Increased consumer spending at coffee shops will drive industry performance
New York, NY (PRWEB) October 30, 2014
The coffee store franchises industry has grown strongly since the recession, as the franchise model has become a popular way for large chains to increase their store footprint with relatively low capital investment. Dunkin' Donuts, the industry's largest player, has added more than 1,300 stores over the past five years, expanding into states where it is underrepresented compared with its traditional stronghold in the Northeast. Growing consumer spending in the United States since the recession has supported the industry's growth as consumers have been more willing to splurge on small luxuries, such as coffee. Busier lifestyles, which leave less time for preparing meals or beverages at home, have also helped the industry as coffee stores have placed a greater emphasis on convenience. Industry revenue is expected to grow per year on average over the five years to 2014.
This industry is dominated by Dunkin' Donuts, which is the most franchised coffee store in the United States. The company has expanded aggressively over the past five years and is expected to continue doing so over the next five years, as it moves into underrepresented states. The number of coffee store franchises has been boosted by Canadian-based Tim Hortons' movement into the United States, where it now has over 800 franchise locations. According to IBISWorld Industry Analyst Andy Brennan, “While there are a large number of small coffee store franchises, they struggle to compete with the market power of Dunkin' and Starbucks, which together dominate coffee sales at the retail level.” Coffee store franchises are becoming increasingly concentrated in the hands of fewer owners, with big, well-capitalized franchisee networks, which own hundreds of stores playing a bigger role.
Looking ahead, “growing consumer spending at coffee shops, especially on higher margin products, will drive the industry higher over the next five years,” says Brennan. IBISWorld projects the coffee store franchises industry revenue to increase over the five years to 2019. More specifically, Dunkin' Donuts has announced plans to open more than 400 locations in 2014, a sign that the industry still has room to grow. The company is planning a major push into states such as California, Colorado and Texas where it is less well known.
For more information, visit IBISWorld’s Coffee Store Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
The coffee store franchises industry is composed of franchise establishments that prepare and serve coffee. Reports in our Business Franchise collection focuses solely on the operation of franchised outlets and exclude nonfranchise data. They show the total number of franchise outlets, total franchise revenue and the average profit margin earned by franchisees. Our reports also highlight the largest franchisors by market share.
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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