Starbucks recently announced they grew 10% in the U.S. but almost all their growth was a result of pricing. Our data show that through the second half of 2022 visits were relatively stable but overall they declined (see fig. 1). Recent trends since the start of the year suggest visits remain stable and have in fact started to recover slightly as the bulk of price increases seem to be behind them. However consumers are very aware of the price increases (see fig. 4) and this has led to a slight reduction in customer satisfaction as seen in figure 2. Starbucks maintains an industry leading NPS score, but our data show the brand has been tarnished slightly due to the price increases instituted in 2022.

Figure 3 shows more than 1/2 of those older than 30 are Starbucks patrons, and equally impressive more than 1/2 of those earning over $100k also frequent the coffee chain. If investors are looking for businesses that target the right demographic group in an inflationary environment, Starbucks screens well. Less known and equally impressive is Dunkin’ which also skews affluent and young which should help them weather inflationary pressures as well (see fig. 3).

On the cautionary side, while demographics are in their favor, consumers are very aware of recent price hikes and many are changing visit patterns. As seen in figure 4, almost 70% of Starbucks patrons have said prices have increased, and 1 in 3  (see fig. 5) have said they are likely to visit less as a result.

Competition in coffee is not a new trend, however some of the recent concepts seem to have taken hold. Drive-through chain Dutch Bros Coffee filed its IPO in September of 2021, and already has ~650 locations mostly in the West. They have a plan to expand to 4000+ stores over time with most of the growth planned for the South. Our data show that they have high share in the markets they enter. While only ~5% of Americans have visited a Dutch Bros overall, ~15% of people in the Pacific region have recently visited a Dutch Bros (see fig. 7). The strategy of expand and they will come seems to be working for them. Similarly, trendy Blue Bottle is also doing well. As seen in figure 6 as they expand they too are gaining in popularity. While coffee chains come and go our data is constantly monitoring fads versus trends.