Coffee Shops & Snack Bars
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 56,000 coffee shops and snack bars in the US sell non-alcoholic beverages, snacks, and related items for consumption on or near premises. Companies may specialize in bagels, beverages, confectionaries, cookies, donuts, frozen custard, ice cream, yogurt or pretzels. They may prepare food and beverages on site or resell goods purchased from third-parties. Formats include national and regional chains, franchises or licensed shops, and independent operators.
Sensitivity to Food Trends
The food and beverage industry is subject to fads and trends that affect demand.
Competition from Alternative Sources
Coffee shops and snack bars compete with various alternative sources, including fast food restaurants, grocery and convenience stores.
Industry size & Structure
The average coffee shop or snack bar operates out of a single location, employs fewer than 20 workers, and generates about $1 million annually.
- The coffee shop and snack bar industry comprises about 56,000 companies that operate over 73,000 locations, employ about 931,000 workers and generate about $64 billion annually.
- The industry is concentrated at the top and fragmented at the bottom. The top four firms account for 31% of industry sales; the top 50 firms account for 37% of sales.
- Large companies include Starbucks, Dunkin' Brands (Dunkin' Donuts, Baskin Robbins), Restaurant Brands International’s Tim Hortons, and Krispy Kreme Doughnuts. Some large chains have significant international operations.
Industry Forecast
Coffee Shops & Snack Bars Industry Growth
Recent Developments
Oct 14, 2024 - Hiring Accelerates
- Eating and drinking places added a net 69,400 jobs in September on a seasonally-adjusted basis, according to the Bureau of Labor Statistics. September’s strong jobs number was the largest monthly increase in over two years, according to the National Restaurant Association. More broadly, hiring in the leisure and hospitality industry accounted for 78,000 of the 254,000 jobs (30%) added in September, per the BLS. Spending on food and drinks, and travel powered much of September’s strong hiring even as other sectors slowed. Underpinning strong job growth in the sector was solid growth in personal consumption expenditures, which rose by 2.2% year-over-year in September. Wage growth, which has been outpacing inflation, is keeping consumers going back to restaurants. Also, lower gasoline prices are leaving more money to spend on food away from home. September’s strong hiring performance followed a solid August during which restaurants added 29,900 jobs.
- Employment by coffee shops and snack bars decreased 0.8% in July compared to a year ago, while average industry wages increased 4.7% over the same period to $17.55 per hour, according to the latest US Bureau of Labor Statistics data. July’s average wage was tied with March as a record high for the industry. Consumers appear willing to spend on coffee and snacks with sales for food services and drinking places rising 3.5% year over year in June and consumer spending up 2.6% over the same period, according to the Bureau of Economic Analysis.
- The number of coffee shops in Odessa, Texas, has more than tripled – from 17 six years ago to around 55 today, The New York Times reports. Entries to the market include new stores by retail giant Starbucks, drive-through coffee stands, the coffee companies Dutch Bros and Human Bean, and numerous mom-and-pop coffee shops. The coffee shop explosion isn’t unique to Odessa, reports NYT. In large and midsize US cities, cafes, and drive-throughs specializing in coffee and tea drinks make up one of the fastest-growing segments of the restaurant industry by store count. Take Dutch Bros, for example: In 2019, the Oregon-based chain had 370 shops and now has 912. Growth has been especially robust in the Midwest and South, which coffee giants Starbucks and Dutch Bros consider to be under-caffeinated. To differentiate themselves, coffee shops are creating exotic concoctions that barely resemble coffee, with growth driven by iced beverages especially.
- According to a report from analytics firm Placer.ai, which tracks shopping and dining trends, coffee bars across the US are enjoying an increase in visits. Overall, the visits to three major coffee chains, including Dutch Bros, Dunkin’, and Biggby Coffee, increased 5.1% during the first five months of 2024. Sales for the US coffee shops and snack bars industry are forecast to grow at a 5.22% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to the Interindustry Economic Research Fund. Following two consecutive years of robust double-digit sales growth in 2021 and 2011, growth moderated in 2023 and 2024 but is expected to tick up in 2025.
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