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Bring On The Joe

Lila Margalit
April 27, 2023
Bring On The Joe

In 2022, the coffee space took a hit as many consumers tightened their purse strings in the face of inflation. Caffeine may be a basic necessity (think Lorelai Gilmore) – but when money’s tight, people may forego their discretionary latte or iced coffee drink and seek out more budget-friendly ways to get their fix. And while inflation has begun to ease in recent months, food prices remain significantly higher than they were at the beginning of last year.  

So with the first quarter of 2023 behind us, we checked in to see how the coffee space is faring in what continues to be a challenging economic environment.

Starbucks and Dunkin’: Coffee Visits Begin to Perk Up

Starbucks, which experienced a monthly year-over-year (YoY) visit gap ranging from 6.4% to 10.0% throughout the Q4 2022, saw foot traffic begin to pick up in the first quarter of 2023. While some of the January and February YoY visit growth may be attributable to the Omicron-induced slump of early 2022, the positive trend continued into March and early April.

Major coffee leader Dunkin’ also saw its visit gap begin to narrow in recent weeks, with foot traffic for the second week of April just 0.5% lower than it was in April 2022. Consumers, it would seem, have begun to recover from last summer’s sticker shock and are once again finding room in their budgets for affordable pick-me-ups. And as the weather warms up, people are flocking once again to their neighborhood Dunkin’ for a delicious Coolatta or Frozen Matcha Latte.

Peet’s Coffee and Dutch Bros Keep Up the Momentum

Starbucks and Dunkin’ dominate the U.S. coffee market, but they’re not the only players on the java scene. In recent posts, we’ve highlighted the strong performance of Dutch Bros. – the rapidly-expanding coffee brand that has seen exponential visit growth in recent years, fueled in part by a highly dedicated customer base. 

San Francisco-based Peet’s Coffee is another chain that has long boasted a loyal following among coffee lovers. First established in 1966 by a Dutch immigrant who famously wondered why the richest country in the world had the lousiest coffee, Peet’s now has more than 300 stores across 20 states – some 230 of them in California. The chain is widely credited with pioneering the specialty coffee revolution in the U.S. and even inspiring the creation of Starbucks. And Peet’s artisanal approach to coffee, combined with its commitment to sustainability and “responsible sourcing,” keep “Peetniks” coming back for more. In Q1 2022, some 24.9% of visitors to the chain frequented it at least twice – a metric that increased slightly to 25.1% in Q1 2023.

And despite many consumers’ current budgetary constraints, traffic to both chains has remained relatively close to last year’s levels, with Dutch Bros – famous for its cold concoctions – even seeing visits spike as the weather warmed up. 

A California Bean Scene

To get a sense of how the different coffee chains fit into the wider coffee market, we analyzed data on the True Trade Areas of Starbucks, Dunkin’, Dutch Bros, and Peet’s, operating in California – the most populous, and by some accounts the most caffeinated state in the country. The data shows that each chain serves a somewhat different customer base. Broadly speaking, residents of Peet’s trade areas tend to be older and more affluent than those of the other coffee leaders – particularly Dutch Bros, which attracts an outsize share of Gen-Zers. In California, like in the rest of the country, there’s room for a variety of coffee chains that appeal to different demographics. 

America’s Favorite Beverage

Even when times are tight, Americans love their Joe. According to recent data from the National Coffee Association, 491 million cups of the stuff are drunk in the U.S. each day. And while out-of-home coffee consumption is still lower than it was before the pandemic, the number of people ordering their coffee from a barista has begun to rebound. As inflation stabilizes and consumers adjust to the new price points, will coffee visits continue to bounce back? What’s in store for the coffee space in 2023?

Visit to find out.

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