Operators will continue to add trendy, high-margin products to stores to stimulate growth.
New York, NY (PRWEB) February 21, 2014
Over the past five years, the Coffee and Snack Shops industry has been buoyed by increased consumer spending, driven by higher disposable incomes and greater confidence in the economic outlook. The industry was hit hard by the recession as unemployment rose, consumer confidence tanked and spending dried up. But coffee and snack shops have rebounded from the recession at a faster rate than most segments of the food service sector as consumers increasingly seek convenience at an affordable price. The industry has been given a much needed boost by rebounds in consumer spending and the Consumer Confidence Index over the past five years, which have increased at annualized rates of 2.2% and 11.2% respectively over the period, respectively. In the five years to 2014, industry revenue is expected to increase an annualized 2.7% to $30.2 billion. This trend is expected to continue into 2014, with an expected growth of 1.4%.
The Coffee & Snack Shops industry has had to adapt to changing consumer preferences over the past five years, especially those relating to health and diet. According to IBISWorld Industry Analyst Andy Brennan, “Consumers have become increasingly health conscious and are avoiding foods that are high in fat and salt content.” Some operators have responded to this trend by expanding the number of healthy options on their menus. Many operators selling unhealthy food have lost business to operators that promote more nutritious, wholesome options.
Major operators like Starbucks and Dunkin' Donuts are expected to expand their menus in the five years to 2019 in order to increase sales and access higher profit margins. "This includes increasing their offerings of nontraditional, high-margin menu items like iced coffee drinks, breakfast items and wraps," says Brennan. Both Starbucks and Dunkin' Donuts plan on rolling out hundreds of new stores over the next five years, making up for lost ground they experienced during the recession. Dunkin', which is highly concentrated in the east, is aiming to expand westward to steal market share from local competitors. The major chains are also expected to invest more in international growth as part of a long-term strategy, because many larger players view emerging economies as markets with huge potential for growth and long-term profitability. This international move is being made as the domestic industry approaches maturity.
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IBISWorld industry Report Key Topics
The Coffee and Snack Shops 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 and sodas. Purchases may be consumed on-site, taken to go or delivered.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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