Allegra’s latest report suggests that the US branded coffee shop market has a value of US$45.4 billion and is growing steadily.
Allegra forecasts that the sector will exceed 40,800 outlets by 2023, representing five-year CAGR growth of 2.8%.
It said industry leaders are ‘broadly positive’ on market conditions, with high staff turnover, labour costs and increased competition cited among the main challenges for the coming year.
Starbucks continues to dominate the US coffee shop industry, remaining the clear consumer favourite and commanding a 40.1 per cent market share.
Project Café USA 2019, a comprehensive report on the US coffee shop market, includes data gathered from more than 5,000 consumer surveys, more than 50 industry leader consultations and insight generated by Allegra’s unparalleled coffee industry network.
“The US continues to lead global coffee shop innovation across quality and product development,” said Allegra. “An influx of international investment is pushing once niche artisan principles into the mainstream across the US coffee and food-focused sectors, with premiumization a key marketing strategy deployed to sustain growth.”
Allegra anticipates that a burgeoning 5th Wave sector will continue to shape the premium market, propelled by growing consumer sophistication and investment from large multinationals. Despite flattening comparable sales growth among leading branded chains, nearly 60 per cent of US consumers surveyed by Allegra visited a branded coffee shop chain at least once a month 2018. This indicates there is still plenty of opportunity for operators who can enhance their customer value proposition in this competitive market.
2018 has seen continued M&A activity and consolidation in the market, with premium consumer spend a key battle ground for growth. The three largest coffee-focused chains, Starbucks, Dunkin’ Donuts and Tim Hortons, comprise 68.1 per cent of the total branded market.
However, Starbucks, Dunkin’ Donuts and German-owned conglomerate, JAB Holdings, now hold a collective 79.2 per cent total branded coffee shop market share, with 28,211 outlets between them. With a 40.1 per cent hold on the total branded coffee shop market, Starbucks is still by far the largest brand and maintains its status as the nation’s favourite coffee shop.
Specialty coffee continues to influence mainstream operators and broaden quality expectations, even among fast-food chains and vending machines. Flattening comparable sales among the top three branded coffee chains indicates the sector may be saturating, with all emphasising quality to boost sales.
Industry leaders surveyed by Allegra perceive growth in specialty coffee as the biggest coffee shop market trend while nearly a quarter of consumers surveyed cite coffee quality as the biggest impetus for behind repeat coffee shop visit.