Coffee and Tea Foodservice Trends in the U.S.

February 2012 | 180 pages | ID: C4FFB22CD2BEN
Packaged Facts

Abstracts

Coffee and Tea Foodservice Trends in the U.S. provides industry participants with essential guidance on trends including menu pricing and discounting; coffee commodity pricing trends; promotional activity & strategy; flavor innovation; coffee and tea foodservice health trends; and retail coffee and tea brands used in foodservice.

Coffee and tea remains a key foodservice industry growth driver, buoyed by aggressive menu innovation and platform expansion, a strong foothold in the breakfast daypart, consumer lifestyle needs, and some of the lowest price points in an industry battling a down economy.

Led by Starbucks and Dunkin' Donuts, coffee and tea players continue to outperform restaurant industry growth, with revenue growth extending across restaurant segments. Coffee and Tea Foodservice Trends in the U.S. tracks coffee and tea growth not only among specialists but among restaurant brands pursuing incremental profits through improvements in coffee and tea quality and variety.

This report will help industry participants:

• Stay on trend, with menu analysis that includes trending of coffee & tea varieties, flavors and types by restaurant segment.
• Learn from innovation and category leaders via coffee and tea foodservice innovator case studies on the following brands: Argo Tea, Café Luxxe, Camille’s Sidewalk Café, Caribou, Coffee Bean & Tea Leaf, Dunkin' Donuts, Intelligensia Coffee & Tea, Java Dave’s, La Madeleine, Peet’s, Starbucks, Tea Station, Tim Hortons and Tully’s. Coverage also includes major QSR brands, such as McDonald’s, Burger King and Wendy’s.
• Gauge coffee-centric restaurants’ brand performance against their strategy decisions via trending of guest traffic, same-store sales, and guest check averages among leading brands.
• Keep ahead of consumer coffee and tea foodservice drinking trends, with analysis by flavor and type of coffee and tea, daypart usage, and penetration by segment.
• Get direction on industry revenue growth, with a foodservice market size and forecast for coffee and tea, including context for selected foodservice segments (including convenience stores, snack and beverage concepts, and fast food/QSR restaurants).

Contents

CHAPTER 1: EXECUTIVE SUMMARY

Scope and Methodology

Scope of coverage

Methodology

Consumer survey methodology

Market size and forecast

Consumer restaurant spend trending

Menu item trend analysis

Other sources

Restaurant categories

Limited-service restaurant definitions

Full-service restaurant definitions

Other definitions

Share of Stomach: Coffee and Tea Foodservice Sales Analysis

Coffee and Tea Foodservice Macroeconomic Drivers

Insight Capsule

Coffee and Tea Foodservice Trends

Insight capsule

Coffee and Tea Foodservice Menu Trends

Insight Capsule

Consumer Coffee and Tea Foodservice Usage & Preferences

Insight Capsule

Coffee and Tea Foodservice Brand Analysis

CHAPTER 2: SHARE OF STOMACH: COFFEE AND TEA FOODSERVICE SALES ANALYSIS

Overview

Market size and forecast summary

Restaurant industry market and forecast

Nonalcoholic beverage sales summary

Graph 2-1: Restaurant & Drinking Places Sales, Non-Alcoholic Beverage Share, 2006-14

Coffee and tea grow shares of nonalcoholic beverages sales

Graph 2-2: Non-Alcoholic Sales at Restaurant & Drinking Places: Coffee, Tea and Other, 2006-14

$18.7 billion in forecasted 2012 sales

Graph 2-3: Coffee and Tea Sales at Restaurants & Drinking Places, 2006-14

2011 sales spike; moderated growth ahead

Graph 2-4: Coffee and Tea Sales at Restaurants & Drinking Places, % Change, 2006-14

Coffee to continue contributing higher dollar share

But siphoning at-home and office sales is central to occasion-based growth

Graph 2-5: Coffee and Tea Sales at Restaurants & Drinking Places, Dollar Share, 2006-14

