New things are brewing for today’s coffee shops.
Long touted as the third place, between home and work, some coffee shops are now becoming more of a quick stop-off as customers order their beverages in advance and swing by, via the drive-thru or a pickup counter, to grab their drinks.
Coffee shops are doing very well. The U.S. coffee and snack shop industry’s revenue in 2023 was $73.9 billion, according to IBIS World, and between 2018 and 2023, the market size grew 7.2% annually.
While Starbucks continues to be a dominant player, the chain reported a dip in its third-quarter fiscal results, with U.S. same-store sales declining 2%. The coffee segment as a broad scope continues to percolate, with emerging brands coming into the limelight.
Between 2022 and 2023, 7 Brew, based in Fayetteville, Ark., expanded its national footprint by more than 374%, making it the fastest-growing coffee chain, according to the “2024 Datassential 500: Top Restaurant Chains” report from global food and beverage intelligence company Datassential, based in Chicago.
Foxtail Coffee Co., Just Love Coffee Cafe and Ellianos Coffee also featured in Datassential’s “Top 100” list of fastest-growing concepts last year.
But what exactly is happening in the coffee shop business, and how can operators capture a larger piece of the coffee cake?
Cold Heats Up
Long known for their hot beverages, coffee shops keep expanding their repertoires. For example, consumers seem to have an insatiable thirst for cold coffee drinks.
At Bluestone Lane, an Australian-inspired coffee chain based in New York City, 70% of drinks are cold, iced or frozen.
And more than 60% of beverage sales come from cold drinks at Beans & Brews Coffeehouse, Salt Lake City. “Cold has become an important part of the mix because it’s expanded the afternoon daypart in a big way,” says Doug Willmarth, CEO of the Utah-based chain.
But more than cold beverages, young consumers want choice. To that extent, Beans & Brews offers a variety of menu options, including seasonal offerings and limited-time offerings (LTOs). It’s important to keep consumers — especially younger ones — happy, with regular launches of seasonal products and LTOs, says Willmarth. “People are much more open to trying new things in beverages than food,” he points out.
Bluestone Lane added to a line of matcha and pumpkin spice drinks “to give the option of something not coffee-based because we see people coming away from coffee for the afternoon,” says Matt Christy, senior vice president.
7 Brew, which has 270 stores in 30 states, sells everything from traditional coffee to shakes, chillers and energy drinks, and customization is important, says Gabe Moore, franchise coach.
Scooter’s Coffee has 817 locations in 30 states and will open around 100 locations this year. “The younger you get, the more [consumers] shift away from brewed coffee to fun drinks, fun names and fun experiences,” says John Owen, chief operating officer. This fall Scooter’s launched a campaign of seven to eight drinks with three flavor lines — apple, maple bourbon and pumpkin — in different variations, such as infusions and blended. More LTOs will follow before 2024 comes to an end.
Beans & Brews launches LTOs and seasonal drinks around six times a year. Matcha is probably the most requested beverage at Beans & Brews and wasn’t even on anyone’s radar two years ago. “This generation is looking for adventure in their food or it’s something they’ve seen or want to post on social media,” says Willmarth.
Spencer Turer, vice president of coffee consulting business Coffee Enterprises, Hinesburg, Vt., is a fan of large menus. “The overall message is to not give the customer a reason to go anywhere else. By expanding the menu to attract more customers, that’s hospitality.” But, he points out, coffee shops need to evaluate how much money they spend on equipment, marketing, more inventory and training.
Fast Development
Menus are not the only parts of the coffee business continuing to grow. Coffee chains continue to expand their footprints too. Scooter’s opened around 200 units last year, with more than 100 launching in 2024.
Since opening its doors 30 years ago, Beans & Brews has expanded across six states, with slightly less than 100 locations open, and plans to open 20 to 30 per year. All but 27 stores are franchised.
Bluestone Lane offers a boutique coffee experience. Each location is slightly different — with more plants, for example, or surfboards on the walls. This is key to Australian coffee culture and “we really try to keep that alive,” Christy says. There are 57 Bluestone Lane corporate stores, in eight states, including on the West Coast.
Efficiency
Speed of service has become more important to coffee shops, as fewer people gather, and more order online. Flow is vital to the smooth running of a coffee shop. The key is where people are coming in, knowing where to go, seeing what’s on offer, and then either sitting down or leaving, says Ed Viser, principal at Cafe Design & Architecture in Phoenix. “You want the customer to know where to go, know where to order, move on and go.”
Scooter’s is all about efficiency, and layout is key to that, says Owen. When employees make a drink, the process starts with a cup and moves constantly toward the pickup window, along four different stations — hot, blended, food and window. The chain has drive-thru timers to measure speed on a regular basis, and stores report those times. And Scooter’s coffee shops have kitchen display systems (KDS) along the line, at least one per station. In this way, the person making blended drinks only sees the blended drink orders that come in, for example.
Drive-Thrus Drive Business
All business at 7 Brew goes through the drive-thru. Employees stand outside near the drive-thru lane greeting customers and taking orders, which they send to the KDS via a tablet so staff are already making the drink before the customer reaches the window. “That’s how we’re so speedy,” says Moore.
