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$45.5bn US branded coffee shop market approaches full Covid-19 recovery

Project Café USA 2023, World Coffee Portal’s definitive report on the US branded coffee shop market, reveals the $45.8bn segment grew 10% over the last 12 months to regain 96% of its pre-pandemic market value.

However, rising cost of living, supply chain disruption and continued staff retention issues will present major challenges to the market in the next 12-24 months

The US branded coffee shop market has recovered to 96% of its pre-pandemic value | Photo credit: Brett Wharton

  • $45.8bn US branded coffee shop market recovers to 96% of pre-pandemic value, achieving a better-than-anticipated $4.5bn sales rebound in 2022
  • US market exceeds pre-pandemic levels in terms of outlets, growing 2.8% to reach 38,411 stores
  • Ongoing staff shortages and an emergent cost-of-living crisis represent significant short-to-medium term challenges for the industry
  • World Coffee Portal forecasts total US branded coffee shop market sales to reach $55.9bn by the Autumn of 2027, led by a forecast $8.1bn increase in coffee-focused segment turnover 
  • The US market is expected exceed 41,900 outlets by the September 2027, displaying five-year outlet growth of 1.8% CAGR​

$45.8bn US branded coffee shop market recovers to 96% of pre-pandemic value

Following more than two years of operational disruption caused by the Covid-19 pandemic, US coffee chains achieved a robust $4.5bn sales rebound in 2022, representing sales growth of 10% over the last 12 months.

The total US branded coffee chain market is now valued at $45.8bn having recovered to 96% of its pre-pandemic value. Additionally, the number of outlets has exceeded 2019 levels, increasing 2.8% over the last 12 months to reach 38,411 stores. The country’s three largest operators, Starbucks Coffee Company, Dunkin’ and Panera Bread, all increased their footprint in the US to reach 15,650, 9,262 and 2,173 stores respectively.

Most operators have achieved year-on-year growth, with 46% experiencing a sales uplift of 5% or more. Nearly half of industry leaders are optimistic about the current trading environment, with 80% positive about the sufficient growth potential for branded coffee shops in the US, compared to 63% pre-pandemic. 

Starbucks extends dominance over the US market as wider drive-thru growth accelerates

Starbucks continues to wield influence over the US coffee shop market, opening 302 net new stores over the last 12 months to achieve a total market share of 41%.

The Seattle-based company has focused on smaller format stores and plans to continue accelerating its US store growth further via high-returning drive-thrus. The US has the most developed drive-thru coffee shop market in the world and the format is proving lucrative for several chains.

Dutch Bros, which operates 603 stores in the US, exceeded $1bn sales for the 12 months ended 30 June 2022. The Oregon-based company is now the fastest growing major US branded chain at 28%. Franchised drive-thru operators Scooter’s Coffee and Biggby Coffee have experienced similar growth over the last 12 months, reaching 490 and 320 stores respectively.

Preferences such as pre-ordering, delivery and drive-thru are set to remain post-pandemic | Photo credit: AIRIZ

Younger consumers transforming US coffee shop culture

Desire for out-of-home coffee remains strong following two years of enforced lockdowns and operational restrictions. However, the way in which customers consume coffee continues to evolve, led by a younger demographic of clientele.

Preferences that gained popularity during the pandemic, such as pre-ordering, delivery and drive-thru, are set to remain as consumers maintain a heightened desire for convenience. An increasing appetite for iced-beverages, product customisation and the notable proliferation of espresso-based beverages among younger consumers is driving the US coffee shop recovery.

With industry leaders optimistic of future growth potential, new operators in the US will also be encouraged in their pursuits of expansion.  Blank Street Coffee, for example, has opened 40 shops in New York City and Boston since launching in May 2020, more than any locally owned competitor. Backed by private equity financing, the start-up is targeting 100 locations across the US by the year’s end.

Rising cost of living adds to staff retention concerns

Hospitality staff shortages remain a major challenge for US operators following the easing of Covid-19 restrictions. Many of the industry’s highly skilled coffee staff reconsidered their careers during the pandemic, weakening the talent pool available for hospitality businesses seeking to invigorate their operations post-pandemic.

With candidates already holding perceptions of the industry as poorly paid, the emergence of cost-of-living concerns has the potential to add further strain to the staff retention crisis.

Furthermore, industry leaders have cited rising inflation as the most pressing short-term concern, with operating costs expected to rise at the same time as consumer disposable income falls.
These factors could compel operators to raise prices, cut operating hours or potentially close stores in the next 12 months.

Strong opportunities on the horizon for US coffee shops

Looking ahead, World Coffee Portal forecasts that US branded coffee chain store sales will exceed $55.9bn in 2027, representing 4.1% CAGR growth​, as US consumer demand for premium out-of-home coffee products continues unabated.

The market is predicted to exceed 41,900 outlets by September 2027, displaying five-year growth of 1.8% CAGR. The coffee-focused segment is predicted to grow at 1.8% CAGR over the next five years to exceed 34,200 stores, while the food-focused segment is anticipated to grow at 1.6% CAGR to exceed 7,600 outlets​.

Commenting on the report findings, Allegra Group Founder and CEO Jeffrey Young said:
Notwithstanding enormous pressures facing our industry, especially rising costs and growing staff shortages, this detailed research shows that the US coffee shop market remains buoyant and is expected to grow solidly over the next decade as younger consumers drive demand for premium, specialty coffee throughout the United States.”


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