This is part of the Nation’s Restaurant News annual Top 200 report, a proprietary ranking of the foodservice industry’s largest restaurant chains and parent companies.
Sales growth in the beverage and snack industry slowed in the Latest Year despite a year marked by a growing battle among the nation’s top coffee players.
According to this year’s NRN Top 200 data, the top six Beverage-Snack brand leaders maintained their same rankings from 2017, though each experienced sluggish sales compared with the Preceding Year.
Unit growth in the Beverage-Snack segment also slipped for the Latest Year.
Not surprising, Starbucks and Dunkin’ Donuts kept their No. 1 and No. 2 ranking for overall Beverage-Snack systemwide sales in the United States. Both saw gains but the increases were not as impressive compared with the Preceding Year.
The segment, a mix of 13 chains selling coffee, doughnuts or frozen desserts, did not outperform the Preceding Year.
The 13 Beverage-Snack chains had average Latest-Year growth in U.S. systemwide sales of 4.5 percent, down from average Preceding-Year growth of 9.3 percent. The No. 1 sales leader, Starbucks, had growth in U.S. systemwide sales of 5.9 percent, down from Preceding-Year growth of 12.4 percent.
Dunkin’, ranked No. 2, saw systemwide sales increase 2.8 percent, compared with a 7.9 percent gain in the Preceding Year.
Sales growth at Krispy Kreme, Baskin-Robbins and Jamba Juice also didn’t outperform their gains from the Preceding Year. Of the six largest chains, by sales, only Auntie Anne’s reported a Latest-Year decline in systemwide sales.
The sluggish year was marked by major battle moves from coffee-focused brands.
Last year, German-based JAB Holding Co. added Panera Bread to its massive specialty beverage and cafe portfolio, which also includes Caribou Coffee, Peet’s Coffee & Tea, Krispy Kreme, Stumptown Coffee Roasters and Intelligentsia Coffee.
Caribou, Peet’s and Krispy Kreme all rose in rankings for sales growth in the Latest Year.
Warren Solochek, senior vice president of industry relations at The NPD Group, said JAB Holding is snapping up relevant brands to compete in the Beverage-Snack category. The latest grabs, Pret A Manger and Panera, are particularly smart moves.
“They’re all coffee related and more upscale places,” Solochek said.
Building an arsenal of brands that cater to afternoon snacking is another advantage of buying coffee and café brands.
For years, consumers would rely on convenience stores for snacking. But now, Solochek said, consumers “are going to these upscale places because they believe the fare is better quality.”
He said JAB is seeing dollar signs as “there’s a lot of margin in coffee.”
Dunkin’ is also betting big on coffee.
Last year, the company began opening next generation stores with Dunkin’-only marquee branding, underscoring the chain’s interest in going head-to-head with McDonald’s and Starbucks.
McDonald’s, which is not part of the NRN Beverage-Snack survey, does not break out segment sales. However, the chain is seeing an opportunity to grab share by boosting
its beverage program.
Last year, the company’s 14,000 restaurants in the U.S. added three new espresso drinks to the McCafe menu: cappuccino, Americano and iced caramel macchiato. Back of the house barista machines were also upgraded to produce a creamier and thicker milk foam. In April, McDonald’s also introduced a seasonal beverage line, McCafé Turtle coffee, which has since left stores.
With foot traffic flat across all segments, industry watchers say chains focusing on coffee can increase frequency among diners because it is a legal addictive elixir.
“Starbucks has the highest customer frequency in North America because caffeine drinkers want their coffee fix,” said Mark Kalinowski of Kalinowski Equity Research. “People who are coffee people, want it very frequently.”
Still, signs show of a continued slowdown in java and snack sales. In late May, an IBISWorld report said coffee and snack shop revenue is expected to grow at slower annualized rate of 0.9 percent to $51.0 billion over the five years to 2023.
Read more:
2018 Top 200: Segment Trends
Contact Nancy Luna at [email protected]
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