2015 Top 100: Beverage-Snack segment analysis2015 Top 100: Beverage-Snack segment analysis

Just like the coffee served at its leading brand, the Top 100 Beverage-Snack segment is strong.

 U.S. systemwide sales of the Beverage-Snack segment — which is led by coffee giant Starbucks and includes major chains such as Dunkin’ Donuts and Krispy Kreme Doughnuts — reached $22.4 billion in the Latest Year, an 8.3 percent year-over-year increase on top of a 7.8-percent jump the year before.

The strength of the segment was heavily supported by coffee giants Starbucks and Dunkin’ Donuts. Starbucks maintained the category’s top spot with more than $13 billion in U.S. systemwide sales. Dunkin’, Starbuck’s closest competitor, held onto second place with U.S. systemwide sales topping $7 billion. Following that one-two punch was Krispy Kreme, Baskin-Robbins, Jamba Juice and Auntie Anne’s.

All six of those top chains recorded positive year-over-year sales growth. Auntie Anne’s and Starbucks had the largest U.S. systemwide sales growth rates with 10.2 percent and 9.7 percent, respectively. Even Jamba Juice, which was the slowest-growing chain in this group, posted a nearly 5-percent growth in the Latest Year.

All but one of the six Beverage-Snack brands posted an increase in theirrespective estimated sales per unit, or ESPU. Krispy Kreme Doughnuts’ ESPU declined 1.7 percent, while the others booked increases ranging from 1.2 percent to 5.5 percent.

Aggressive store openings didn’t appear to have contributed significantly to the health of the segment in the Latest Year. The healthiest chains largely maintained or slightly increased the Preceding Year unit growth rates. Krispy Kreme bucked that trend, significantly accelerating its unit-growth rate from 6.3 percent in the Preceding Year to a segment-leading 9.5 percent in the Latest Year. The Winston-Salem, N.C.-based chain ended its Latest Year with 278 units.

More likely to be the driving growth factor at the top chains is a fervent commitment to innovation, say industry experts.

“What we see is the number of new LTOs that all of these chains are doing is kind of going through the roof,” said Dave Jenkins, managing director of consumer solutions for Datassential. “The level of activity across everybody is up.”

Datassential research shows that of the top 15 restaurant chains in terms of the number of new products and limited-time offers released in 2014, more than half are beverage/snack brands. While Taco Bell was the leader, Dunkin’ Donuts ranked second and Starbucks ranked third, according to Datassential. Other NRN Top 100 Beverage-Snack chains on the Datassential short list included Krispy Kreme, which ranked 11th, and Baskin-Robbins, which ranked 15th.

In addition to product innovation, Starbucks and Dunkin’ have set the bar high in terms of digital innovation. Starbucks is in the process of a systemwide roll out of app-based mobile ordering and pay-ahead options, and later this year will add delivery in select markets. Meanwhile, Dunkin’ is currently testing mobile ordering.

Howard Schultz, Starbucks’ chairman and CEO, confirms that innovation plays a significant role in the coffee chain’s success.  

“Innovation is the force that will continue to drive our business and enable us to expand and increase revenues and profits — always through the lens of humanity — long into the future,” Schultz said in a recent statement.

Similarly, with more than 10 million downloads of the Dunkin’ mobile app and 2.8 million users signed up for DD Perks, Dunkin’s loyalty program, executives at Dunkin’ say that digital innovation is definitely driving business.

“The most significant change in our marketing is a digital strategy,” said John Costello, president, global marketing and innovation at Dunkin’ parent company Dunkin’ Brands.

Sister brand Baskin-Robbins is also benefitting from that strategy. The ice cream chain broke out of a flat year in ESPU growth in the Preceding Year by posting a 5.5-percent lift in sales per unit in the Latest Year. The move led the chain to the Beverage-Snack category’s No. 1 spot in ESPU growth results.