Coffee & Snack Shops Will Add High-Margin and Healthy Items to Their Menus to Aid Growth

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The Coffee and Snack Shops industry will resume its long-term growth trend beginning in 2012, when revenue is anticipated to jump 4.9% to $27.8 billion, according to IBISWorld, the nation’s largest publisher of industry research. Major operators like Jamba Juice, Starbucks and Dunkin' Donuts Coffee will benefit as the economy improves, unemployment rates decline and consumers begin to spend money again on luxuries like eating out. Furthermore, over the five years to 2016, consumer spending is expected to increase at an average annual rate of 2.3%. As a result, revenue is projected to increase at an average annual rate of 4.1% to $32.5 billion over the period.

IBISWorld Market Research

IBISWorld Market Research

Over the five years to 2011, revenue has grown at an average annual rate of 2.0% to $26.5 billion

The Coffee and Snack Shops industry will resume its long-term growth trend beginning in 2012, when revenue is anticipated to jump 4.9% to $27.8 billion, according to IBISWorld, the nation’s largest publisher of industry research. Major operators like Jamba Juice, Starbucks and Dunkin' Donuts Coffee will benefit as the economy improves, unemployment rates decline and consumers begin to spend money again on luxuries like eating out. Furthermore, over the five years to 2016, consumer spending is expected to increase at an average annual rate of 2.3%. As a result, revenue is projected to increase at an average annual rate of 4.1% to $32.5 billion over the period.

According to IBISWorld analyst, Nima Samadi, after surging over the past decade, the Coffee and Snack Shops industry experienced a major slowdown in 2009 due to a struggling economy and, to a lesser extent, changing consumer tastes. “Over the five years to 2011, revenue has grown at an average annual rate of 2.0% to $26.5 billion,” says Samadi. “After revenue declined 6.5% to $24.7 billion from 2008 to 2009, it began its upward climb in 2010, with growth of 3.2%. In 2011, industry revenue is expected to continue rebounding, with an increase of 4.0%.”

During the recession, consumers spent less on luxuries like eating out, and they purchased lower-priced items when they did spend. So high-priced coffee drinks and other nonessential snacks lost the battle over people's shrinking budgets. Consumers have also become increasingly health-conscious over the five years to 2011. Many retailers have responded by expanding the number of healthy options on their menus, and retailers like Jamba Juice have experienced growth due to the health benefits of their products. Still, the general trend toward healthy eating has hurt the industry's unhealthier segments, such as donut and ice-cream shops. Over the past five years, industry employment has grown at a muted rate of 1.1% per year to 479,856 employees. Furthermore, in response to weak market conditions, the number of establishments has increased only marginally at an average annual rate of 1.5% to 48,857 in 2011.

To combat slumping sales, major operators like Jamba Juice, Starbucks and Dunkin' Donuts have expanded their menus to offer nontraditional, high-margin menu items like iced-coffee drinks, new breakfast items and healthy wraps, aiding them in their turnaround. Many major chains are also investing in international growth as part of a long-term strategy. Companies in the Coffee and Snack Shops industry like Starbucks view China in particular as a market with huge potential for growth and long-term profitability. Over the five years to 2016, revenue is forecast to grow at an average rate of 4.1% per year to reach $32.5 billion.

For more information, download the full report from IBISWorld on the Coffee and Snack Shops industry

IBISWorld Industry Market Research Reports Contain:

About this Industry
Industry Definition
Main Activities
Similar Industries
Additional Resources

Industry at a Glance

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle

Products & Markets
Supply Chain
Products & Services
Major Markets

Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry

Major Companies

Operating Conditions
Capital Intensity

Key Statistics
Industry Data
Annual Change
Key Ratios

Jargon & Glossary

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About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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