U.S. Coffee Shop Profits Unlikely to Return Until 2023: Report

U.S. Coffee Shop Profits Unlikely to Return Until 2023

A new report has emerged stating that U.S. coffee shop profits are unlikely to return until 2023, as cafes around the globe struggle to recoup their losses amid government restrictions. 

The report states that coffee shop profits are unlikely to return to pre-pandemic levels until 2023, after a 12-month period that has seen cafe profits wiped by nearly 25%. 

The numbers come from Allegra World Coffee Portal who published a report stating that the COVID-19 pandemic has reduced the coffee shop market value in the U.S. by a quarter. 

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The U.S. Coffee Shop industry saw its profits decline by more than $11.5 billion throughout the pandemic, amounting to around one-third of the market valued at $36 billion. The year-on-year drop in confidence was noted by the report who said that just 38% of industry leaders said that current trading was positive, compared to 65% in 2019. 

The long term forecast for the industry, however, looks to be positive with 81% of respondents saying they believe there is sizable growth coming to the industry in the future. In anticipation of this growth, the report says that the COVID-19 pandemic has accelerated the “digital integration” of US cafes, which includes services like mobile ordering, pick-up and e-commerce websites. 

Specific to the recovery timeline, Allegra World Coffee Portal forecasts that “the branded coffee shop segment will return to pre-pandemic sales levels by 2023 – 65% of US industry leaders surveyed believe coffee shop trading conditions will improve over the next 12 months.” 

“The total market is projected to recover to $40bn sales over the next year and exceed $50bn by 2025 at 7% CAGR,” the report says. 

U.S. Coffee Shop Profits Unlikely to Return Until 2023

Allegra Group Founder and CEO, Jeffrey Young has said that “the US coffee shop market is enduring the worst trading environment in living memory, with the COVID-19 pandemic piling extraordinary pressure on hospitality businesses across the country.” 

The industry has been impacted by the fact that U.S. coffee shop profits are unlikely to return until 2023, according to the latest figures.

“However, with a changing political situation, the prospect of mass vaccinations and operators rapidly adapting to new trading formats, there is now light at the end of the tunnel after an incredibly challenging year.” 

“Despite ongoing market turbulence, coffee shops will remain a vital part of the US economy and social framework for many years to come. We expect trading to begin stabilizing from summer 2021, however, it will take a number of years for operators to fully readjust to the ‘new normal’,” Mr Young concluded. 

Interestingly, the number of customers opting for drive-thru coffee services has increased over the past twelve-months, no doubt buoyed by social distancing guidelines and new operating procedures for coffee shops. 

The report states that drive thru purchases accounted for 37% of all coffee shop transactions, with public sentiment increasing from 48% in 2019 to 63% in 2020. 

U.S. Coffee Shop Profits Unlikely to Return Until 2023

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