Once they’ve ordered, customers drive into one of two waiting lanes, and an employee delivers their drinks. Stores with enough space have a third lane, a passing lane, in case drinks are ready earlier for a car that’s further back.
There’s no store interior for customers at 7 Brew, and because of this, the entire coffee shop “box” is just 500 square feet, with a separate 120-square-foot cooler.
Between 60% and 70% of Beans & Brews’ business is drive-thru, with another 10% of beverages being ordered ahead, which is a “fast-growing component of our business,” Willmarth says. The final 20% of sales are inside the store.
To meet the need for off-premises business, Beans & Brews reduced its retail merchandise area in its prototype to expand the pickup spot. In older stores it’s more ad hoc, but the area’s growing in size. Almost all stores have traditional drive-thrus.
Almost all Scooter’s locations are drive-thru-only locations. Even locations with a seating component see more than 90% of business go through the drive-thru, Owen points out.
Scooter’s drive-thrus are traditional, but at busier times, employees “line scoot” — taking orders and payments in the line. Customers can also order ahead through their mobile device. When they arrive at the drive-thru, they announce they’re there, and the order — which is already in the kitchen — is made so it’s fresh. But the service is faster since there’s no order-taking.
Some of the drive-thrus are double-lanes, while others are double that converge to one at the order point, but most are single.
Equipment on Show
The most essential pieces of equipment for a coffee shop are the espresso machine and coffee bean grinder. That key espresso machine should always face customers, says Viser, and customers also need to see the food display case immediately. He suggests placing the coffee machine on a lower counter “to show it off.”
Coffee brewers are also important for coffee and tea. “The size and capacity of coffee brewers should match the expected business volume of the coffee shop, without allowing the coffee to go stale while being held,” says Turer.
Turer sees more coffee shops shifting to automatic espresso machines. “Automation has been the key for throughput, for making the drinks as consistent as possible,” he says, and makes it easier to train employees. This does, however, mean employees should work hard at customer service, he adds.
7 Brew prefers traditional espresso machines to automated ones “because otherwise you can only move as fast as an automatic machine,” says Moore. He adds that 7 Brew employees can move faster.
Scooter’s uses traditional espresso machines, but “I suspect we’ll go down [the automatic] path,” Owen says.
Beyond the coffee machine and grinder, what equipment does a coffee shop need?
Bluestone Lane has a nitro machine, which it uses for cold brew and oat draught flat whites. 7 Brew also has chiller machines for energy chillers and mocha chillers.
Ice machines are being used more in these days of strong, cold business. Sometimes stores put these out front, but Viser advises placing a large ice machine in the back of the house and a bin in the front, where it can be accessed by the barista and the person making the smoothies. Ice machines are best in the back of house, he says, because they’re bulky and can be noisy.
Ice is very important in these days when cold drinks constitute more than 50% of the menu mix. 7 Brew has one machine with two heads that produce ice with covered bins under the three bars. Water filtration systems are really important, says Moore, as well as, sometimes, reverse osmosis or water softeners.
Typical Beans & Brews stores have at least two espresso machines — one frozen machine and one blender, plus more in higher-volume stores.
For food, Bluestone Lane has hot holding equipment for soup and oatmeal along with flattop grills and convection ovens. All food is freshly prepared in each location’s back of house.
On the food side, paninis “have been the staple of the mom-and-pop coffee shops,” Viser says. This requires a panini press and sometimes a hood, though a ventless impinger oven can do the same job, with panini plates, he adds.
The right equipment, an extensive menu, and stores designed for efficiency and easy pickup are key to running a successful beverage shop today.
Tomorrow’s Customer
To understand what tomorrow’s customers are going to order from a coffee shop, look no further than a college campus. This fall, Virginia Tech in Blacksburg, Va., opened a self-operated AMP Coffee Bar.
This high-energy location has a music vibe and is open 7 a.m. to 10 p.m. It’s busiest at lunch time.
Drink choices range from drip coffee (two flavors) to espresso drinks and a large selection of cold options. “Anything cold, iced, sweet, candy-in-a-cup are always popular,” says Brian Grove, director of dining services. “We’re really surprised by how popular cold drinks are, year-round.”
So far, the five most popular beverages are: iced lattes, strawberry acai refreshers, iced chai lattes, iced matcha lattes and cold brews.
The location has three automatic espresso machines, two blenders for the blended coffee drinks, an ice bin on the front and back counter, and undercounter refrigeration throughout. The ice machine is in the back of house, close to the front, so that the bins can be easily refilled.
Most orders — 85% to 95% — are mobile, Grove says, so the university designed the coffee shop to cater to those, with more room dedicated for the pickup line and a smaller spot next to it for in-person specialty coffees. A large screen lists all orders, which allows customers to track them.
The convenience of mobile trumps everything else, Grove says. “Students don’t care if [their drink] is a little melted or not as hot — they’re prepared to forego those things for convenience’s sake and to time their order correctly.”