Coffee and tea per capita and population use

Graph 2-6: Coffee and Tea Volume, U.S. Per Capita, 2000-2009

Graph 2-7: Coffee and Tea Volume, U.S. Population, 2000-2009

Quarterly same-store sales comparisons, by brand and restaurant segment

Reading the graphs

One-year and multi-year comparisons

Performance & outlook: coffeehouses and donut shops

Coffeehouses ride positive sales wave

Graph 2-8: Coffeehouse and Donut Shop Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive segment momentum through 2011

Graph 2-9: Coffeehouse and Donut Shop Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Performance & outlook: QSR coffee players

Outlook

QSR: the behemoth grows while others falter

Graph 2-10: QSR Coffee-Centric Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Mixed momentum through 2011

Graph 2-11: QSR Coffee-Centric Restaurant Quarterly Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Competitive capsule: Burger King

Menu initiatives

Breakfast menu trends

Competitive capsule: McDonald’s

Breakfast: a quarter of sales, with unit volumes on the upswing

Beverage sales are booming

Coffee lays the foundation for broadening McCafé platform

Competitive capsule: Wendy’s

Wendy’s reenters breakfast wars with premium QSR differentiation

Redhead Roasters

Tweaking menu strategy by moving away from extreme affordability

Fast casual coffee players

Panera Bread, Einstein Noah and Cosi

Graph 2-12: Fast Casual Coffee-Centric Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive momentum

Graph 2-13: Fast Casual Coffee-Centric Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Food away from home spending share declines, but 2010 growth is stable

Graph 2-14: Food Away from Home vs. Food at Home, 2001-2010

Restaurant Performance Index exhibits moderate strength during 2011

Graph 2-15: Restaurant Performance Index, 2007-2011

Consumer spending trends

Daypart analysis

Hispanics driving growth in food spending

Driving dayparts

Table 2-1: Restaurant Share of Spend, by Daypart: Hispanic v. Non-Hispanic, 2007-10

Spending trends by age

Table 2-2: Restaurant Share of Spend, by Daypart, by Age, 2007-10

Spending trends by HH income

Daypart trends

Table 2-3: Restaurant Share of Spend, by Daypart, by HH Income, 2007-10

CHAPTER 3: COFFEE AND TEA FOODSERVICE MACROECONOMIC DRIVERS

Overview

Our take: muted optimism

Economic forecast through 2014

GDP: A long time getting back, but finally passes pre-recession levels

Forecast factors

Graph 3-1: Unemployment, GDP & Inflation Forecast, 2011-2014

Analysis: consumer confidence & foodservice

Consumer confidence remains abysmal but is rising from bottom

Present Situation Index increases business condition perceptions & job prospects brighten

Expectations Index rises on business conditions & job prospect optimism

Graph 3-2: Unemployment Rate, Savings Rate & Consumer Confidence, 2007-2011

Foodservice application and analysis

Strong correlations to LSR family, snack and beverage & high-frequency limited-service usage

Table 3-1: Degree of Consumer Confidence, Limited-Service Restaurant Use & Usage Frequency

Weaker correlation to full-service usage

Analysis: employment & foodservice

Unemployment remains high but is tapering downward

Demographic analysis

Trouble areas

Restaurant industry ramifications

Bright spots

Restaurant industry ramifications

Table 3-2: Unemployment Trends, by Demographic, October 2009 to December 2011

Analysis: consumer spending trends

Consumer spending ticks upward

Inflation-adjusted foodservice & accommodations consumer spending up 4% since 2005

Graph 3-3: Real Personal Consumption Expenditures by Type of Product,

Indexes, 2007-2011

Lower energy prices free up discretionary income for foodservice spending

Graph 3-4: U.S. Regular Gasoline Prices, 2007-2011

Analysis: coffee and tea price outlook

Commodity coffee prices coming back down to earth?

