Buoyant US Branded Coffee Shop Market Surpasses 40,000 Outlets, Reaching Record $49.5 Billion
World Coffee Portal’s comprehensive report on the US branded coffee shop market has unveiled impressive growth, showcasing the resilience of the industry. The market, valued at $49.5 billion, now boasts a record-breaking 40,062 outlets, surpassing pre-pandemic levels by 104%.
Over the past 12 months, the market has experienced robust sales growth of 8%, contributing to a 4% increase in net outlet growth. Projections for the next year anticipate total sales exceeding $52.4 billion, with a further surge to $61.6 billion by 2028, driven by the thriving coffee-focused segment.
Leading the pack, Starbucks maintains its dominance with 16,144 stores, constituting 40% of the total market share. Dunkin’ follows with 9,434 stores, while Panera Bread, despite closing 22 sites, operates 2,151 stores.
Despite the overall positive trend, 19% of operators admit to struggling with the lingering effects of pandemic-related trading pressures, emphasizing the challenges still faced by some players in the market.
Industry Optimism on the Rise as Recovery Gains Momentum
The past year has seen a remarkable recovery in customer footfall, contributing to heightened optimism within the industry. A survey of industry leaders reveals that 76% report a positive sales environment in 2023, a significant jump from the 49% reported the previous year. Additionally, only 11% find trading conditions challenging, indicating a favorable business climate.
Consumers are also showing increased engagement, with 23% now visiting or ordering from coffee shops daily, up from 16% a year ago. Weekly visits have risen by 5%, reaching 69% of surveyed consumers.
Cold Coffee Emerges as Key Trend, Fueled by Younger Consumers
A notable trend in the market is the growing popularity of cold and iced coffee, particularly among younger demographics. Survey results indicate that 79% of under-35s purchase iced beverages at least once a week. Cold coffee consumption has surged by 8% in the past year, making it the second most frequently ordered type after filter coffee.
Industry leaders recognize this trend, with 50% considering cold coffee as the most important market trend, ahead of specialty coffee (32%) and drive-thru growth (29%).
Changing Dynamics: In-Store Dwell Time Increases, but Convenience Remains Paramount
While consumers are spending more time in coffee shops, the emphasis on convenience remains paramount. The proportion of customers spending less than 10 minutes in a coffee shop has decreased by 5%, and those staying for up to 30 minutes has increased by 13%. However, only 4% of consumers linger in-store for more than 30 minutes.
With 56% of consumers preferring drive-thru options, chains like Scooter’s Coffee and Dutch Bros have experienced rapid growth, opening 224 and 167 net new stores, respectively.
Continued Growth and Positive Outlook
The report concludes with optimistic projections for the industry, with 58% of industry leaders anticipating improved trading conditions in the coming year. The forecast suggests that sales momentum will continue, with a projected growth of 4.5% CAGR, reaching over $52.4 billion in the next 12 months and $61.6 billion by 2028.
Jeffrey Young, Founder and CEO of Allegra Group, commented on the findings, stating, “The rising number of stores exceeding 40,000 for the first time ever is credible evidence of a very robust market. However, challenges persist, including a tough labor market, high inflation, and squeezed consumer spending, which will require strategic navigation by industry players over the next 12-18 months.”
