What you need to know

As 2020 started out, demand for prepared coffee drinks was strong and, in most cases, stable. More than a third of consumers had increased their foodservice coffee purchases year over year, prior to COVID-19. The foodservice coffee and tea market has become highly segmented, with three dominant chains – Starbucks, Dunkin’ and McDonald’s – selling the majority of coffee. C-stores and LSRs compete for the rest, while independent coffee shops fill niches for artisanal, specialized drinks. COVID-19 has made competition from retail options even more intense, with the dominant chains quickly recalibrating to respond to shrinking business and new service needs.

Key issues covered in this Report

  • The impact of COVID-19 on consumer behavior and the foodservice coffee and tea market

  • How foodservice coffee and tea operators will fare in a recession

  • Coffee and tea menu trends and innovation opportunities

  • Which demographics are driving the market forward

This Report was written July-August 2020.


This Report focuses on coffee drinks (eg regular hot brewed coffee, iced coffee, specialty espresso-based drinks) and tea drinks (eg regular tea, iced tea, specialty tea drinks) found at foodservice establishments. While special attention is paid to coffeehouses, coffee and tea are found at nearly all foodservice segments, thus coffee and tea found at other locations (eg QSRs, donut shops, convenience stores) are also discussed.

Like Coffee and Tea on Premise – US, July 2019, this year’s Report has somewhat greater focus on coffee trends as opposed to tea.

While the retail coffee and tea markets are discussed briefly, this Report excludes any in-depth analysis on the retail coffee and tea markets. For information on retail coffee and tea please see:

Coffee and RTD Coffee – US, July 2020

Tea and RTD Tea – US, August 2020

Coffee wave definitions

  • First wave coffee: Dates back to the 19th century as packaging and brewing technologies made it feasible for the average American to purchase coffee.

  • Second wave coffee: Characterized by the growth of coffeehouses and specialized coffee drinks (eg lattes, cappuccinos) in the US. The rise of second wave coffee was largely due to the aggressive expansion of Starbucks from the 1990s to the 2000s. Regular coffee became specialized, with some roasts specifying point of origin. Most mass-market coffeehouses (eg Starbucks, Peet’s, Dunkin’) are typically regarded as second wave coffee.

  • Third wave coffee: Coffee is regarded as a specialty product. Point of origin, processing methods and tasting notes are often provided on third wave coffee menus. Third wave coffee is always at a higher price point than second wave, oftentimes significantly higher. The coffee is also often brewed using a unique method such as pour-over, vacuum pot or AeroPress. Artisan coffee chains such as Blue Bottle, Stumptown, Revelator and La Colombe are considered third wave coffee chains.

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