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American They are drinking more coffee than they have in decades. but few get it from Starbucks.
The company that revolutionized American coffee culture remains the largest player in the United States, with nearly 17,000 stores across the country and plans to open hundreds more. But it faces unprecedented competition that will make it harder to win back customers it has lost.
Starbucks’ share of spending at all U.S. coffee shops will decline in 2024 and 2025; it is now 48%, down from 52% in 2023, according to food industry consulting firm Technomic. Dunkin is an old rival that just opened its 10,000th store in the United States and has been gaining market share in both years.
Starbucks has other challengers, such as fast-growing drive-thru chain 7 Brew, Scooter’s coffee Chinese chains such as Luckin Coffee and Mixue are opening stores in the United States. High-end coffee shop Blue Bottle has 78 stores in the United States and has opened two new stores this year. Even McDonald’s and Taco Bell are beefing up their beverage offerings.
“people “People haven’t lost their love for Starbucks, but they are now more diverse in their coffee selections,” said Chris Kayes, chair of the management department at the George Washington University School of Business. “People are now trying other coffees, they’re seeing what’s out there.”
caffeine country
Americans love coffee. An estimated 66% of Americans drink coffee daily in 2024 and 2025, up 7% from 2020, according to the National Coffee Association, an industry trade group.
Coffee chains are racing to cash in on the demand. The number of chain coffee shops in the United States has grown 19% over the past six years to more than 34,500, according to Technomic, a consulting firm that studies the food service industry.
Seattle-based Starbucks was a small regional chain when former CEO Howard Schultz bought it in 1987. Now, other smaller chains are experiencing explosive growth. Nebraska-based Scooter’s Coffee had 200 stores in 2019; it now has more than 850 stores. Arkansas-based 7 Brew opened 14 stores in 2019 and now has more than 600 stores.
“There’s too much supply relative to demand,” said Neil Saunders, managing director and retail analyst at consultancy GlobalData Retail.
Sanders said Starbucks’ size is somewhat of a disadvantage because it has less ability to grow sales by opening new stores.
“Honestly, they’re pretty saturated,” Sanders said. “They are a very established business.”
From Grande to Winter
Starbucks is undaunted. At an investor conference on Thursday, the company said its ongoing efforts to improve service while making stores warmer and more welcoming have increased traffic at its U.S. stores. The company plans to add 25,000 seats to its U.S. cafes by this fall.
“Growth doesn’t require us to be something new. It requires us to be exceptionally good at what we already have,” said Mike Grams, Starbucks chief operating officer.
Starbucks expects to open more than 575 new stores in the United States over the next three years. It developed a smaller store that was cheaper to build but still had indoor seating, a drive-thru lane and mobile pickup. The company said the reduced size will allow Starbucks stores to operate in locations where they were previously unable to operate.
Starbucks has also added new products, such as updated pastries and snacks rich in protein and fiber, to try to win back customers.
what’s on the menu
Sanders said a lack of menu innovation is one reason Starbucks is struggling, especially among younger consumers who like novelty and try new places to find it.
For example, Arizona-based Dutch Bros added protein coffee drinks in January 2024, nearly two years before Starbucks. Nearly 14 years after Dutch Bros launched energy drinks, it now accounts for 25% of its business. Starbucks to launch icy energy drinks for a limited time in 2024 Customizable energy drinks will soon be on Starbucks menus, executives said Thursday.
Dutch Bros, led by former Starbucks executive Christine Barone, has more than 1,000 stores in the United States and hopes to double that number by 2029. Nearly all of the stores are drive-thru with walk-up windows.
The Dutch brothers also focus on value. In a recent meeting with investors, Barone noted that Dutch Bros’ tall drinks are 24 ounces; at Starbucks, tall drinks are 16 ounces.
Luckin Coffee’s app, filled with coupons and promotions, is also value-oriented. On a recent afternoon, nine of its New York The store was packed with customers picking up their phones to place orders. There are no seats in the small shop.
Xie Xunyi, who was traveling to New York from his home in Delaware, said he stopped by to try a velvet latte because Luckin Coffee had a $1.99 drink promotion. Xie said he usually makes his own espresso, but if Luckin opens a store on his way to work, he will go there.
As for Starbucks? “I think the price is too high,” Xie said.
The future of Starbucks
According to an analysis by investment research firm Morningstar, customers will spend an average of $9.34 at Starbucks in 2024, compared with $8.44 at Dutch Bros and $4.68 at Dunkin’.
Starbucks did not raise prices in fiscal 2025 and vowed to remain smart with future price increases. But Ari Felhandler, an equity analyst at Morningstar, said it was a mistake for Starbucks to try to win customers with discounts because competitors will always cut prices.
“Keep prices the same and try to justify them,” Verhandler said. He believes Starbucks store redesigns and new menu items will drive traffic.
Starbucks COO Grams said the company firmly believes the best path forward is not to just open drive-thru stores or mobile pickup kiosks. The company is building cafes with comfortable seating — the “soul of Starbucks,” in his words — while also serving on-the-go, drive-thru and takeout customers. He said customers sometimes want something convenient and sometimes want to stay.
“There’s always competition. We’re aware of that and we’re definitely paying attention to it, but we’re not trying to be them,” Grams told The Associated Press. “We offer something that most people don’t have, which is a legitimate space to sit and enjoy and use it for a variety of different reasons.”
But George Washington University’s Case wonders whether that strategy is enough to keep Starbucks ahead, or whether customers who want a comfort or premium experience have turned to independent coffee shops or upscale chains like Blue Bottle.
“In some ways, I think they’re victims of their own success,” Case said. “I do think that Starbucks’ aura of being special, unique and exciting is gone.”