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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 49,600 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.

Competition from Alternative Sources

Coffee shops and snack bars compete with a variety of alternative sources, including fast food restaurants, grocery stores, and convenience stores.

Sensitivity to Food Trends

The food and beverage industry is subject to fads and trends which affect demand.

Industry size & Structure

The average coffee shop or snack bar operates out of a single location, employs 13-14 workers, and generates about $926,000 annually.

    • The coffee shop and snack bar industry consists of about 49,600 companies that operate 65,800 locations, employ about 681,500 workers and generate about $46 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), and Krispy Kreme Doughnuts. Some large chains have significant international operations.
                              Industry Forecast
                              Coffee Shops & Snack Bars Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 5, 2022 - Out-of-Home Coffee Consumption Still Down
                              • Coffee shops and snack bars hoped the drastic drop in numbers of new COVID-19 cases in much of the country would bring more customers back to stores. However, while 27% of coffee drinkers say they are having coffee outside the home, away-from-home coffee drinking has not yet returned to pre-pandemic levels, according to the Spring 2022 National Coffee Data Trends report by the National Coffee Association. In January 2021, only 8% of coffee drinkers reported venturing out for coffee. About 30% of Americans are still not comfortable with indoor dining, according to a recent study by MorningConsult.
                              • In March 2022, 6.1% of accommodation and food services workers quit or left their jobs, the highest percentage of any US industry sector. To cope with labor shortages, food services providers and restaurants are doing more than just offering better wages to retain their workers, according to Bar & Restaurant. Some have invested in technology, including new point-of-sale (POS) systems with handheld devices and QR code ordering kiosks to ease team member workloads. Others offer bonuses for employment referrals or have created clear upward mobility tracks.
                              • In early April 2022, the US House passed the Relief for Restaurants and Other Hard Hit Businesses Act of 2022 (HR 3807), which would add another $42 billion to the Restaurant Revitalization Fund (RRF). The legislation would provide RFF grants for the 177,000 restaurants that applied for relief but didn’t receive any before the funding ran out in May 2021. The National Restaurant Association says the group of unfunded RRF applicants represents about 20% of US restaurants. HR 3807 has moved to the US Senate.
                              • In response to Russia’s invasion of Ukraine, Starbucks in early March said it was suspending all of its business in Russia. The firm said it would stop shipments of all its products to Russia, and about 100 coffee shops operated by a Kuwait-based licensee would close. Starbucks said its licensee will "provide support to the nearly 2,000 partners in Russia who depend on Starbucks for their livelihood."
                              • Food prices have been rising since mid-2021, but they are expected to increase further amid the Ukraine war and rising interest rates. On a seasonally adjusted basis, US food manufacturers’ prices rose 1.5% in March 2022 compared to the prior month, but unadjusted food prices grew 14.6% over March 2021, according to the US Bureau of Labor Statistics. While restaurants have tended to increase their prices as food costs rise, firms and their customers are not likely to get much relief. Food-away-from-home prices are expected to rise between 5.5% and 6.5% for all of 2022 compared to 2021, according to the food price outlook released in March by the US Department of Agriculture.
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