Coffee’s popularity as a vital part of the morning and, increasingly, other dayparts, shows no signs of waning for most American consumers.
However, “where and how they get their caffeine fix—and which brews, flavors and temperatures they favor—are undergoing an evolution, shaped by changing commuting behaviors, generational preferences and a wide array of new hot and iced offerings,” according to CSP’s inaugural C-Store Coffee Trends report, published earlier this month.
At convenience stores, where coffee has long been a core product, “the coffee category remains a workhorse but lacks growth seen by some other staples like prepared foods, packaged beverages and alcoholic beverages,” the report said. “That said, there is significant runway for growth by capitalizing on trending specialty coffee beverages—if c-store leaders can work out the operational challenges to drive growth and maintain profitability.
For this report, CSP Intelligence, the research and insights arm of CSP, surveyed more than 100 c-store retailers about the strength of their current prepared-coffee programs, pain points around prepared coffee, and how they plan to drive coffee sales and transactions in the year ahead.
Some key findings from the report:
Coffee sales solid but need a jolt: C-store prepared-coffee programs have a strong foundation with the overwhelming majority of respondents offering coffee, and more than eight in 10 retailers said their sales are the same or better than a year earlier.
“However, that includes nearly half of respondents who said sales are flat year over year,” the report said. “The retailers who can figure out how to perk up stagnant sales will have a leg up on the competition.”
Rising costs are a top challenge: Rising cost of goods, for food and equipment, were cited as top challenges. Labor costs are a bright spot, however, and not a significant obstacle for retailers as the c-store coffee consumer is accustomed to self-service and doesn’t expect or require employee help.
Retailers are optimistic heading into 2025: Nearly seven in 10 said they expect their coffee sales to increase in the next 12 months, with slightly less than a third predicting flat sales, a notable shift from their current sales trends. Only 4% said they expected prepared-coffee sales to decline in the next year.
The consumer is a moving target: The consumer is a wild card in c-store coffee strategies, as the rise of remote work and inconsistent return-to-office strategies have upended long-held morning routines—and coffee retailers are feeling the effects.
“Meanwhile, cutbacks in discretionary spending and increased competition from c-store and restaurant competitors are also a concern for retailers,” the report said.
Dayparts are blurring: Consumers are changing the time of day they visit for their caffeine fix, more than half of c-store operators surveyed said. Subsequently, forward-thinking retailers are looking for equipment that supports all-day offerings, and some are introducing “happy hour” promotions.
New coffee offerings are hot (and cold): Hot coffee reigns supreme, with more than eight in 10 c-store retailers offering it and more than two-thirds calling it their best-selling coffee item. However, new brews are stepping into the spotlight, particularly iced and flavored varieties.
Equipment could be a big unlock: Surveyed retailers said they’re eyeing new or upgraded equipment to help their coffee programs grow.
“In fact, new equipment was the top reason cited for growth in coffee transactions,” the report said. “Others, meanwhile, said lack of equipment was a drag on their business. Retailers who can figure out the equipment equation for their businesses—balancing cost, function and space—will likely have a competitive edge going forward.”
When the 36% of respondents who have experienced growing coffee sales in the last year were asked what factors led to those gains, their responses were:
- 44%: We have invested in new equipment
- 39%: We’ve added varieties of iced or cold-brew coffee
- 39%: Customers are commuting to work more often
- 39%: We’ve added creamers and flavored syrups
- 29%: Our marketing for our coffee program has been more effective
- 29%: The increase in coffee transactions fits with higher traffic overall
- 24%: Our value proposition is stronger for prepared coffee
- 22%: We have sped up service times for our coffee program
- 20%: We’ve added varieties of iced or blended espresso
- 17%: We’ve added varieties of hot coffee
The battle for market share is heating up: C-store retailers face competition from other c-stores and from new coffee players in the restaurant space. More sophisticated consumer products and equipment, meanwhile, led some retailers to say they are also competing against drinks their customers can brew at home.
Leaning into marketing: Many retailers are making marketing moves to drive sales and frequency. Loyalty programs, combo deals and limited-time offers or promotional flavors are popular strategies.
The report was developed and produced by CSP Intelligence, the research and insights division of CSP, with support from sponsor SEB Professional. The report features original research by CSP as well as design and project management by Informa Engage.
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