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 52,000 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.

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 that affect demand.

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 consists of about 52,000 companies that operate over 69,000 locations, employ about 912,300 workers and generate about $56 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

                              Recent Developments

                              Feb 14, 2024 - More Kona in Kona Coffee
                              • Legislators in Hawaii have introduced two bills that would increase the percentage of Kona coffee required for a product to be labeled as such and expand legal penalties for mislabeling, Spectrum News reports. Currently, products labeled Kona coffee must contain at least 10% Kona coffee beans. The bills, which followed the release in January of a study by the Hawaii Department of Agriculture (HDOA), are intended to support Hawaiian farmers and preserve the integrity of the Kona brand. “Requiring coffee labeled as 'Kona' to be 100% Kona beans will protect the value of the Kona name and support farmers’ ability to get the best prices for their products,” said state Rep. Nicole Lowen. The HDOA reports that increasing the minimum amount of Kona coffee content from 10% to 51% or 100% would increase the price of Kona coffee without significantly impacting quantities grown and sold.
                              • In a deal that will allow Caribou Coffee to reach consumers beyond its coffeehouses, the Minnesota-based retail coffee chain has announced it will license its brand in the consumer packaged goods and food service channels to JDE Peet's, Nation’s Restaurant News (NRN) reported in January. The licensing agreement, valued at $260 million, will allow Caribou Coffee to grow its chain of 800-plus coffeehouses while providing global coffee and tea company JDE Peet's a new platform to expand its coffee portfolio in North America. The transaction also includes the transfer of Caribou Coffee's roasting operations in Minnesota and its office coffee and food service contracts, according to NRN.
                              • Cafes may find relief from high prices for coffee beans in 2024, according to the World Bank’s commodity markets outlook. Global coffee prices may ease this year on a projected increase in supplies from key producing countries such as Brazil, Vietnam, and Colombia, according to the World Bank. Prices of Arabica coffee fell 14% during Q3 2023 versus the previous quarter. Following this decline, Arabica prices are down by nearly a third (-30%) compared to a year ago. Arabica prices are expected to ease further in 2024 as production ramps up with output likely to rise 14% in Brazil, Vietnam, and Columbia. Coffee production in Brazil – which produces more than 35% of the world’s coffee – rebounded in 2023 from lows in 2021-2022 due to supply chain disruptions. Production from Brazil is a strong indicator of US coffee import volumes, and ultimately the price of coffee.
                              • A new coffee-focused format from McDonald’s aims to challenge Starbucks, Dutch Bros, and other specialty beverage chains, The Wall Street Journal reports. CosMc’s – named after an orange alien mascot featured in the burger giant's past advertisements – will focus on iced beverages, snacks, and to-go service with multiple drive-through lanes and no dining room, according to WSJ. The new spinoff – the company’s first in the US in its history – is designed to meet consumers’ growing preference for takeout orders. The menu will be heavily skewed toward customizable iced drinks, including flavored lemonades, turmeric spiced lattes, boba, pear slushes, and churro frappés, WSJ reports. The first CosMc’s restaurant opened in a Chicago suburb in December with 10 more locations slated to open by the end of 2024. Nine units will be located in the Dallas-Fort Worth and San Antonio metro areas, according to the company’s CEO.
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