Coffee Shops & Snack Bars NAICS 722515

Jul 14, 2026 - Relief From Soaring Coffee Prices?

• Coffee shops may finally get some relief from input cost pressures as arabica coffee prices continue to decline in 2026 from record highs in 2024 and 2025, Perfect Daily Grind reported in June. The price drop is being driven by expectations of a record Brazilian coffee harvest, with production forecasts ranging from 66.7 million to nearly 72 million bags. Rabobank projects a global coffee surplus of 7-10 million bags during the 2026/27 season, which could put further downward pressure on coffee prices. Lower green coffee costs could help improve margins for manufacturers and coffee shops after several years of elevated input costs and compressed profitability. However, the outlook remains uncertain, as weather risks, including the potential development of a strong El Niño event that could affect future Brazilian crops, may reverse recent price declines.
• Coffee shops face mounting challenges as consumer habits shift from away-from-home consumption, according to new data from the National Coffee Association. High retail prices are pushing customers to brew at home, with 85% of coffee drinkers now doing so, the highest rate since 2012 and up 5% since January 2020. The rise of remote and hybrid work arrangements has further reduced foot traffic at coffee shops, as fewer people commute past cafes daily. Compounding these pressures, improvements in home coffee technology now allow consumers to produce near cafe-quality beverages without leaving the house, making the premium price of away-from-home coffee harder to justify. Together, these forces - rising prices, changing work patterns, and better home machines - are driving a sustained decline in out-of-home coffee consumption, posing serious long-term challenges for coffee shops competing for a shrinking pool of customers willing to pay for the cafe experience.

• Tariffs, crop failures, higher rents, and rising labor costs are driving up the cost of doing business for coffee shops, The Wall Street Journal reports. Cafes are facing sustained cost inflation and margin pressure as coffee prices continue to rise, with little relief expected in the near term. Key drivers include higher green coffee costs from crop failures, tariffs on imports, rising labor and rent expenses, and increased freight costs linked to the Middle East conflict, according to WSJ. Moreover, commodity price volatility, fueled by speculative trading and supply uncertainty, is making costs unpredictable. Smaller coffee shops are especially vulnerable because they lack the scale and purchasing power to hedge prices or secure long-term contracts. For operators, this creates a difficult choice between raising menu prices and risk losing customers or absorbing costs and straining cash flow and profitability.
• Employment by snack and nonalcoholic beverage bars grew 5.6% in April compared to a year ago, while the average industry wage at restaurants and other eating places increased by 4.6% over the same period to another new high of $19.77 per hour, according to the latest US Bureau of Labor Statistics data. Employment growth and wage inflation, fueled by rising minimum wages in 19 states that began in January, are swelling industry payrolls. More broadly, restaurant industry employment has grown at an annual rate of just 0.62% over the past four years, well below the 1.8% average before the pandemic. Operators are relying more on technology, including mobile ordering and kiosks, to improve efficiency and reduce labor needs.