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Forget water, soda, or tea – coffee reigns supreme in the United States. A recent study reveals that coffee surpasses even water as the nation's most consumed beverage. This continued demand is fueling a robust coffee shop sector that continues to thrive despite economic headwinds.
We took a closer look at industry-wide trends to understand how the segment is performing.
Robust-a Demand
The coffee segment has seen consistent visit growth over the past few years, demonstrating remarkable resilience – a trend fueled by steady consumer demand. Analyzing the baseline change in quarterly visits from Q1 2019 underscores this growth – and also reveals distinct seasonal patterns.
Visits to coffee shops plummeted during the pandemic, as consumers hunkered down at home and many independent coffee shops went out of business – but swiftly rebounded as consumers sought affordable luxuries and a sense of normalcy. Between 2021 and early 2024, coffee foot traffic continued to climb, as chains from Starbucks to Dutch Bros expanded their footprints. The visit growth followed a fairly predictable seasonal rhythm, slowing in the first quarter of the year and peaking in Q4. But though visits in Q4 2024 were slightly higher YoY, they remained relatively flat compared to Q2 and Q3 2024, possibly signaling that the industry may be reaching a plateau.
A Whole Latte Growth
Looking at the data by region reveals that coffee shop visit growth has been widespread throughout the country, with most CBSAs experiencing growth relative to 2023.
Some areas – like parts of the Midwest and South – experienced especially pronounced growth, suggesting heightened interest in coffee chains in these regions. Coffee visit growth in the South in particular may be partially a reflection of greater market penetration following chain expansions and inflows of domestic migration over the past several years. And while some areas of the country saw YoY declines, most CBSAs saw continued growth, highlighting the consistent appeal of coffee chains across a wide range of markets.
Mid-Sized Coffee Chains Brew Interest
There are hundreds of coffee shops nationwide catering to every kind of coffee drinker – from chains with 2-3 locations specializing in artisanal blends to major players like Starbucks and Dunkin'. And diving into the visit split between small, mid-sized, and large coffee chains shows that mid-sized coffee chains – many of which are drive-thru focused – are gradually claiming a greater share of the market.
Between 2019 and 2024, the share of visitors to mid-sized coffee chains grew from 10.8% to 17.6%. Some of this growth can be attributed to Dutch Bros’ ascendance – but other fast-growing coffee chains like BIGGBY Coffee are contributing to this growth.
Smaller coffee chains also saw their visit share increase, albeit more modestly, from 3.2% in 2019 to 4.4% in 2024. This trend suggests that, while Starbucks and Dunkin' continue to dominate, there remains plenty of room – and interest – for smaller, independent chains to thrive.
A Small Cup of Joe
Indeed, diving into visitor behavior at small, mid-sized, and large chains highlights the distinct niches these segments effectively fill. Between 2023 and 2024, short visits (<10 minutes) increased more than longer visits at mid-sized and large chains, while large chains actually saw a drop in longer visits, likely a result of increased emphasis on drive-thru and mobile ordering.
Meanwhile small chains saw a greater YoY increase in long visits (+13.4%) than in short ones (+9.1%), suggesting that smaller coffee shops are increasingly filling the niche of a relaxed, destination-oriented experience.
These shifts highlight the different needs that coffee shops can fill within a community, with some offering speed and convenience, while others can meet the desire for a relaxed and personalized coffee experience.
Sipping on Success
The success of the overall coffee segment highlights the continued consumer demand for affordable luxuries even as economic uncertainty persists, and the benefits of a diverse market that accommodates different visitor needs.
Will the coffee segment continue to thrive into 2025? Visit Placer.ai for the latest data-driven dining insights.
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