Growth in Saturated Coffee Segment

The coffee café market is well saturated, especially thanks to segment leader—and leader of Canada’s foodservice industry as a whole—Tim Hortons. Coffee cafés will be forced to battle this market saturation by tapping into new strategies, including international expansion, retail product development and licensing, and new and expanded occasions.

The last of these three is the most critical for ramping up domestic sales. Increasing cheque averages, both through add-on sales and driving different occasions altogether, will be key in facing fierce competition both from coffee café concepts and from quick-service restaurants looking to steal share from the leading segment.

Unsurprisingly, due to the focus of the segment, the most frequent occasions at coffee cafés are those that include only a beverage; 81% of coffee café patrons visit for just a beverage (coffee or otherwise) at least monthly, more than double the monthly frequency of any particular meal or snack purchase. For both the breakfast and lunch dayparts, about one-third of consumers visit coffee cafés at least monthly, while just 16% do so for dinner.

Consumers say that lower prices could convince them to also order food on beverage-driven occasions (56%, up from 49% in 2013), as well as encourage them to visit for meals more often (57%). Other offerings related to value, such as special offers, discounts and loyalty programs, could particularly encourage meal purchases, while consumers say that a variety of quality, healthful and small, portable options would also encourage food purchases on beverage-only occasions.

When you only order a beverage at coffee cafés, which would encourage you to also order food? Select all.


Base: 333 (bakery) and 355 (coffee) consumers who visit these concepts only for beverages
Source: 2015 Canadian Bakery & Coffee Café Consumer Trend Report, Technomic

Overall, we can take this to mean that coffee café patrons are looking for greater value. Therefore, cafés must work to increase the value perception of their food and introduce quality fare that fits consumers’ needs—affordable, portable and heartier items that can be quickly prepared.

Cafés are looking to address these issues by strengthening their food focus yet ramping up service speed. Some examples include:

  • Tim Hortons:
    • Focus on food: released hearty sandwiches, such as the Chipotle Steak Panini, featuring 100% Canadian beef
    • Focus on speed: pulled the Cold Stone Creamery brand from its Canadian sites to test express beverage lines, shortened panini press times and simplified menus


  • Starbucks Canada
    • Focus on food: will roll out evening menu by 2016 in major cities
    • Focus on speed: mobile ordering allowing customers to bypass lines, and more drive-thru lines in the works



Deanna Jordan

Deanna Jordan is Manager of Consumer Insights at Technomic Inc. in Chicago. She works on the firm’s Consumer Trend Reports, a series of annual studies that provides operators and suppliers with a comprehensive guide to the menu and consumer trends impacting various restaurant segments and menu categories in the U.S., Canada and U.K. She also contributes to the Consumer Food Trends newsletter, which explores the latest in foodservice and consumer trends.

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