Description

Providing the most comprehensive and up-to-date information and analysis of the Foodservice Coffee and Tea market, including the behaviours, preferences and habits of the consumer.

The pandemic completely changed the nature of employment, resulting in a dramatic increase in remote work, which in turn will reduce morning traffic to foodservice coffee/tea establishments. 45% of remote workers anticipate purchasing coffee/tea away from home less often compared to their pre-pandemic routines. Furthermore, 26% of consumers upgraded their home coffee/ tea options during the pandemic, thus diminishing their need to purchase drinks away from home.

Home beverage options pose a strong competitive threat to the foodservice market and chains that have traditionally relied on commuter traffic (eg c-stores) will need to rethink and revamp their coffee/tea programs. Consumers’ desire for value may result in an increased reliance on home-sourced drinks. 41% of consumers who anticipate purchasing coffee/tea less often say they will visit foodservice coffee/tea establishments less often in order to save money.

Total foodservice coffee/tea traffic will be slow to return to prepandemic levels but the pandemic accelerated consumers’ shift away from regular hot coffee and tea toward cold and specialty beverages. Consumers will increasingly source basic everyday drinks from home but treat themselves to premium foodservice-quality beverages, a trend that benefits the total market. 56% of all consumers and 67% of remote workers agree that foodservice quality drinks can’t be replicated at home, indicating the need for chains to embrace bold beverage innovation to provide consumers unique, premium, flavorful drinks that can’t be created at home.

Rather than compete on price, operators must instead focus on providing consumers premium beverage experiences. The importance of cold coffee drinks to the market will only increase as brands cater to Gen Z consumers, a generation that primarily orders cold coffee beverages. The development of cold flavorful beverages is critical for attracting Gen Z consumers.

Read on to discover more details or take a look at all of our US Drinks market research.

Quickly understand

  • The impact of COVID-19 on consumer behavior and the foodservice coffee/tea market.
  • The opportunity for cold coffee beverages.
  • Coffee and tea opportunities among Gen Z consumers.
  • The impact of remote work on the foodservice coffee/tea market.
  • Foodservice coffee brands.
  • Foodservice coffee and tea trends.

Covered in this report

Brands: Starbucks, McDonald’s, Dunkin Donuts, FSR, C-Store.

Expert analysis from a specialist in the field

Written by Caleb Bryant, a leading analyst in the Food & Drink sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The foodservice coffee and tea market suffered acute losses during the pandemic as morning commute traffic dissipated. While traffic will rebound as the country reopens, the rise of remote work will create new challenges. However, the pandemic accelerated consumers’ shift away from basic coffee/tea beverages toward cold and specialty drinks, a trend that ultimately benefits the market. Cold drinks represent the market’s future as remote workers treat themselves to premium cold afternoon beverages and as more chains cater to Gen Zers’ preferences.
Caleb Bryant
Associate Director of Food and Drink

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
    • Definition
    • COVID-19: US context
  2. Executive Summary

    • Top takeaways
    • Impact of COVID-19 on foodservice coffee and tea
      • Figure 1: Short, medium and long term impact of COVID-19 on foodservice coffee and tea, July 2021
    • Opportunities and challenges
    • Morning traffic will decline due to the rise of remote work
      • Figure 2: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
      • Figure 3: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
    • Remote workers will purchase premium drinks
      • Figure 4: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
      • Figure 5: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
    • Keep it cool for Gen Z
      • Figure 6: AFH coffee purchases, by generation, April 2021
      • Figure 7: Foodservice coffee/tea visitation motivators, by generation, April 2021
    • Café design will evolve
      • Figure 8: Foodservice café concept interest, by anticipated work situation, April 2021
    • Premium food options can draw in consumers
      • Figure 9: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
  3. The Market – Key Takeaways

    • Home-sourced beverages pose a larger competitive threat
    • Expect rising prices due to coffee supply chain issues
    • Economic conditions are favorable for the AFH coffee/tea market
  4. Target Audience by the Numbers

    • Generations and AFH coffee/tea
      • Figure 10: Population by generation, 2016-26
  5. Market Factors

    • Changes in work paradigms challenge the AFH coffee market but also create opportunities
      • Figure 11: Anticipated work situation for the remainder of 2021, April 2021
    • Consumers upgraded their home coffee/tea options during the pandemic
    • Supply chain disruptions and weak output sends coffee prices soaring
    • Consumers have extra disposable income for their favorite drinks
      • Figure 12: Disposable Personal Income change from previous period, January 2017-April 2021
      • Figure 13: Financial health tracker, March 2020-May 2021
  6. Companies and Brands – Key Takeaways

    • Cold coffee will become the norm and plant-based milks will proliferate
    • Largest chains adapt to changing consumer preferences
    • Chains will need to attract consumers outside traditional morning hours
  7. Competitive Strategies

    • Plant power
      • Figure 14: Milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
      • Figure 15: Non-dairy milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
    • The Big Three coffee providers adjust to changing consumer preferences
    • Starbucks promotes ethics and drives coffee innovation
    • Dunkin’ becomes a Gen Z favorite
    • McDonald’s outperforms during the pandemic but breakfast lags
    • C-stores need to rethink their coffee strategy
    • Coffee shops go green
    • Foodservice coffee and tea menu trends
    • Coffee declines but gets colder and more flavorful
      • Figure 16: Change in incidence of coffee drinks on menus, Q1 2018-Q1 2021
      • Figure 17: Change in incidence of coffee drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
      • Figure 18: Change in incidence of coffee preparation methods, Q1 2018-Q1 2021
    • Operators simplify their tea selection
      • Figure 19: Change in incidence of tea drinks on menus, top 10 drink types, Q1 2018-Q1 2021
      • Figure 20: Change in incidence of tea drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
  8. Market Opportunities