Graph 3-5: Consumer Debt Ratios: 2007-2011

In face of rising coffee commodity prices, tea remains stable

Tea pricing stability delivers growth potential

Graph 3-6: Producer Price Index, Coffee and Tea, 2007-2011

PPI industry index follows commodity trends

Graph 3-7: Producer Price Index, Coffee and Tea Manufacturing, 2007-2011

Translation: higher coffee and coffee drink menu prices

Table 3-3: Average Increase in Price of Coffee and Drinks, by Beverage Type, 2007-2011

Retail price trends

Graph 3-8: Consumer Price Index, Coffee and Tea, 2007-2011

Summarized pricing analysis

Table 3-4: Commodity and Industry PPI & CPI: Coffee & Tea Percent Change, 2007

Coffee and tea imports: volume and value

Increase in coffee sales highly influenced by cost per ton, not volume increases

Table 3-5: Coffee Imports, by Product Type Value, 2006-2010

Table 3-6: Coffee Imports, by Product Type Volume, 2006-2010

Table 3-7: Coffee Imports, U.S. Dollars per Ton, by Product Type, 2006-2010

Tea import value increases, based on price and volume increases

Table 3-8: Tea Imports, by Product Type Value, 2006-2010

Table 3-9: Tea Imports, by Product Type Volume, 2006-2010

Table 3-10: Tea Imports, U.S. Dollars per Ton, by Product Type, 2006-2010

CHAPTER 4: COFFEE AND TEA FOODSERVICE TRENDS

Overview

Specialty coffee & tea growth

Specialty coffee

Specialty tea

And the winner is . . .

Mainstreaming is at hand

Shift away from carbonated beverages

Iced tea and specialty coffee benefit

Multi-channel distribution model increasingly the rule, not the exception

Green Mountain: a new multi-channel model

Coffeehouses increasingly retail, foodservice and commercial participants

Coffeehouse brands increasingly retail powerhouses

Ushering in Age of the K-Cup

Dunkin’ Donuts

Starbucks

Tripling household penetration within 5 years?

Not just a coffee thing; a beverage thing

Hain Celestial

Food platforms now the rule; continued expansion expected

Expanding beyond coffee . . .

Coffee: Revitalizing instant

VIA raises instant coffee quality bar

The Via Effect

Coffee: Lightening up

Tea: Growing consumer awareness

Tea: Consumer focus on health and wellness

Tea’s healthful properties a hit with consumers

Table 4-1: Consumer Beverages Purchased for Nutritional Benefits, 2011

Table 4-2: Tea Types Purchased in Last 12 months: Health Significance, 2011

Overview

CHAPTER 5: COFFEE AND TEA FOODSERVICE MENU TRENDS

Datassential

What’s hot?

The “hottest”? Specialty tea

Table 5-1: Top 10 Nonalcoholic Beverage Menu Trends, 2011

Coffee varieties

Table 5-2: Top Coffee Varieties, Restaurant Penetration, by Segment, 2011

Restaurant penetration increases

Table 5-3: Top Coffee Varieties, Restaurant Penetration, by Segment, 2007-2011

Coffee flavors and types

Table 5-4: Top Coffee Flavors/Types, Restaurant Incidence, by Segment, 2011

Tea flavor & variety trends

Table 5-5: Top Hot Tea Flavors, Restaurant Penetration, by Segment, 2011

Iced tea

Table 5-6: Top Iced Tea Varieties, Restaurant Penetration, by Segment, 2011

Retail branded teas: menu presence and introductions

Seattle’s Best gets the ball rolling

But Starbucks brand can play a role

Other players also plan to grow foodservice presence

Taco Bell parlays retail brand equity into large-scale daypart expansion

Retail branded tea on the menu more common

Snapple, Lipton, Nestea and AriZona lead the way

Tazo, Gold Peak, Mighty Leaf and Fuze breaking onto the menu

Mighty Leaf on the move

Jamba Juice

Atlanta Bread

DrinkWorks cracks 7-Eleven

Selected restaurant brand coffee and tea menu introductions

Krispy Kreme

Jack in the Box

Other menu introductions

Overview

CHAPTER 6: CONSUMER COFFEE AND TEA FOODSERVICE USAGE & PREFERENCES

Summary analysis

Guiding Industry Guest Traffic Trends

Guest traffic remains an issue

Snack and beverage trouble spots: Generations Y and X

Adjusting to downward HH income shifts

Cater to diversity

Breakfast growth; breakfast opportunity

Follow Boomers

Guiding coffee and tea trends

Mature usage dictates need for expanding varieties, usage occasions & distributions channels

Summary Analysis: Tea

Foodservice upside

Moving tea-centricity into under-tapped areas

Specialty tea—or specialty tea mainstreaming?

