Consumer Demand for Coffee Is Up Across All Major Chains

Starbucks reported declining sales for the first time in almost three years, but coffee demand is on the rise around the country. Placer.ai data shows that year-over-year visits to coffee chains increased in every single state from the first five months of 2023 to the first half of 2024, resulting in roughly 5.1% traffic growth for coffee chains across the country. Most of this foot traffic is driven by coffee chain development, which proves that consumer demand for coffee shops is matching the companies’ drive for expansion.

The biggest foot traffic boosts are coming from smaller, rural markets like Oklahoma and Wyoming, which were traditionally some of the “last frontiers” for major foodservice chains. This trend matches the push for expansion among the largest coffee brands like Starbucks and Dunkin’, which have already saturated larger urban markets. Drive-thru-format concepts like Dutch Bros and 7 Brew have been dominated by growth within the coffee category as suburban markets flourished.

Among four major coffee chains — Starbucks, Dunkin’, Dutch Bros, and Biggby Coffee — only Starbucks saw negative traffic measured in visits per location. One major driver could be the return to the office, as work from home policies continue to dwindle in a post-COVID world. Starbucks saw a 2.4% boost in pre-work coffee purchases from 2022 to 2024, while Dunkin’ has also received a boost in traffic from short visits and is performing better in states with a higher percentage of short visits.

Dutch Bros’ key demographic is young singles, particularly young adults living alone. In Tucson, Ariz., Dutch Bros saw a 6% increase in average visits per location for the first five months of the year, matching its “cool kid” reputation among Gen Z consumers. On the opposite side of the spectrum, Biggby Coffee performs best among suburbanites, particularly in the Baby Boomer generation.

As the coffee industry continues to flourish, the segment-wide success could offer a clue into Starbucks’ 2024 slump. As competition for coffee cup shares heats up, it has become harder for Starbucks to rely on its reputation as the default option.

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