Caffeine fix: Coffee and Snack Shops in the US Industry Market Research Report from IBISWorld has Been Updated

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While a decline in disposable income and healthier eating trends hurt many coffee and snack shops during the recession, demand is set to continue increasing in the five years to 2013; furthermore, operators will look to international expansion in Asia and the Middle East to boost growth as the industry nears domestic saturation. For these reasons, industry research firm IBISWorld has updated a report on the Coffee and Snack Shops industry in its growing industry report collection.

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Operators will continue to add high-margin, trendy products to stores to stimulate growth

After surging during 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. In the five years to 2013, IBISWorld estimates revenue will grow at an average annual rate of 0.9% to $29.0 billion. After revenue declined 6.6% to $25.9 billion in 2009, it resumed its upward climb between 2010 and 2012. “In 2013, industry revenue is expected to continue its rebound with an increase of 2.6%,” IBISWorld industry analyst Nima Samadi says.

During the recession, consumers spent less on luxuries like eating out, and they purchased lower-priced items when they did spend. This caused high-priced coffee drinks and other nonessential snacks to lose the battle for people's shrinking budgets. Consumers have also become increasingly health conscious during the five years to 2013. “Many retailers, such as Jamba Juice, have responded by expanding their healthful options, and have grown due to the health benefits of their products,” Samadi says. Still, the general trend toward healthful eating has hurt the Coffee and Snack Shop industry's unhealthier segments, such as donut and ice cream shops.

In response to weak market conditions, the number of establishments is expected to increase more slowly than in the past. In 2013, the top two players in this industry include Starbucks Corporation and Dunkin’ Brands Inc. These players make up more than one-half of the industry market share, which gives them considerable market power in determining industry trends and also creates a formidable barrier for nonfranchised players. The industry's concentration has increased because of the recent jump in acquisitions, which indicates that companies are making a concerted effort to increase profitability by claiming larger portions of market share. Between 2008 and 2013, the numbers of establishments and enterprises have experienced muted growth, which caused a marginal increase in industry concentration. The level of industry concentration is expected to continue to increase in the five years to 2018.

To combat slumping sales, major operators like Starbucks and Dunkin' Donuts are anticipated to expand their menus during the five years to 2018, which includes increasing their offerings of nontraditional, high-margin menu items like iced coffee drinks, breakfast items and wraps. These additions are expected to aid these companies in their turnaround. Many major chains are also investing in international growth as part of a long-term strategy. Larger players view China, in particular, as a market with huge potential for growth and long-term profitability. In the five years to 2018, revenue is forecast to grow. For more information, visit IBISWorld’s Coffee and Snack Shops in the US industry report page.

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IBISWorld industry Report Key Topics

This industry is composed of establishments that prepare or serve specialty snacks and nonalcoholic beverages, including ice cream, frozen yogurt, cookies, donuts, bagels, coffee, juices, smoothies or sodas. Purchases may be consumed on-site, taken out or delivered.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & 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

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 or call 1-800-330-3772.

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Gavin Smith
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