Starbucks Franchise Standards Manual
This coffee franchise industry report was written. One thing the Great Recession taught coffee purveyors in the U.S.
And which investors with a Starbucks franchise in Europe may be learning now, is that when money is tight and the economy is struggling, people will give up their fancy, calorie-packed coffees for a cheaper, simpler option. According to the most recent Coffee and Snack Shops industry report from market research, after more than a decade of consistent growth, the industry experienced a sharp correction in 2009 because of the economic crisis in the United States as well as consumers’ continuing demand for healthier foods. Industry revenue fell by 6.6 percent to $25.9 billion. “During the recession, consumers spent less on luxuries like eating out, choosing to purchase low-price items when they did spend.
This caused high-priced coffee drinks and other nonessential snacks to lose the battle for consumers’ shrinking budgets,” the IBISWorld report states. First Starbucks Franchise.
Brand Standards Manual
With the largest market share in the United States, 37 percent, Starbucks was one of the companies in the sector hardest hit by declining disposable income. By the end of 2009, it closed some 900 company-operated stores worldwide. Sales have since rebounded, but Starbucks may now have to weather a debt crisis in Europe just as it rolls out a vigorous Starbucks franchise program there. Starbucks has resisted franchising in the U.S., preferring to operate company-run stores and issue licensing agreements, which allow it to have more control over the brand.
With more than 17,570 locations worldwide, the company opened its first franchise-owned store last year in the British village of Liphook and it now has some 45 franchise stores in the U.K. That’s a small share of the nearly 2,000 stores in Europe, the Middle East and Africa, but Starbucks will continue its strategy with more franchise stores to follow in France. According to a year-end story in the in 2013, Starbucks plans to limit its number of franchise partners in the U.K. To fewer than 25.
The franchisees, who sign 10-year contracts with Starbucks, are expected to open 10 or more stores. The company said it has no plans to extend the Starbucks franchise program in the U.S. Industry Overview One might say that as Starbucks goes, so goes the coffee shop industry.
And for the most part, the future looks bright for those brands that will be able to survive increasing competition. Coffee drinks are extremely popular in the United States, which partially explains the 7 percent annual growth rate of coffee shops. According to the Coffee Statistics Report 2012 from, coffee shops represent the fastest growing segment in the restaurant industry.
Grouped together with doughnut shops, bagel shops, frozen yogurt stores and other snack shops, coffee shops are the largest product segment in the industry, responsible for 42 percent of overall revenue in 2013. In the United States, the coffee shop industry is valued at $10 billion with about 20,000 stores operating in the country. The industry is in the mature phase of its life cycle. Revenues have grown consistently during the last 10 years (with the exception of 2009). However, the rate of new store openings has slowed, operators are concentrating on international openings and price-based competition is heavy. The industry is saturated in some areas and leaders are holding on to their considerable market share. Market Share Starbucks and Dunkin’ Donuts alone capture more than 60 percent of industry market share, which gives them considerable power in determining industry trends and creating a barrier for non-franchised players, according to IBISWorld.
Overall, 70 percent of sales are generated from the top 50 coffee shop operators. The Small Business Development Center Network’s Coffee Shop 2012 report reveals the habits of consumers and provides data about where the industry is headed. Based on its findings, the report advises investors to know their local market, where it’s likely that mom-and-pop coffee shops compete with established national brands such as Starbucks, Seattle’s Best (owned by Starbucks), Caribou, and Peet’s Coffee & Tea.