Concerns About Discretionary Spending Jolt Coffee Chains

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Consumer concerns about discretionary spending pushed Dunkin’ Donuts and Starbucks traffic lower in June, data indicated.

Coffee visits outpaced QSR visits every month between July 2020 and May 2022, noted. In June, however, coffee visits dropped below QSR levels, as a combination of inflation, high gas prices, and the rise in COVID cases kept some consumers away.

At the same time, drive-thru coffee chain Dutch Bros. visits continue to grow as the brand expands with more locations. The company is currently offering half-off cold drinks every Tuesday in July to Starbucks Rewards members.

With that, other chains are keeping up with summer offers: Dunkin’ discounted its medium cold brew to $3 this month after debuting a new cold brew flavor. McDonald’s is offering free iced coffees with at least a $1 purchase on three days of its July deals. The Coffee Bean & Tea Leaf’s promoting a $2 croissant with any beverage purchase and a 30% off Christmas in July online sale.

In other coffee news:

  • Coca-Cola is bringing the world’s second-largest coffee chain, Costa, to the U.S. this year with pilots currently in select markets. The powerhouse plans to “disrupt” and “reimagine” the category with sophisticated vending machines called Smart Cafes, fair prices for premium coffee, and personalization for customers, Costa Coffee US GM Tim Warner told Beverage Daily.
  • Major chains are turning to menu innovation. Eater and Bon Appetit have both reported on boba tea influences seeping into coffee chains, like jelly at Peet’s Coffee and an iced brown sugar drink at Starbucks. And each chain has expanded matcha offerings as the lower-caffeine tea gives the coffee category a run for its money, The Street
  • Brewing at home — or the office as one consumer told CNBC — appears to be a quick fix for inflation-weary consumers , and retailers are ready with surplus. Amazon discounted more than two dozen coffee makers on its annual Prime Day, Target and Walmart have Keurig’s on sale, and Costco has deals on Starbucks K-Cups and whole beans.