Room for additional tea variety at restaurants

Target young and old

The ethnic tea connection

Summary Analysis: Coffee

The Via Effect

Ground/whole bean coffee suffering at the hands of single-brew/instant innovation?

Conversion opportunities

143 million opportunities to sell coffee every morning

Drive-thru, anyone?

Restaurant Segment Guest Traffic Count and Frequency Comparisons, 2008-11

Visit frequency definitions

Population growth saves industry

Table 6-1: Restaurant Usage by Major Segment, 3-Year Growth Index, 2008-11

Age restaurant usage trends

Snack and beverage usage declines

Table 6-2: Restaurant Segment Usage & Growth, by Generation, 2008-11

Table 6-3: Limited-Service Restaurant Guest Traffic Trending, by Age/Generation, 2008-2011

HH income restaurant usage trends

Downward migration in HH income has serious ramifications for restaurant industry

Table 6-4: Restaurant Segment Usage & Growth, by HH Income, 2008-11

Race/ethnicity restaurant usage trends

Table 6-5: Restaurant Segment Usage & Growth, by Race/Ethnicity, 2008-11

Daypart guest visit frequency

Summary analysis

Dinner remains biggest draw

Breakfast and snack growth

LSR breakfast, LSR dinner and FSR snack outpace other daypart segments

Table 6-6: Restaurant Use, by Daypart and Restaurant Segment, 2008-11

Daypart restaurant usage, by age

Table 6-7: 2011 Daypart Use, by Restaurant Segment: Age

Daypart restaurant usage growth, by age

Percentage breakfast use among 35-44s grows over time

Percentage snacking use among 25-34s on the upswing

Table 6-8: 2008-2011 Daypart Usage Growth, by Restaurant Segment: Age

Daypart restaurant usage, by HH income

Table 6-9: 2011 Daypart Use, by Restaurant Segment: HH Income

Daypart restaurant usage growth, by HH income

Table 6-10: 2008-2011 Daypart Usage Growth, by Restaurant Segment: HH Income

Coffee and Tea

Coffee and tea usage holds steady through recession

Table 6-11: Coffee and Tea Usage Trending, 2008-2011

Bagged/packaged tea, RTD iced tea & instant iced tea

Table 6-12: Bagged/Packaged Tea, RTD Iced Tea & Instant Iced Tea Usage Trending, 2008-2011

Bagged/packaged hot & iced tea

Table 6-13: Regular Hot & Iced Tea Usage Trending, 2008-2011

Regular loose & bagged tea

Table 6-14: Regular Loose & Bagged Tea Usage Trending, 2008-2011

Framing foodservice tea drinking trends: tea drinkers

Usage baseline: 173.5 million adult tea consumers

Table 6-15: Tea Drinkers, Selected Demographics, 2011

Leaf tea, instant tea, RTD tea and tea ordered at restaurants

Leaf tea the usage leader by wide margin

Restaurant opportunity

Table 6-16: Teas Purchased/Ordered in Last 12 months, 2007-11

Generational differences

Table 6-17: Teas Purchased/Ordered in Last 12 months, by Generation, 2007-11

Instant/mixed tea usage results yield HH income surprise

Table 6-18: Teas Purchased/Ordered in Last 12 months, by HH Income, 2007-11

Cultural heritage informs Asians’ tea use

Table 6-19: Teas Purchased/Ordered in Last 12 months, by Race/Ethnicity, 2007-11

Regional differences

Table 6-20: Teas Purchased/Ordered in Last 12 months, by Region, 2007-11

Urban restaurant tea ordering higher than average

Table 6-21: Teas Purchased/Ordered in Last 12 months, by Region, 2007-11

Leaf, instant, and RTD tea & tea ordered at restaurants: flavor & variety analysis

Black tea leads tea leads consumer tea purchases

Specialty teas reaching wide audience

Form and purchase method create significant distinctions

Table 6-22: Leaf Teas Purchased in Last 12 months, by Flavor/Variety, 2007-11

Visualizing the results

Graph 6-1: Leaf, Instant & RTD Tea Purchasing; Restaurant Tea Ordering:

