Brewing All-day Coffee Sales

Hot and iced specialty coffee drinks can add traction to off-hours traffic, turning the morning rush into an all-day affair.

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Brewing All-day Coffee Sales

STRONG BEVERAGE PROGRAMS IMPROVE P.M. TRAFFIC PATTERNS

Coffee is most strongly associated with the early part of the day, its eye-opening powers cementing a buzzy reputation for morning-time consumption. Bolstered by specialty and premium beverages, changing demographics of Millennials and Gen Zs favoring an anytime attitude, and less-rigid work-from-home schedules, coffee is making gains in afternoon and early evening hours.

47% of guests say that beverage offerings are very important to them when deciding which restaurants to visit for meals.
_{^{Source: Technomic Beverage Study (2020)}}

Concerns that amid shifting work habits, coffee sales would weaken appear unfounded, at least for Starbucks. Sales climbed 12% in the second quarter of 2022. There is one slight difference: its first rush now happens between 8–10 a.m. instead of the pre-lockdown 7:30–9:30 a.m. crunch. The second strong wave comes early to midafternoon, generally coinciding with school dismissal. Pre-pandemic, just less than 60% of its business was in the morning, with an effort to grow revenue in other dayparts. Pricier cold beverages that appeal to Gen Zs’ snack-all-day habit are part of that strategy. Dunkin’ also sees peak times coming later. With people continuing to work remotely, the chain’s busiest span is from 10 a.m.–2 p.m.

INSTANTLY DELICIOUS

Sure, they’re wildly convenient and portable but for most people instant and freeze-dried coffee hold on tight as the least-favorable choices for that all-essential cup of joe. But with convenience being the guiding force for many food and beverage options, lackluster powdered instant coffee has largely been replaced with better formulations including single-serve packets, bags, liquid concentrates, and even instant alt-milk lattes. Led by these improvements and the call for easy options, the global instant coffee market is projected to grow from roughly $25 billion in 2000 to over $34 billion by 2028. While they probably don’t make sense for peak coffee time in foodservice, instant/freeze-dried are worth considering for operational ease, off-hours, and at locations at which coffee isn’t a consistently strong seller. Regular and decaf are available as are different roasts from light to max force.

COFFEE VARIETIES & TERMS | MENU ADOPTION CYCLE

_{^{Source: Datassential SNAP! Coffee Varieties & Terms}}

R2D, TOO

As a category, ready-to-drink (R2D/RTD) coffee is among the fastest growing in the beverage world, its sales increases outmuscling even bottled energy drinks. Analysts credit much of the growth to strong all-day interest from Millennials and Gen Zs. With the convenience of grab-and-go and a full spectrum of choices, the market saw dollar sales in retail channels grow 20.1% in 2021. Nitro, functional, and enhanced ingredients, different roasts, high caffeine, sweeteners, and flavors are among the marketing hooks that are expected to keep sales vibrant, bringing opportunity to multiple foodservice industry segments including colleges and universities, healthcare, QSRs, and fast casual.

Consumers spend 50% more in retail settings when offered free espresso on arrival. They not only buy more but also stuff they don’t need.
_{^{Source: Wall Street Journal How About a Jolt of Caffeine for the Economy (2022)}}

Beverage Menu Scan

New flavors and combinations keep the beverage category interesting for consumers and profitable for operators. Here are some of the latest offerings seen on menus.

Rose cardamom latte: espresso coffee gently sweetened and flavored with rose water and cardamom and topped with milk of choice
Gibraltar: espresso cut with a tiny amount steamed milk
Shakerato: double espresso and raw sugar shaken over ice
Cold Brew Power PB Banana Smoothie: packed with 30 grams of protein via peanut butter powder, banana, cocoa, hemp protein powder, and collagen blended with cold brew coffee
Killer Bee: iced coffee bolstered with espresso
Medici: espresso with chocolate syrup, orange peel, hot chocolate, and steamed milk
Turmeric Latte: turmeric, Ceylon cinnamon, ginger, and spices with choice of milk
London Fog: tea topped with steamed milk
Frozen Treat: choice of milk and flavor such as caramel, ginger spice, or almond, blended and frothed with ice
Mocha Arbol: brewed coffee with infusion of chile de arbol, panela, cinnamon, and dark chocolate
Blue-Eyed Teas ‘er: blend of eight tart-fruity teas served hot or iced

TEA FOR ALL

By all accounts, tea is pretty hot stuff, with 34% more hot or iced specialty tea ordered in foodservice vs two years ago, according to Technomic’s latest Beverage Study. If that’s not enough, the Tea Association of the U.S.A., Inc. says that in 2021, Americans quaffed almost 85 billion servings, nearly all of it black tea and much of it poured over ice. In an all-important signal for future strength, tea also has strong appeal for younger consumers, with 87% of Millennials drinking it hot or iced. Along with the Gen Zs coming up behind them, Millennials are drawn to purported healthy attributes of tea including its ability to reduce stress and possibly build immunity.

ICED TEA | MENU ADOPTION CYCLE

_{^{Source: Datassential SNAP! Iced Tea (2022)}}

_{^{Sources: CNBC: Starbucks Suspends Its Outlook (2022); Food Institute: Millennials, Gen Z Fueling Coffee Sales Boom (2021); Verified Market Research: Global Instant Coffee Market Size (2021); BevNet: Cold Coffee Heats Up (2022); P.R. Newswire: Global Instant Coffee Market (2022); The Tea Association of the U.S.A., Inc.: Analysis of Tea in the Foodservice Industry (2000).}}