Paper
Coffee Shop
Industry Snapshot
January 2012
119 North Commercial Street, Suite 175 Bellingham, WA 98225-4455 phone: (360) 733-4014 fax: (360) 733-5092 www.cevforbusiness.com
Coffee Shop
January, 2012
Industry Overview
There are approximately 20,000 coffee shops in the United States with combined annual revenues equaling almost $10 billion. This industry is highly concentrated in that the top 50 companies generate 70% of total industry sales, (First Research, 2011).
Consumers
Consumers spend an average of $2.45 for an espresso-based drink or $1.38 for a cup of brewed coffee. The majority of Americans (65%) drink coffee at breakfast. Thirty percent report drinking coffee in between meals, while 5% say they drink it with meals other than breakfast, (Harvard School of Public Health, 2012). The following table shows the percentage of people who drink coffee, by age, (National Coffee Association, 2010):
80% 71% 70% 60% 51% 50% 41% 40% 30% 20% 10% 0% 18-24 25-39 40-59 60+ 34% 31% 66% 63% 61% 68% 74%
53% 44% 2008 2009 2010
Success Factors
The following factors contribute to the success of coffee shops in the United States, (IBISWorld 2011): Business expertise of operators Business expertise is required in an industry that generates high revenue, but low margins, and has a high propensity for losses.
Center for Economic Vitality www.cevforbusiness.com Page 2 of 7
Coffee Shop
January, 2012 Effective cost controls Cost controls with minimal waste are important in this low margin industry, particularly related to food inputs. Ability to franchise operations Franchising in both the United States and overseas is now a significant component of this industry and can assist by providing necessary support to owners. Product is sold at high-profile outlets It is important to have high-profile locations for stores, with easy access, parking and drive-thru services for customer convenience and service. Market research and understanding Firms need to
Industry Snapshot
January 2012
119 North Commercial Street, Suite 175 Bellingham, WA 98225-4455 phone: (360) 733-4014 fax: (360) 733-5092 www.cevforbusiness.com
Coffee Shop
January, 2012
Industry Overview
There are approximately 20,000 coffee shops in the United States with combined annual revenues equaling almost $10 billion. This industry is highly concentrated in that the top 50 companies generate 70% of total industry sales, (First Research, 2011).
Consumers
Consumers spend an average of $2.45 for an espresso-based drink or $1.38 for a cup of brewed coffee. The majority of Americans (65%) drink coffee at breakfast. Thirty percent report drinking coffee in between meals, while 5% say they drink it with meals other than breakfast, (Harvard School of Public Health, 2012). The following table shows the percentage of people who drink coffee, by age, (National Coffee Association, 2010):
80% 71% 70% 60% 51% 50% 41% 40% 30% 20% 10% 0% 18-24 25-39 40-59 60+ 34% 31% 66% 63% 61% 68% 74%
53% 44% 2008 2009 2010
Success Factors
The following factors contribute to the success of coffee shops in the United States, (IBISWorld 2011): Business expertise of operators Business expertise is required in an industry that generates high revenue, but low margins, and has a high propensity for losses.
Center for Economic Vitality www.cevforbusiness.com Page 2 of 7
Coffee Shop
January, 2012 Effective cost controls Cost controls with minimal waste are important in this low margin industry, particularly related to food inputs. Ability to franchise operations Franchising in both the United States and overseas is now a significant component of this industry and can assist by providing necessary support to owners. Product is sold at high-profile outlets It is important to have high-profile locations for stores, with easy access, parking and drive-thru services for customer convenience and service. Market research and understanding Firms need to