Population Analysis, 2011

Leaf tea

Black and green teas dominate

Table 6-23: Leaf Teas Purchased in Last 12 months,

by Flavor/Variety, 2007-11

Instant/mix teas

Higher penetration rates among niche teas

Table 6-24: Instant/Mix Teas Purchased in Last 12 months,

by Flavor/Variety, 2007-11

RTD teas

Table 6-25: RTD Teas Purchased in Last 12 months,

by Flavor/Variety, 2007-11

Tea flavor/varieties ordered from restaurants

Room for additional variety at restaurants

Table 6-26: Teas Ordered from Restaurants in Last 12 months,

by Flavor/Variety, 2007-11

Gender and generation: Gen Y and X driving need; Baby Boomers present opportunity

Table 6-27: Tea Flavor/Varieties Ordered at Restaurants: Gender and Generation, 2011

HH income and race/ethnicity: minority groups bring tea opportunity

Table 6-28: Tea Flavor/Varieties Ordered at Restaurants: HH Income and Race/Ethnicity, 2011

Population density and region: moving tea-centricity into under-tapped areas

Table 6-29: Tea Flavor/Varieties Ordered at Restaurants: Population Density and Region, 2011

Coffee drinks, espresso/cappuccino and instant coffee

Note on reading charts on this section

Instant coffee gaining traction among higher-income households

Espresso/cappuccino an important racial/ethnic distinction; usage trends are afoot

Table 6-30: Coffee Drinks, Espresso/Cappuccino and Instant Coffee Usage Trending, 2008-2011

Instant coffee & instant flavored coffee

Usage upswing among black consumers

Table 6-31: Instant Coffee & Instant Flavored Coffee Usage Trending, 2008-2011

Ground and whole bean coffee: suffering at the hands of single-brew?

Table 6-32: Ground and Whole Bean Coffee Usage Trending, 2008-2011

Framing foodservice coffee drinking trends: coffee drinkers

Usage baseline: 173.5 million adult tea consumers

Age gap exists—but is gap narrower?

Relevance to Hispanic and Asian consumers

Table 6-33: Coffee Drinkers, Selected Demographics, 2011

Daily coffee consumption frequency

At least 240 million opportunities to sell coffee per day

Table 6-34: Daily Coffee Consumption Frequency, Selected Demographics, 2011

Coffee drinking by daypart

142 million opportunities to sell coffee every morning

Table 6-35: Coffee Drinking by Daypart, 2011

Coffee Procurement in Past 7 Days, by Method/Location

Before work or during work?

On-the-go importance

Table 6-36: Coffee Procurement in Past 7 Days, by Method/Location, 2011

Coffee Procurement: Method/Location

Drive thru: generational and employment-driven differences

RTD coffee and women

Table 6-37: Coffee Procurement in Past 7 Days, by Method/Location,

Selected Demographics, 2011

CHAPTER 7: COFFEE- AND TEA-BASED RESTAURANT BRAND ANALYSIS

Overview

Dunkin’ Donuts

Marketing initiatives - Creating a Fan

2009-11 menu strategy

Beverages

K-cups a hit

No cannibalization

Table 7-1: Dunkin Donuts: 2011 New Coffee & Tea Items & LTOs

Food

Hitting the right notes with breakfast and snacking

Sandwiches, wraps and dollar menu fill out breakfast menu

Big ‘N Toasty offers premium alternative

Incremental health innovation

Hearty Snacks

2008-2011 demographic trend analysis: Dunkin Donuts

Strong usage growth across demographics

Graph 7-1: 2008-2011 Demographic Usage Frequency Trending: Dunkin’ Donuts

Sales performance

Expansion plans and unit growth

Same-store sales improve

Table 7-2: Dunkin’s Donuts, Selected Metrics, 2007-11

Mountain Coffee Roasters, Inc.

