The Power of Coffee

When looking at the pandemic’s impact on restaurant performance, there was a clear distinction between sit-down restaurants and QSR players. The latter group saw a significant boost from existing strength in takeaway, drive thru and delivery. While the former saw the loss of its primary channel create a significant hit, even though many players admirably moved quickly to create or strengthen takeaway and delivery processes.

Yet, there is a group that sits between the two categories that may see its dual strength drive a uniquely powerful future. Coffee and breakfast-oriented brands possess a combination of strengths that could come to drive even more significant returns considering the current environment. 

Coffee Power – The Short Term Recovery

While this will come as an obvious to any coffee enthusiast, for many, kicking a day off without that caffeinated start is a nightmarish scenario. And this dependency generally drives significant traffic for brands like Starbucks and Dunkin’ as they cater to providing this needed fix. But the role these brands play was impacted by the pandemic, the lack of commuting, and the overall disruption to normal routines.  

But as the retail effect of the pandemic begins to dissipate, the positive impact on visits to these barista brands is clear and obvious. Intense inclement weather in several key regions had a demonstrable impact on visits across the retail and restaurant landscape in late January and the first few weeks of February. But since the week beginning February 22nd, visits are moving strongly in the right direction. Starbucks and Dunkin’ saw visits down just 21.3% and 15.4% year over year respectively the week beginning March 1st, the best performance for either brand since the week beginning December 28th. Panera also saw its strongest visit gap that same week, with the year over year visit gap down to 24.6% – the lowest it’s been since the pandemic began in March 2020.

And it isn’t just that the visit gap is shrinking, but that overall visits are rising. Since the week beginning February 8th, Starbucks and Panera have seen consistent week-over-week growth, with Dunkin’ seeing one week with a minor decline amidst strength during that same period. And the reasons seem to be clear. More people are returning to ‘normal’ work and school routines, COVID concerns seem to be declining and restaurants are beginning to reopen at much faster rates across the country. The combined effect is driving significant strength to the recoveries of these brands.

The return to ‘normalcy’ is especially important for coffee. Whether it be a stop-in at a Dunkin’ on the way to work or a midday meeting at a Starbucks, coffee brands tend to be heavily centered around normal work routines. And these routines do appear to be coming back. Visits to Starbucks locations between 6 and 9 am, were 8.8% of overall Starbucks visits the week of March 1st, when they had been just 7.6% of visits the three months prior. While this trails 2020, when visits during that time amounted to 10.4% of overall visits, it is still a very positive step in the right direction.

Coffee Power – The Long Term Opportunity

Looking beyond the current environment, there is a longer-term trend that could drive significant value to these brands. As flexible work becomes a more commonplace practice, the escape from home to local places to work – even for just a few hours – could provide a valuable asset. Longer stays at the coffee shop midday should drive larger transaction sizes, and increase output throughout the day.

This potential result is a more complex picture of how Starbucks and brands like it could evolve in the coming years. While announced small-format locations and an emphasis on convenience should drive a boost in some areas and cities, the sitdown component may become a major strength in others, especially suburban centers. More people are moving to the suburbs from major cities, and this shift could drive a strong wave of visits to Starbucks locations – with a unique emphasis on those with strong sitdown environments.

Will the coffee recovery continue? Can leading brands find the ideal balance between convenience and sit down? Visit to find out.

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