Coffee Shop Business Overview

The coffee industry and the coffee shop business has boomed in recent years, especially with regards to
specialty coffees. The market for specialty coffees has grown as consumers become more educated
about espresso-based drinks and how they are made. According to a National Coffee Association Annual
Drinking Trends Survey, specialty coffee consumption has risen from 9 percent in 2000 to 16 percent in
2004. Every day, more than half of the adult population drinks coffee, 108.9 million people. The United
States accounts for 52 million of those coffee drinkers.
While fast food chains are growing at a rate of 2 percent each year, coffee shop chains grow more than
10 percent annually. Even though 75 percent of the cups of coffee brewed daily are consumed at home,
66 percent of Americans buy their coffee outside of their homes. The Specialty Coffee Association of
America reported at the end of 2003 that the retail coffee shop count in the country had reached 17,400
or 4% more than in 2002. The market size of coffee grew from $7.53 billion in 1999 to $8.96 billion in
2003.

Coffee Shop Sales Estimates, 2003 (Beverage retailers with seating)

 11,250 locations averaging $550,000 in annual sales = $ 6.12 billion
 For adults who have visited a coffeehouse in the past week: Average weekly spending $5 or
under: 41% Rarely or never purchase food: 49% Consume the beverage off-premises: 52%

Demographics of Coffee Drinkers

Seventy-seven percent of U.S. adults drink coffee daily, and gourmet coffee consumption has risen in the
past five years. According to Scarborough Research, a market research firm that studies media, lifestyle,
and shopping patterns in the United States, in October 2004, 12 percent of adults have been to a coffee
shop in the past month. Although popularity of coffee shops has recently spread across the nation, the
West coast has the most coffee shop patrons. The ideal ratio of coffee shops to residents in a particular
area is 1:10,000.

Coffee Shop Client Profile

Coffee shop patrons are younger, more affluent, and educated and are 22 percent more likely to be aged
18-24. They are also 65 percent more likely to have an annual household income of $100K+. Coffee shop
patrons are 28 percent more likely than the average American adult to be single and 70 percent more
likely to have a post graduate degree. The average age of specialty coffee drinkers is 43. Occasional latte
devotees are in the higher average income of $76,000, and similarly, cappuccino and espresso drinkers
reflect an average income of $60,000.
According to the National Coffee Association, seniors drink more coffee away from home, while 18-to-24-
year-olds drink more coffee at home. Seniors are discovering gourmet coffee more and more as the
overall percentage of coffee drinkers over the age of 60 jumped from 9 percent in 2003 to 13 percent in
2004. Adults aged 55-64 are 28 percent more likely than young adults to consume coffee away from
home. Overall, at home consumption has risen from 44 percent in 2002 to 60 percent in 2004, which may
be a result of a slow U.S. economy. Over 60 percent of coffee is consumed at breakfast in the United
States so establishments that serve coffee and do not open until 11am are taking advantage of only 40
percent of the market. Eleven percent of adults who drink coffee away from home say that they only
purchase coffee in a coffee shop, while 66 percent of adults who drink coffee away from home say they
usually purchase it at a coffee shop. Forty-two percent of adults aged 18-34 purchases their coffee at a
coffee shop. From 2000 to 2005, the 55 – 64 age group will grow 24 percent, which is nearly twice the
amount the 45 – 54 age group will grow. The population of 25 – 45 year-olds is declining; so coffee
drinking will be common currently among the elderly with some participation from the next generation.

Coffee Shop Industry Trends

Types of Coffee
Customizing according to interests in local markets is a way for coffee shop owners to create loyalty and
increase sales. Espresso and other specialty coffees are becoming popular in quick service restaurants.
While consumption of gourmet coffee has remained steady, purchases of espresso beverages have risen
from 4 percent to 7 percent. Gourmet coffee had been the strongest growing part of the market, but
recent studies have shown that that the trend toward occasional drinkers is continuing while espresso
drinks continue to rise in popularity. Specialty coffees seem to be most appealing to younger adults. The
25 – 34 age group accounted for one-quarter of specialty coffee orders in 2000 and only 10 percent of the
regular coffee orders. Those 18 – 34 years old have increased their specialty coffee purchases at table
service restaurants in the last two years. One-third of regular coffee orders are placed by consumers 65
and older, while that group accounts for less than 10 percent of specialty coffee orders.

Adults Who Drank Gourmet Coffee or Specialty

Coffee [*]

Percent Index

Gender

Men 47 98

Women 53 102

Age

18-24 9 73

25-34 15 80

35-44 21 100

45-54 21 111

55-64 14 117
 65+ 20 116

Index: Indices above 120 or below 80 generally

indicate percentages were notably above/below
expected levels based on population figures. [*] In
the past seven days.

Half of restaurant orders for coffee (regular and specialty) are placed during the breakfast/a.m. snack
mealtime. One fourth of specialty coffee orders are during the p.m. snack mealtime, more than during
lunch or dinner. Quickservice restaurants, which include coffeehouses and bars, account for 75 percent of
all specialty coffee orders, but only account for half of all restaurant occasions for any type of coffee.
Coffeehouse traffic grew 8 percent in 2000, while the overall growth in the quickservice segment was only
1 percent. The specialty coffee retail sector is estimated to be $8.4 billion, and for prepared beverages,
coffeehouses report an average of $170,643 in gross sales.

