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Regional Coffee Chains Are Growing Because Of, Not Despite, The Dominance Of Starbucks

Great news for coffee lovers! Regional chains are offering new coffee blends and brewing techniques to enhance your coffee enjoyment. For more info on the top regional chains, please click the button below.

Photo Courtesy of ICSC.

Operators of regional coffee chains see a major growth opportunity.

For decades, Americans traditionally got their daily cup of joe at a diner, a bakery or a café.

Then, corporate coffee chains as Starbucks, Dunkin’ and Tim Hortons were driving the second wave of expansion.

Now, this third wave is being fueled by craft coffee makers offering coffee with one twist or another: more flavors, different types of brews and special store experiences.

Nearly 65% of American adults drink coffee daily. Coffee drinkers are also exhibiting a stronger yearning for gourmet, high-quality coffee and specialty coffee drinks.

Photo Courtesy of ICSC.

Some coffee shops are geared more toward the grab-and-go customer, while others offer a quiet and inviting location in which their patrons can hang out.

While Starbucks offers retail landlords good credit and predictable traffic flow, smaller regional chains have gained a significant foothold with their loyal followings and local appeal. Among these are Blue Bottle Coffee, La Colombe Coffee Roasters, and Philz Coffee.

These local and regional coffee companies have more of a homegrown feel that sets them apart from the larger corporate chains.

Some larger shopping centers have found that they can accommodate multiple coffee shops. Sales for Starbucks actually increased after bringing in another coffee tenant.

The U.S. coffee and snack shop category generated an estimated $50.7 billion in annual revenues in 2018, but that domestic growth is declining from an average annual rate of 4.6% over the past five years to a projected rate of 1.4% over the next five.

There are a variety of ways that coffee chains are working to differentiate themselves. Some are showcasing new brewing techniques, such as nitro coffee, mushroom-infused blends, buttered coffee or cascara coffee.

It’s a New Age approach to coffee.

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