SEATTLE – Starbucks and Dunkin’ have entered a new battleground for coffee drinkers: The afternoon, QSR Magazine reports. But the two companies aren’t pushing hot beverages—they’re banking on cold drinks to bring in customers.
For example, Dunkin’ offers happy hour deals, such as $2 espressos and Go2s snaking menus under its $2 PM Break promotion. “We think that’s a lot of white space for us, and again, early days, but we like the improvement that we’ve made in the p.m. business, but it’s the combination of great products at a compelling price,” said Dave Hoffman, CEO of Dunkin’.
The espresso drink has brought in younger consumers, growing 35% for the chain. “I’m quite confident over time that as more and more of our current customers who haven’t necessarily been espresso drinkers take advantage, for example, of our [$2 deal], they’re going to convert into espresso lovers, and it might be the second trip of the day for an afternoon indulgent espresso beverage,” said Tony Weisman, the chain’s CMO.
Meanwhile, competitor Starbucks also has improved its cold beverage selection of Iced Espresso and Iced Coffee. “While much of the beverage comp sales growth was driven by ticket, close to half of the ticket growth was from beverage mix and attach, demonstrating that our higher-margin premium offerings resonated with customers, and customers bought more beverages per transaction,” said Pat Grismer, CFO of Starbucks.
The National Coffee Association found that consumers are flocking to cold brews. A recent survey found that past-week consumption by drink type was 13% for frozen blended coffee, 12% for cold brew and 5% for nitro-infused.