Starbucks continues to dominate coffee culture as local cafes struggle to survive a pandemic economy. Local coffee store owners will have to think outside the box to compete with the convenience that giant coffee chains offer.
A whopping 63% of American adults drink coffee daily, according to the National Coffee Association USA (NCA). We wanted to know which factors contributed most to where they decide to purchase their cup of coffee.
Premise asked 250 Contributors across the country to order a medium drink from either Starbucks or their local coffee shop and report back on their experiences.
Here is what we learned:
- 66% of Contributors decided to go to Starbucks over a local coffee shop when given a choice.Overwhelmingly, the Contributors who went to Starbucks did so out of convenience.
- However, 97% of Starbucks customers who order on the app would go elsewhere if they were notified on the Starbucks App that they were out of the ingredients needed to make their drink of choice
- Starbucks drinks were enjoyed marginally more than drinks ordered at a local coffee shop
- People are 35% more likely to order a Chai or Matcha at Starbucks than a local coffee shop
But while Contributors by and large favored Starbucks, there were several factors that tipped the scales in favor of local coffee shops.
- Contributors who went to a local coffee shop overwhelmingly said they did so because it’s more affordable.
- Customers are 1.2x more likely to stay an hour sitting at a local coffee shop than a Starbucks coffee
- Customers at local coffee shops care more about ambiance than those who go to Starbucks
- Customers who drink coffee in local coffee shops care about ethical coffee 2x more than those who go to Starbucks
According to Bloomberg, “The U.S. will have 25,307 outlets specializing in coffee or tea by the end of 2020, down 7.3% from a year earlier in the first decline since 2011, according to estimates by research firm Euromonitor International. Annual sales will plunge 12% to $24.7 billion.”
There is a narrative that Starbucks‘ biggest competition is the growing trendy local coffee shops. However, Starbucks has maintained its competitive edge.
Although local coffee shops appeal to those coffee drinkers seeking more affordable cups of coffee that are ethically sourced, more coffee drinkers are actually seeking out the convenience of Starbucks.
While the rise of trendy neighborhood shops had the potential to draw customers away from Starbucks in the long term, Starbucks has managed to rebrand in a way that has maintained their appeal and made their brand easily accessible.
The Seattle-based coffee giant has a successful “pickup” concept and a drive-thru at some locations to cut waiting times. This supports our findings that the Contributors who went to Starbucks did so out of convenience.
While many coffee enthusiasts may still prefer the ambiance at their local coffee shop and want to support local businesses, coffee shop owners may need to rethink how they differentiate themselves now that Starbucks has shown to not only be a major competitor to other national coffee chains, but to local coffee shops as well.
Want to learn more about where you stand compared to your competitors? Get in touch with us today.