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.
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 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
Recent Developments
Apr 14, 2024 - Wages Hit New High, Employment Falls
- According to data from the US Bureau of Labor Statistics, employment by coffee shops and snack bars has been trending downward since last summer. Between July 2023 and January 2024, employment fell by 11.3%. Wages are trending in the opposite direction, however, rising 3.2% over the same period to $17.31 per hour in January, a new high for the industry. 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.
- With outlet growth in its home country stalled, Canadian coffeehouse chain Tim Hortons is pushing deeper into the US with plans for 1,000 stores south of the US-Canada border by 2028, Weekly Coffee Dose reports. That’s up from 631 outlets across 11 US states – mostly in New York, Ohio, and Michigan – and 5,833 Tim Hortons stores worldwide as of the end of 2023, including 3,894 in Canada. The coffee chain’s parent company, Restaurant Brands International, revealed on an investors’ call that it also has ambitious expansion plans in China, where it currently operates more than 900 stores. Named after a Canadian hockey player, Tim Hortons (or “Timmies” to its Canadian fans) is Canada’s largest quick-service restaurant chain. It competes with Starbucks and Dunkin’, among many other smaller US operators.
- According to the February monthly jobs reports from the National Federation of Independent Business (NFIB), small business owners find it a little easier to attract and retain employees. Per the NFIB’s February survey, 37% (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down 2% from January and the lowest reading since January 2021. Thirty-two percent said they have openings for skilled workers (up 2%) and 12% have openings for unskilled labor (down 3%). Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net of 16% planning to create new jobs in the next three months. As long as consumer spending holds up, small businesses will need more workers, per the NFIB report.
- 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.
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