As the COVID-19 situation continues to evolve in the United States, specialty coffee businesses are adapting in a variety of ways.
Square, Inc. and the Specialty Coffee Association (SCA) released the 2020 Square x SCA Coffee Report, outlining the current state of the specialty coffee industry. The report also includes insights into new trends and ways of doing business emerging as the COVID-19 pandemic continues to unfold.
“Specialty coffee businesses across the country are evolving their efforts to serve communities and generate revenue during this unprecedented time. Amazingly, three in four Square coffee sellers have been able to continue operating during shelter-in-place, finding ways to adapt to their new circumstances,” said Peter Giuliano, Chief Research Officer at the Specialty Coffee Association. “This shows tremendous resilience and creativity, from curbside coffee pickup to grocery store-style sales, home delivery to expanded eCommerce. These trends seem to represent more than a brief moment in time—they likely indicate a greater transformation of the specialty coffee industry and a new way that coffee shops work within the communities they serve.”
As specialty coffee businesses continue to evolve, pivoting ways of doing business include increasing delivery and pickup/takeaway options. The report also notes fewer cash transactions as consumers and business owners move to other forms of payment.
Key findings from the report include:
- Significant increases in curbside and/or pickup purchases, including:
- 5,380% increase in combined sales across curbside and/or pickup orders
- 521% increase in the number of coffee sellers offering curbside and/or pickup since shelter-in-place* began
- An increase in delivery options:
- 340% increase in delivery sales among Square coffee sellers
- 19% increase in the number of Square coffee sellers offering delivery since shelter-in-place began
- An increase in card payments for purchases:
- 26% of Square coffee shops were “cashless” by late April, up from 2% in early March
- The share of cash transactions at all Square coffee shops decreased by 6 percentage points, from 34% in early March to 28% in late April 2020
- Customers tended to order more:
- 25% increase in average order size from March to April 2020, with an average increase in value from US$8.41 per order to US$10.50 per order
- An increase in subscription offerings and sales at a higher price point than the average order:
- 109% increase in subscription coffee sales
- 25% increase in the number of sellers offering subscription coffee services
- Coffee subscription median price of US$14.25
Pre-COVID-19 Coffee Consumption: Steady and Shifting Trends
Although the coffee industry has experienced an incredible amount of change over the past few months, there are still some longer-term market trends holding steady in the face of the global pandemic.
Square collected and analyzed data from millions of anonymized transactions from thousands of coffee shops across the US between 2018 and 2020: where the seller was located, the total transaction amount (cost), and the names of the purchased items. As each shop chooses its own labels for its products, all of the estimates you’ll find within the reports are conservative.
The information below is reflective of trends identified between 2018-2019, with some interesting changes in consumer preferences.
Holding Steady: Alternative Milk (alt-milk) Continues to Grow
- While 91% of all coffee drinks still feature regular dairy milk, the alt-milk category continues to grow:
- The rise of oat milk continues:
- Oat milk sales increased 171% from 2018 to 2019.
- In 2019, oat milk sales surpassed soy milk sales for the first time (from 2018 to 2019, soy milk sales slowed by 3%).
- Almond milk still reigns supreme among the alt-milks, despite slowing growth: from 2018 to 2019, almond milk sales saw a 3% increase.
- The rise of oat milk continues:
Shifting Preferences: A Greater Demand for Black Coffee
- Black coffee has increased in popularity, eclipsing lattes as a customer favorite in 2020.
- And this is while prices for a black coffee have jumped significantly from US$2.47 (2018) to US$3.13 (2019), while lattes have only gone up from US$4.16 (2018) to US$4.22 (2019).
- Espresso has moved up the favorites list in 2019, making it into the top five most popular drinks in the US.
* “Shelter-in-place” refers to the period of time within Square data where the impacts of COVID-19 and local lockdown measures began to take effect (March 1, 2020 – April 2020). All comparisons here are made in reference to 2020 pre-COVID-19 data, collected during the period of January 1, 2020 – February 29, 2020.
Original media release: https://sca.coffee/sca-news/news/2020-square-report