Table of Contents
Executive Summary
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- Top takeaways
- Market overview
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- Figure 1: Unemployment and underemployment, January 2007-June 2020
- Figure 2: Spending cuts – NET – Any rank, November 2019
- Impact of COVID-19 on foodservice coffee and tea
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- Figure 3: Short, medium and long term impact of COVID-19 on foodservice coffee and tea, July 2020
- Opportunities and challenges
- Re-emergence
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- Figure 4: Important foodservice coffee factors – NET – Any rank, by location most often visited for coffee, April 2020
- Recovery
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- Figure 5: Foodservice coffee attitudes, April 2020
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- Figure 6: Coffee attribute interest – NET – Any coffee, by gender and age, April 2020
The Market – What You Need to Know
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- Retail competition percolating
- Panic buying and supply chain issues raise coffee prices
- Poor economic conditions lead to fewer pour-overs
Market Perspective
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- Retail options thrive as consumers stay home
- RTDs beat foodservice at functionality
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- Figure 7: Interest in functional coffee attributes (retail), May 2019
- Energy drinks give consumers a jolt
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- Figure 8: Total US retail sales and forecast of energy drinks and shots, at current prices, 2014-24
Market Factors
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- Coffee prices spike due to pandemic panic buying and supply chain disruptions
- Economic fallout will last much longer than the pandemic
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- Figure 9: Unemployment and underemployment, January 2007-June 2020
- Figure 10: Spending cuts – NET – Any rank, november 2019
Key Players – What You Need to Know
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- Major players pivot in the wake of COVID-19
- Operators must get creative to offset morning occasion losses
- Value is king as consumers limit discretionary spending
Coffee and Tea Menu Trends
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- Coffee and tea drinks continue to rise on menus
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- Figure 11: Top 10 coffee beverages on US menus, Q1 2017-20
- Figure 12: Top 10 tea beverages on US menus, Q1 2017-20
- Coffee preps play it cool
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- Figure 13: Top 10 coffee preparations on US menus, Q1 2017-20
- Traditional coffee flavors flourish
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- Figure 14: Top 10 coffee flavors on US menus, Q1 2017-20
- Fruity, spicy tea flavors on top
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- Figure 15: Top 10 tea flavors on US menus, Q1 2017-20
- LTOs show new directions in coffee and tea preparations
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- Figure 16: Select coffee and tea LTOs, October 2019-June 2020
What’s Working
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- Dunkin’ reinvents itself
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- Figure 17: Dunkin’ Refreshers Facebook ad, June, 2020
- Brands pivot in response to COVID-19
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- Figure 18: DIY Dunkin’ Donut Kits, April 2020
- Is it tea’s time to shine?
What’s Struggling
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- Breakfast’s boom goes bust
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- Figure 19: Caribou Coffee email, “Feeding a herd? Order a Bundle (new!) from Uber Eats,” June 20, 2020
- Independents may never fully recover
What to Watch
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- Value-based promotions will be vital to success in a recession
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- Figure 20: Panera Bread Bread email, “FREE COFFEE Sign Up Extended!” July 6, 2020
- Figure 21: Caribou Coffee email, “Only 2 more days to earn your Caribou Coffee Karma Badge,” July 29, 2020
- The micro cafe
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- Figure 22: Starbucks micro cafe
- Functionality comes to coffee shops
The Consumer – What You Need to Know
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- Afternoon treats and snack occasions can make up for dwindling morning sales
- Hot drinks are a must-have but operators should play it cool
- Flavor and functionality keep coffee exciting, especially for younger drinkers
Coffee and Tea Consumption
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- Cold drinks satisfy younger consumers
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- Figure 23: Coffee and tea consumption – NET – Any consumption, April 2020
- Figure 24: Coffee and tea consumption, April 2020
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- Figure 25: Coffee and tea consumption – NET – Any consumption, by age, April 2020
- Frequent purchasers are more likely to experiment
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- Figure 26: Coffee and tea consumption – NET – Any consumption, by change in coffee purchase (pre-COVID-19)
Coffee Purchase Location
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- Coffee chains reign
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- Figure 27: Coffee purchase location, most often, April 2020
- All generations prefer coffeehouse chains
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- Figure 28: Coffee purchase location, by generation, April 2020
- Lower-earning households rely on affordability of fast food and c-store coffee
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- Figure 29: Coffee purchase location, by household income, April 2020
Change in Coffee Purchases (Pre-COVID-19)
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- One third of consumers increased their coffee purchases pre-COVID-19
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- Figure 30: Change in coffee purchases (pre-COVID-19), April 2020
- Gen Zs and Millennials are driving the market forward
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- Figure 31: Change in coffee purchases (pre-COVID-19) – More, by select demographics, April 2020
- Independent coffeehouse consumers were buying more coffee pre-COVID-19
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- Figure 32: Change in coffee purchase (pre-COVID-19), by coffee purchase location, April 2020
Important Foodservice Coffee Factors
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- Hot drinks are table stakes, but restaurants should chill out
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- Figure 33: Important foodservice coffee factors – NET – Any rank, April 2020
- QSR coffee drinkers are most price conscious
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- Figure 34: Important foodservice coffee factors – NET – Any rank, by coffee purchase locations, April 2020
Coffee Attribute Interest
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- Creamers can aid in consumer comfort with coffee functionality
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- Figure 35: Coffee attribute interest – NET – Any coffee, April 2020
- Younger consumers will move functional coffee forward
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- Figure 36: Coffee attribute interest – NET – Any coffee, by gender and age, April 2020
- Frequent coffee buyers most interested in functional coffees
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- Figure 37: Coffee attribute interest – NET – Any coffee, by change in coffee purchases (pre-COVID-19), April 2020
- Coffeehouse chain and independent consumers most open to flavor innovation
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- Figure 38: Coffee attribute interest – Net – Any coffee, by coffee purchase locations, April 2020
Foodservice Coffee Behaviors
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- Consumers primarily drink coffee in the morning but opportunity lies in afternoon occasions
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- Figure 39: Foodservice coffee behaviors, April 2020
- Flavor innovation can excite young coffee consumers
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- Figure 40: Foodservice coffee behaviors, by generation, April 2020
- Premium, flavored coffees pave the way for upsell opportunities
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- Figure 41: Foodservice coffee behaviors, by change in coffee purchases (pre-COVID-19), April 2020
- Coffeehouse chain customers prefer flavored coffees
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- Figure 42: Foodservice coffee behaviors, by coffee purchase location, April 2020
Foodservice Coffee Attitudes
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- Focus on the afternoon treat occasion
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- Figure 43: Foodservice coffee attitudes, April 2020
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- Figure 44: Denny’s email, “Packs that feed the fun!” July 22, 2020
- Foam-topped drinks appeal to younger generations
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- Figure 45: Foodservice coffee attitudes, by generation, April 2020
- Promote dessert-like coffee flavors with c-store consumers
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- Figure 46: Foodservice coffee attitudes, by coffee purchase location, April 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
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