Growth strategy

“A beverage for every occasion”—pushing beyond coffee

Penetrating away-from-home venues

K-Cup branding reach

Expanding its own foodservice & retail coffee brands

Tully’s

Timothy's Coffees of the World

Diedrich Coffee Roasters

Tea branding

Other beverages

Table 7-3: Green Mountain Coffee, Tea and Other K-Cup Brands, 2011

Coffee makers & accessories leader

Significant business relationships with coffeehouse giants

Dunkin Donuts

Starbucks

Lavazza

Filtered coffee machine in the works

Operating segments

Sales performance

Segment sales

Table 7-4: Green Mountain Coffee Roasters, Selected Metrics, 2007-11

McDonald’s

Tiered menu approach

Dollar Menu to remain a fixture

No trading down to Value Menu

Breakfast: a quarter of sales, with unit volumes on the upswing

Beverage sales are booming

Coffee lays the foundation for broadening McCafé platform

Sales performance

Table 7-5: McDonald’s, Selected Metrics, 2007-11

Starbucks Corporation

Beverages comprise three-quarters of retail sales

Table 7-6: Starbucks, Revenue Mix by Product Type, 2009-2011

Recession response

Menu pricing strategies and customer incentives

Social media and technology innovation

A holistic approach firing on all cylinders

Driving toward a strong, unified emotional connection

Beverage innovation

Customizable Frappuccinos

Coffee and tea initiatives & innovation

Starbucks Reserve

Blonde Roast

VIA

Growing—and bringing new customers into the fold

Seattle’s Best: leveraging a mid-tier brand

K-Cups: 50 million shipped

Seasonal promotions

Retail development innovation

Starbucks juice bar concept

Foodservice

2008-2011 guest traffic frequency analysis: Starbuck’s

General use on decline; higher-frequency use increases

Trouble spots: females, high-income individuals and black consumers

Graph 7-2: 2008-2011 Guest Traffic Frequency Analysis: Starbuck’s

Sales performance: 2011 builds on 2010 turnaround

Same-store sales momentum strengthens

Traffic and guest ticket rises

Table 7-8: Starbucks, Selected Metrics, 2007-11

Argo Tea Café

On the menu

Table 7-9: Argo Tea: Selected Seasonal and Signature Drinks

Marketing & promotional activity

Health focus

Chart 7-3: Argo Tea Health Positioning: Product Example

Sales performance

Au Bon Pain

On the menu

Table 7-10: Au Bon Pain, Selected Food Menu Items, 2011

Table 7-11: Au Bon Pain, Selected Coffee and Tea Menu Items, 2011

Marketing & promotional activity

Sales performance

Caffe Luxxe

On the menu

High price points; breadth and variety

Marketing & promotional activity

Camille’s Sidewalk Cafe

On the menu

Table 7-12: Camille’s Sidewalk Café, Selected Food Menu Items, 2011

Marketing & promotional activity

Sales performance

Caribou Coffee Company

Competitive differentiation

Growth strategy

New food and drink initiatives

Commercial foodservice initiatives

K-Cups

Tying coffee purchases to social cause

Sales performance

Table 7-13: Caribou Coffee Company, Selected Metrics, 2007-11

Coffee Bean & Tea Leaf

Inside the store

Tea overwhelmed by coffee?

A single-serve participant

Quality as differentiator

On the menu

Marketing & promotional activity

Sales performance

Java Dave’s Coffee

On the menu

Table 7-15: Java Dave’s, Selected Coffee Menu Items, 2011

Marketing & promotional activity

La Madeleine Country French Cafe

On the menu

Table 7-16: La Madeleine Country French Café, Selected Menu Items

Marketing & promotional activity

Peet’s Coffee and Tea

Coffee types and blends

Tiered pricing model

New coffee products

Tea, food and merchandise

Distribution channels

Retail stores

Grocery

Grocery revenue pops 24%

Home delivery

Foodservice and office

Growth strategy

California base

Geographic expansion

Diedrich loss; Starbucks’ gain?

Sales performance

Business segments

Business categories

Historical summary

Q3 2011

Table 7-17: Peet’s Coffee and Tea, Selected Metrics, 2007-11

Tazo Tea

Specialty tea pedigree

A single-serve player

Tully’s Coffee

A look inside the store

On the menu

Table 7-18: Tully’s Coffee, Selected Coffee and Tea Menu Items, 2011

Marketing & promotional activity

Foodservice suppliers

Coffee

Tea

J. M. Smucker

Growing the foodservice angle

Sara Lee acquisition ramifications

Sales performance