Coffee and Tea Foodservice Trends in the U.S.

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Coffee and Tea Foodservice Trends in the U.S.
Published on February 2012
Report Summary
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.
Coffee and Tea Foodservice Trends in the U.S. (From Slideshare) Page 1/15

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).
Table of Content
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,
RTD teas
Table 6-25: RTD Teas Purchased in Last 12 months,
Tea flavor/varieties ordered from restaurants
Room for additional variety at restaurants
Table 6-26: Teas Ordered from Restaurants in Last 12 months,
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
Sales performance
Caffe Luxxe
On the menu
High price points; breadth and variety
Camille's Sidewalk Cafe
On the menu
Table 7-12: Camille's Sidewalk Café, Selected Food Menu Items, 2011
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
Sales performance
Java Dave's Coffee
On the menu
Table 7-15: Java Dave's, Selected Coffee Menu Items, 2011
La Madeleine Country French Cafe
On the menu
Table 7-16: La Madeleine Country French Café, Selected Menu Items
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
Foodservice suppliers
Coffee
Tea
J. M. Smucker
Growing the foodservice angle
Sara Lee acquisition ramifications
Sales performance

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