Project Café report values US coffee market at $45.4 billion

Allegra World Coffee Portal’s Project Café USA 2019 report has valued the United States branded coffee shop market at US$45.4 billion across 35,616 stores. Allegra says this represents an annual outlet growth of 3.8 per cent. The report forecasts the sector will exceed 40,800 outlets by 2023, representing a five-year compound annual growth rate of 2.8 per cent. Project Café USA 2019 is a comprehensive report that features data gathered from more than 5000 consumer surveys and 50 industry leader consultations. The report says the US continues to lead global coffee shop innovation across quality and product development, with healthy annual outlet growth of 3.8 per cent in a competitive market. Despite flattening comparable sales growth among leading branded chains, nearly 60 per cent of US consumers visited a branded coffee shop chain at least once a month in 2018. Allegra says this indicates there is still plenty of opportunity for operators who can enhance their customer value proposition in this competitive market. The report found the three largest coffee-focused chains – Starbucks, Dunkin’, and Tim Hortons – comprise 68.1 per cent of the total branded market. With a 40.1 per cent hold on the market, Allegra says Starbucks is still by far the largest brand. However, the report says flattening comparable sales among the top three branded coffee chains indicates the sector may be saturating, with all three emphasising quality to boost sales. Allegra says specialty coffee continues to influence mainstream operators and broaden quality expectations, even from fast-food chains and vending machines. Allegra noted industry leaders perceive growth in specialty coffee as the biggest coffee shop market trend. Nearly a quarter of consumers surveyed cite coffee quality as the biggest impetus for behind repeat coffee shop visit. The report says rising labour costs, including state-specific minimum wage increases and high staff turnover are among the biggest concerns for operators. Competition for desirable sites has also intensified against the backdrop of slowed sales growth compared to 2017. Allegra says operators must successfully combine convenience, coffee quality and good location to maintain footfall, with loyalty apps, product diversity, and a unique selling proposition all essential factors to success.

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