Starbucks is among the companies benefiting from steady visits from coffee cravers.
Uncertain times have consumers cutting back on non-essential spending, but caffeine cravings at $5 or more per cup have so far been relatively unscathed. June spending at U.S. coffee shops and bakery cafés rose 1.9% from a year earlier, even as overall restaurant spending declined 3.1%, according to a report from financial services provider Rabobank and data analytics firm Earnest Research.
Analysts attribute the rise to various reasons, including more people getting out of their homes and back to offices and other public places since the early days of the pandemic. Some customers are looking for a social experience and a cup of coffee beyond those home-brewing pods that are also selling well.
Among other evidence, Seattle-based Starbucks this month reported record revenue for the April-June quarter at its more than 34,000 global locations, with sales of $8.2 billion exceeding expectations. Executives said Starbucks opened 298 net new stores in North America and 1,355 internationally since June 2021.
“While we are sensitive to the impact inflation and economic uncertainty are having on consumers, it’s critically important that you all understand we are not currently seeing any measurable reduction in customer spending or any evidence of customers trading down,” Starbucks CEO Howard Schultz told analysts during an earnings conference call earlier this month.
Retail traffic analytics firm Placer.ai also reported coffee shops outperforming the wider dining sector for much of the pandemic, though it said no category has been unaffected by consumer cutbacks during 2022. Coffee visits to places such as Starbucks, Dunkin’ Donuts and Dutch Bros. outpaced overall quick-service restaurant visits every month between July 2020 and May 2022, before dropping slightly below the quick-service average in June.
“But given the trends of the past two years, there is every reason to believe the June 2022 visit numbers are a reflection of the temporary challenges and not of any drop in coffee demand,” Placer.ai marketing manager Shira Petrack said in a July report, referring to high gas prices and spiking COVID cases that kept customers away from shops in some cities.