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 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
Recent Developments
Mar 14, 2023 - Pandemic Spurs Permanent Changes
- Adaptations made by restaurants to survive the pandemic have become the industry’s “new normal", according to the National Restaurant Association’s 2023 State of the Restaurant Industry Report. The report notes that “temporary” pivots like expanded delivery services, outdoor dining options, to-go alcohol offerings and investments in technology are here to stay. Also, at least four in 10 operators in the quick service, fast casual, and coffee and snack formats believe the addition of drive-thru lanes will become more common this year. For other restaurant formats, outdoor dining and alcohol-to-go are becoming table stakes. Across all six major industry formats, more than nine in 10 operators plan to continue offering outdoor seating and are also likely to continue offering alcohol-to-go, if legal in their jurisdiction. Two-thirds of adults say they’re more likely to order takeout from a restaurant than they were before the pandemic.
- A federal judge in March ruled that Starbucks violated the National Labor Relations Act hundreds of times to affect workers’ organizing efforts through “egregious and widespread misconduct demonstrating a general disregard for the employees’ fundamental rights,” according to a NLRB press release. The decision, issued by an NLRB administrative law judge, requires Starbucks to – among other remedies – reinstate seven employees terminated from locations in the Buffalo area and to compensate 27 workers for violations like refusing to grant time off. Also, Starbucks must post a notice in stores nationwide informing all employees of their right to unionize. Interim CEO Howard Schultz must read or be present at a reading of the notice. Schultz has agreed to testify before a Senate committee investigating the company’s labor-law practices. The striking baristas had asked for better workplace conditions, along with higher pay and additional benefits.
- Occupations that work with food and drink are projected to grow faster than the 5% average for all occupations from 2021 to 2031, according to the Bureau of Labor Statistics (BLS). Of selected occupations that work with food and drink, bartender is the fastest-growing occupation with a projected employment increase of 18%, followed by cooks (16%), chefs and head cooks (15%), drivers and sales workers (12%), and waiters and waitresses (10%). Some of the projected growth for bartenders is due to recovery from the COVID-19 recession of 2020, but demand for this occupation also is expected to coincide with rising demand from consumers dining out, especially in full-service eating and drinking places, the BLS reports. Employment growth for food service managers is forecast at 10%, twice the average for all occupations, according to BLS.
- Baristas and other low-wage restaurant workers could see big gains in wages this year, thanks to unionization drives, hikes in the minimum wage, and California legislation, CNBC reported in January. More than half of US states will raise their minimum wage in 2023. In California, where the FAST Act was signed into law last year, fast food workers in the state could see their hourly wage rise to as much as $22 per hour. While the industry opposes the California law on the grounds that it could kill restaurant jobs and is seeking to have it overturned, restaurant industry lobbyists say states like New York and Michigan could pass similar legislation to California’s FAST Act, CNBC reports. Some restaurant employees are seeking better pay and working conditions by unionizing. Over the past year, some 270 Starbucks locations have joined Workers United, an affiliate of the Service Employees International Union.
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