Coffee Competition Heats Up One Cup at a Time

As new technology streamlines the segment, consumers’ appetites for caffeine-inspired beverages and the coffeehouse experience provide these limited-service restaurants with a jolt of competition.

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Scooter's Coffee Drive ThruCompetition continues to percolate in the coffee segment as large chain operators like McDonald’s seek to grow their sales through caffeine-inspired beverage programs.

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“Overcoming the bad coffee objection has been successful for many large foodservice operators,” says

Ric Rhinehart, executive director of the Specialty Coffee Association of America (SCAA), based in Long Beach, Calif. “The high-end coffee operators have had to refine the level of differentiation in product and service quality to compete effectively.”

There’s no disputing that coffee is big business. In 2012, coffee was the second-most commonly consumed beverage in the U.S. on a past-day basis, following only water, according to the National Coffee Association’s (NCA) 2012 National Coffee Drinking Trends Study.

Coffee café segment sales totaled more than $19.6 billion in 2011, up 5 percent from $18.7 billion a year prior, according to Technomic, a Chicago-based foodservice market research firm. Total units were down 2.2 percent, totaling 26,612 in 2011 (compared with 27,200 in 2010).

Age is a definite factor in coffee consumption. Consumers ages 40 to 59 years old who drink coffee tend to be the heaviest drinkers, averaging 3.4 cups a day, while those ages 18 to 24 are the lightest drinkers, averaging about 2.4 cups a day, according to the NCA report.

More Americans now seek upscale coffee beverages, including espresso, latte and flavored coffee, rather than the traditional cup of joe. In fact, gourmet coffee accounted for 46 percent of all coffee consumed in 2012, according to the NCA report. Of those drinking brewed coffee, more than a third added flavoring and sought coffee outside of their homes.

Although there was a time when coffee cafés were adding full menus to create additional revenue during the lunch daypart, today these operators are more likely to downsize food offerings to focus on beverages.

“Over the past three to five years, we have seen highly successful coffeehouse operators at the specialty end focus more on coffee and less on food for a variety of reasons,” Rhinehart says. “Food production in a coffee environment can be distracting for customers and staff alike. Those operators most dedicated to coffee quality have found that they are best served by minimizing their food offerings.”

New technology is revolutionizing and streamlining the coffee segment. “The production of brewed coffee beverages has seen a number of changes, with a focus on production and holding in large batches giving way to optimizing extraction and new technology for single-cup or custom-beverage applications,” Rhinehart says.

For example, single-serve brewers, designed to capture the high-end coffee operator, now compete with handmade techniques, such as pour over. “Major coffee equipment manufacturers [have developed] highly sophisticated brewers that allow tremendous operator control in producing made-to-order cups,” Rhinehart says.


Key Equipment

  • Food warmer
  • Food processer
  • Toaster
  • Ice machine
  • Refrigerator
  • Freezer
  • Blender
  • Espresso machine

E&S Considerations

  • Consistency: When it comes to espresso, latte and other similar beverages, customer
  • expectations are high, and consistency counts. Equipment should offer features and options that assist operators in properly brewing coffee and preparing these drinks.
  • Capacity: Because coffeehouses produce large quantities of products by constantly using the same equipment, brewers, espresso machines and other units should accommodate enough volume to move people through the line quickly.
  • Reliability: A majority of beverage operations have limited menus, so there is no room for downtime or extensive maintenance. These units must be able to stand up to high volumes and extensive use.
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