Coffee Shops and Wireless Technology

Successful coffee shop owners have moved past just selling coffee to creating environments that
encourage longer visits: surfing the Internet, working from their laptops, or communicating with friends,
family, and colleagues. Wireless technology is changing the way people live. Hotspots (internet access
areas that deploy wireless technology) can be found in airports, hotels, and coffee shops. Some offer free
access while others require paid subscriptions. Offering free wireless Internet in a coffee shop is one sure
way to boost the chances of success. People are now given the option to make a connection over a cup
of coffee and over the internet.

5 Coffee Industry Trends You Can’t Miss in 2017

In one form or another, chances are almost everyone you know starts their
day with coffee – be it home-brewed, bottled, or purchased hot or iced from a
coffee shop. As longstanding as its popularity may be, the coffee industry is in
the midst of a rapid change.

As millennials’ fast-paced lifestyle becomes ubiquitous, consumers are

preferring to get their caffeine on the go. In turn, retailers are experimenting
with novel ways to speed up ordering and get busy shoppers back in their
stores.

Here are the five coffee industry trends that will dominate 2017: 
1. New Generation, New Measure of Value

As of last spring, Millennials have unseated Baby Boomers as the largest living

generation, according to U.S. Census data. This younger generation is more
social and mobile than any other to date. As a result, coffee consumption
has moved from the privacy of consumers’ homes to more public venues,
and is then compounded by social media.
With that in mind, millennials have come to value different aspects of their
coffee than their parents. Since many older generations drank their coffee in
the comfort of their own homes, they focused on the price of the coffee they
were drinking. Millennials, on the other hand, are more focused on experience
rather than price.

Here’s how to capitalize on this trend:

 Invest in eye-catching packaging and labels people will want to share photos
of.
 Showcase your brand’s commitment to sustainability.
 Experiment with new packaging and delivery systems.
 Highlight your leadership team. Consumers might be able to connect with your
founding team, and hearing their message straight from the source can be more
powerful than reading the words on a label.
2. Ready-to-Drink Coffee Takes Off

It is no secret that we live in a fast-paced world, or that it’s getting even faster. That
means that people want to have their coffee ready to drink as soon as possible. In this
environment, the canned and bottled ready-to-drink coffee market reached $2.4 billion
in 2015 and has only continued to climb, Bloomberg reported.
One reason RTD coffee may be taking off in 2017? The falling popularity of soft
drinks in the U.S. and beyond. “It is probably not a coincidence that canned or
bottled ready-to-drink cold coffee is catching on at a time when fewer are drinking
carbonated soft drinks, including the caffeinated colas,” said Karen Bundy, V.P. of
Food & Beverage Marketing at Multi-sponsor Surveys in a press release.
This movement has inspired some of the coffee industry’s biggest players jump in to
the RTG arena. In September 2016, Dunkin Brands announced it would be partnering
with Coca Cola to bring a new line of cold coffee beverages to retail in 2017.
Related: A New Generation of Products Is Shaping the Future of Coffee
3. Morning Coffee on Tap

With ready-to-drink coffee making it easier for consumers to get their caffeine fix on
the go, some retailers are trying to get coffee drinkers back in the store with nitrogen
infused coffee. Nitro coffee is poured from a tap and provides a similar mouthfeel as a
beer (think Guinness). The foamy and creamy texture allows brewers to rely less
on sugar and milk to cut coffee’s bitter taste, which is appealing to the more health
conscious coffee drinker. Plus, the texture is incredibly difficult to replicatein an RTD
format, giving coffee shops something to offer millennial consumers looking for
unique drinking experiences.

4. Out With Iced Coffee, in With Cold Brew

Iced coffee has long been the go-to for consumers looking for a refreshing
pick me up in the summer months or even just an extra kick of caffeine, but
this is starting to change. Cold brew coffee has exploded in popularity over the
last several years, and 2017 should be no different. Cold brew sales jumped
up 580% between 2011 and 2016, according to a Mintel report. While a large
part of these sales has been at coffee shops themselves, plenty of retail
brands are also adding cold brew products to their lineups.
Here’s what separates cold brew from the more traditional iced coffee: Iced
coffee brews just like standard hot coffee – it uses heat to extract flavor,
sugar, oils and caffeine from the coffee beans. Then, that coffee is chilled and
served over ice. The cold brewing process uses time, rather than heat –
soaking beans in water for 12 hours or more in order to turn water into coffee.
Related: How to Make Cold Brew Coffee at Home
5. A Shift Toward Specialty

Overall, as shoppers prioritize experience over price, consumption of gourmet and

specialty coffee beverages is on the rise. Out of the $48 billion U.S. retail coffee
market, about 55% of spend will go toward specialty coffee next year, the Specialty
Coffee Assoc. of America found. Even for brands that have not traditionally operated
in the specialty space, opening up a luxury line could pay off in 2017.
Read the original  post at Repsly