    • Cold drinks are critical
    • Make it a meal
      • Figure 21: Snack daypart frequency, mid-morning, by generation, October 2020
      • Figure 22: Snack daypart frequency, afternoon, by generation, October 2020
    • Timing is everything
    • Functionality will eventually come to the foodservice coffee market
    • Coffee shop design will evolve in a post-pandemic world
  9. The Consumer – Key Takeaways

    • Remote workers will order drinks less often but treat themselves to premium beverages
    • Gen Z becomes a key coffee/tea consumer group
    • Develop unique drinks that can’t be recreated at home
    • The future of café design is both big and small
    • Keep it cool
  10. Trended AFH Coffee and Tea Purchases

    • Consumers ditch brewed coffee for more premium options
      • Figure 23: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
    • Nearly half of Gen Z consumers order iced coffee AFH
      • Figure 24: AFH coffee purchases, by generation, April 2021
      • Figure 25: AFH tea purchases, by generation, April 2021
    • Older Hispanic consumers are key brewed coffee consumers
      • Figure 26: AFH coffee/tea purchases, by age and Hispanic origin, April 2021
  11. Trended Coffee and Tea Foodservice Visitation

    • Pandemic hits FSRs the hardest
      • Figure 27: AFH coffee and tea purchase location, 2019 vs 2021, May 2019 and April 2021
    • Entice remote workers by offering premium beverages
      • Figure 28: AFH coffee and tea purchase location, by anticipated work situation, April 2021
    • C-stores must offer budget-friendly cold beverages
      • Figure 29: AFH coffee and tea purchase location, by age and Hispanic origin, April 2021
      • Figure 30: AFH coffee and tea purchase location, c-store, by HHI, April 2021
  12. AFH Coffee and Tea Purchase Frequency: Pre-pandemic and During Pandemic

    • Purchase frequency significantly dropped during the pandemic
      • Figure 31: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, April 2021
      • Figure 32: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, by anticipated work situation, April 2021
  13. Post-Pandemic Anticipated AFH Coffee and Tea Purchases

    • Chains will need to actively draw in remote workers
      • Figure 33: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
      • Figure 34: Purchases post-pandemic anticipated, AFH coffee and tea, by select demographics, April 2021
  14. Reasons for Purchasing Coffee/Tea Less Often Post-Pandemic

    • Consumers grow accustomed to new coffee/tea habits established during the pandemic
      • Figure 35: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
    • Young consumers will respond to premium BFY beverages
      • Figure 36: Reasons for purchasing coffee/tea less often compared to prepandemic, by age, April 2021
    • Enhance affluent consumers’ home coffee experience
      • Figure 37: Reasons for purchasing coffee/tea less often compared to prepandemic, by HHI, April 2021
  15. Coffee/Tea Behaviors During Pandemic

    • New coffee/tea experiences trialed during the pandemic may stick
      • Figure 38: Coffee/tea pandemic behaviors, by anticipated work situation, April 2021
    • Stock home options for Millennial consumers
      • Figure 39: Coffee/tea pandemic behaviors, by generation, April 2021
      • Figure 40: Coffee/tea pandemic behaviors, by age and HHI, April 2021
    • CHAID analysis – Specialty coffee consumers upgraded home options
      • Figure 41: CHAID analysis – Coffee/tea pandemic behaviors, April 2021
  16. Foodservice Café Concept Interest

    • Café design diversification is necessary
      • Figure 42: Foodservice café concept interest, by anticipated work situation, April 2021
    • Gen Z are beginning their careers in the new era of remote work
      • Figure 43: Foodservice café concept interest, by generation, April 2021
  17. Foodservice Coffee/Tea Visitation Motivators

    • Deals, meals and serve it chilled
      • Figure 44: Foodservice coffee/tea visitation motivators, April 2021
    • Functional drinks appeal to a unique set of consumers
      • Figure 45: TURF analysis – Foodservice coffee/tea visitation motivators, April 2021
      • Figure 46: Table – TURF analysis – Visitation motivators, April 2021
    • Gen Z consumers want cold, flavor-forward drinks
      • Figure 47: Foodservice coffee/tea visitation motivators, by generation, April 2021
    • C-stores should upgrade their food options
      • Figure 48: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
  18. Foodservice Coffee and Tea Attitudes

    • Home options can’t replace foodservice quality beverages
      • Figure 49: Foodservice coffee and tea attitudes, any agree, April 2021
    • Cold brew is worth the upcharge
      • Figure 50: Foodservice coffee and tea attitudes, attitudes toward cold brew, any agree, April 2021
    • Remote workers will venture from their homes for premium drinks and for a change of pace
      • Figure 51: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
    • Local claims appeal to high-income consumers
      • Figure 52: Foodservice coffee and tea attitudes, any agree, by age and HHI, April 2021
    • QSRs and C-stores should focus on indulgent flavors
      • Figure 53: Foodservice coffee and tea attitudes, by chain and segment visitation, April 2021
  19. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Abbreviations and terms
    • Abbreviations
    • Terms
  20. Appendix – The Consumer

    • TURF methodology

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