The United States has long been a coffee culture, and in recent decades, consumers’ embrace of the drink has helped independent roasters and shops thrive alongside the big international chains like Starbucks and Dunkin’. People still might be drinking plenty of coffee, but their buying habits also have shifted during the COVID-19 pandemic.
Primarily, many people stopped venturing out for a daily cup of joe. Even as sheltering at home restrictions eased, they may have developed new habits, such as brewing a pot at home. If they already are working from home, people also are less likely to head out to obtain coffee, in contrast with their habit when they might driven past the café on a daily commute. For coffee shops located in city centers or office buildings, the lack of foot traffic and patrons, and thus the dip in sales, is especially acute.
Although they affect all coffee purveyors, the shifts have had more severe and detrimental consequences for smaller, independent cafés. Estimates project that more than 7 percent of them will close by the end of 2020, the first time in nearly a decade that the number of coffee retail outlets will decrease rather than increase in number. With just one or maybe a few local locations, each of these small retailers has fewer slack resources, such that any disruption to their income can be risky. They also compete on more hedonic features, such as cozy chairs in the stores for reading, locally sourced baked goods, or friendly baristas.
In contrast, the big names like Starbucks and Dunkin’ have plenty of resources to sustain their operations, even during massive slowdowns. Furthermore, they have already invested in convenience and technology advances, so they can offer coronavirus-friendly interactions that rely on mobile ordering and low-touch drive-through lanes. These competitors actively are seeking to strengthen these utilitarian advantages too, by investing even more in convenient, touchless pickup options.
These shifts also are having effects throughout the supply chain. Local cafés often source and sell high-end, high-quality coffee beans, often from local suppliers or organic or fair trade farmers. Some even maintain their own roasting operations. In contrast, Dunkin’ buys large quantities of lesser quality coffee beans. Thus for some coffee farmers and brokers, the implications of the pandemic have been minimal, but for some boutique growers, diminished consumption means substantial drops in demand for their specialty products.
Discussion Questions:
- Since the pandemic started, have you changed your coffee drinking habits?
- What options do smaller cafes have for surviving the threats of the pandemic?
Source: Marvin G. Perez, “Say Goodbye to Your Local Coffee Shop in America’s Café Shakeup,” Bloomberg, October 8, 2020.