More coffee, please: Cafés are growing faster than their fast-food peers
If you’ve tracked how much money you spent at coffee shops in the past few years, there’s a good chance it has gone up. The trend is reflected in rising same-store sales at Starbucks (SBUX) (8 percent in 2013) and Dunkin’ Donuts (DNKN) (3.4 percent). Even if you prefer a boutique coffee shop, it’s hard to deny that the “café scene”—particularly in corporate incarnations—is thriving in the U.S.
In fact, sales data from restaurant consultancy Technomic show cafés are the quickest-growing segment in the fast-food sector, with sales up 9 percent last year. Unlike other kinds of food, coffee has the advantage of being a daily ritual for many people. “Cafés continue, in quick service, to provide strong beverage and food options to younger consumers,” said Darren Tristano, an executive vice president at Technomic, in an e-mail. This includes both cafés that focus on beverages and café-style bakeries such as Au Bon Pain.
The boom is being driven by large chains. Of the country’s roughly 26,500 cafés, Starbucks accounts for more than 11,400 of them, Dunkin’ more than 7,600 more, and both are expanding. Only about 5,000 cafés in the U.S. are now run by independent operators and small chains, defined as businesses with 30 or fewer units, according to Technomic. While independent coffee shops are doing well—sales increased 6 percent last year—small chains saw sales drop 5.5 percent, according to the data.
Additional genres of fast food marking similarly robust growth are Asian- and noodle-focused chains and purveyors of Mexican cuisine, both of which have benefited from a growing consumer preference for slightly nicer fast-casual restaurants. Larger, more established categories such as pizza and burgers experienced slower growth, thanks in no small part to cafés and noodle joints stealing share “from more traditional players,” said Tristano.
Here’s how the different kinds of limited-service restaurants performed in 2013, according to year-on-year sales data from Technomic (with leading chains cited as examples):
1. Cafés (Starbucks, Dunkin’ Donuts) +9.0%
2. Bakery Cafés (Au Bon Pain) +9.0%
3. Asian/Noodles (Panda Express, Noodles & Co., Manchu Wok) +8.5%
4. Mexican (Chipotle, Taco Bell) +6.1%
5. Chicken (KFC, Boston Market) +4%
6. Sandwich (Arby’s, Subway,) +4%
7. Frozen Desserts (Ben & Jerry’s, Baskin-Robbins) +3.6%
8. Pizza (Domino’s, Papa John’s) +2.3%
9. Burger (McDonald’s, Burger King) +1.5%
10. Family Casual (Golden Corral, Old Country Buffet) -5.5%
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