is the definitive, ground-breaking study on the changing and dynamic US branded coffee shop market across all 50 states.
* The total coffee shop market includes branded coffee-focused and food-focused chains, fast food and convenience stores.