Rising coffee tide lifts boats from Starbucks, Dunkin’, Dutch Bros, data shows

Americans have started drinking their morning cup of coffee outside the home again, new data shows, in the latest signal that consumers are slowly returning to pre-pandemic normality.

Research from data analytics firm Placer.ai shows that foot traffic at chains like Dunkin’, Starbucks (SBUX) and Dutch Bros. Coffee (BROS) overtook the restaurant industry in 2021. The company called the morning coffee routine a “proven necessity.” based on customer visits during the COVID-19 pandemic, despite daily schedule changes and many white-collar workers working from home.

Foot traffic at the top ten coffeehouse chains increased 2.8% from two years ago in June 2021, Placer.ai found, but restaurant visits fell 4.6%. At the end of last year, the contrast became more apparent: in November, the café space saw an 8.4% increase in foot traffic compared to 2019 levels, while in December, an increase of 7.5% was recorded.

Meanwhile, the restaurant sector saw a decline of 6.4% and 1.8% compared to 2019, reflecting the rise of new variants of COVID-19.

“The numbers reveal that necessity and convenience aren’t the only two drivers of foot traffic in cafes,” Placer.ai said, with many customers choosing to pay for a cup of coffee outside their homes.

“For many coffee drinkers working from home, making coffee in their kitchen is no substitute for the experience of a coffee trip,” the report adds.

However, home coffee brands like Dunkin’ and Cafe Bustelo by JM Smuckers (SJM) have also seen a boost from customers choosing to drink their coffee at home.

In an interview in late November, CEO Mark Smucker told Yahoo Finance that “the whole business is benefiting from people staying home and continuing to stay home as we return to a new normal. , where people are likely to work more time at home than outside the home or office.”

Dutch Bros wade into the coffee conversation

(Courtesy of Placer.ai)

(Courtesy of Placer.ai)

Comparing foot traffic levels to 2019, newcomer Dutch Bros could give well-known players like Dunkin’ and Starbucks a run for their money according to Placer.ai. Throughout 2021, the Oregon-based coffee chain saw a major spike in monthly visits compared to 2019, a jump that peaked at 160% in December 2021.

Starbucks and Dunkin’, meanwhile, only saw foot traffic increase by less than 20% from March to December, with declines in January and February.

Ethan Chernofsky, CMO of Placer.ai, told Yahoo Finance LIVE in a recent interview that “Beyond seeing visits increase over time, we’re seeing visits by location number increase, indicating really this loyalty” for the Dutch Bros.

“They’re really focused on delivering the product in a really positive way, drive-thru and a fast-paced service model that allows them to grow very quickly and very efficiently,” he added.

Over the past five and a half years, Dutch Bros has grown its presence from 250 stores to nearly 500 stores, with plans to reach 800 stores by 2026.

However, “the expansion does not significantly impact visits by current coffee kings,” Placer.ai noted in its report. Despite a smaller increase in foot traffic for major brands from March to December compared to Dutch Bros, both companies exceeded pre-pandemic levels.

(Courtesy of Placer.ai)

(Courtesy of Placer.ai)

According to Placer.ai’s white paper, the “significant increase” in visits last March could be attributed to the release of spring menus. On top of that, the warmer weather may have spurred cravings for cold drinks that “often require special equipment and ingredients” that they may not have at home.

Starbucks — where cold drinks currently dominate sales — continues to benefit from “pumpkin spice latte season.” The coffee giant’s foot traffic rose 14.6% last November, the start of a holiday wave marked by the return of seasonal red cups.

Placer.ai believes that the general well-being of major brands proves that “the days of one coffee brand monopolizing a given region are coming to an end.” Dunkin’ is seeing significant growth in California, and Starbucks has gotten a boost in New York from two years ago.

“Demand for coffee is strong enough to sustain several national leaders,” the firm noted. “In fact, the data shows that multiple chains can be part of a single individual’s coffee mix by providing different values ​​and products based on demand.”

Late morning effect

NORWELL, MA.  - MARCH 17: A Dunkin' worker holds out a coffee through the window of a drive-thru while wearing gloves and a mask as the coronavirus continues to spread on March 17, 2020 in Norwell, Massachusetts.  (Staff Photo by Matt Stone/MediaNews Group/Boston Herald)

NORWELL, MA. – MARCH 17: A Dunkin’ worker delivers coffee through a drive-thru window wearing gloves and a mask as the coronavirus continues to spread on March 17, 2020 in Norwell, Massachusetts. (Staff Photo by Matt Stone/MediaNews Group/Boston Herald)

One lasting “COVID-induced change” is late morning visits to cafes. Last quarter, 26.2% of consumers visited their favorite cafes between 9 a.m. and 12 p.m., according to Placer.ai. But in Q1 2020, just over 23% of customers visited during this time, with more customers choosing to go midday (12:00 p.m.-3:00 p.m.) or late afternoon (3:00 p.m. 00-18:00).

The report notes that in the fourth quarter, “this increase in late morning visits appears to be at the expense of late afternoon visits – between 3:00 p.m. and 6:00 p.m.” which have yet to recover to pre-levels. the pandemic.

This could allow coffee chains to rethink their offers, according to their desires.

“Early morning coffee seekers may seek different products and a different spatial layout than late afternoon and evening coffee seekers,” the report said. This could allow chains to identify customer needs currently versus the needs of what Placer.ai calls “pre-pandemic customers”, giving them a possible “leg up on the competition”.

As the world looks to get back to work, the concept of “third places” could see a long-term boom as workers seek hybrid work models.

“As more and more people looked for ways to meet friends and family outdoors, buying a coffee to go and sitting on an outdoor bench went from a lame date idea to a popular dating concept,” the report notes.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.

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