Local Coffee Shops Are Struggling
The pandemic has dented small businesses, while larger chains are able to weather the storm.
Oct 12, 2020 | 3 min read
NEW YORK—Independent coffee shops are struggling to survive as COVID-19 suppresses foot traffic and batters sales, Bloomberg reports. Dunkin’ Donuts, McDonald’s and Starbucks stand to benefit, and there’s opportunity for convenience stores to pick up customers—and laid-off foodservice staff.
“Closures have happened already, and we believe the winter could bring another wave, especially for coffee shops depending on outdoor seating or even walk-up foot traffic,” Rabobank’s senior beverage analyst James Watson told Bloomberg.
The number of coffee shops in the U.S. is expected to drop for the first time in nearly a decade. By year’s end, the U.S. will have 25,307 outlets specializing in coffee or tea, down 7.3% from a year earlier in the first decline since 2011, according to estimates by research firm Euromonitor International. Annual sales are expected to decline 12% to $24.7 billion.
“Coffee shops that succeed in this new climate will need try to recreate as many of their popular pre-COVID-19 attributes as before while being in line with the new realities of social distancing,” said Matthew Barry, a beverages consultant for Euromonitor. “This will include moving many aspects online, where personal engagement is still possible without physical proximity.”
Barry told Bloomberg he expects overall volumes and sales in the coffee foodservice industry to decline through 2024, while retail coffee sales at grocery stores will increase.
What’s more, there will be thousands of former baristas and café employees looking for work. That could be a gain for convenience stores struggling to find and retain staff.
Small businesses in general have been fighting headwinds for decades but are especially suffering amid the pandemic. In 2018, businesses with fewer than 100 employees represented 33% of workers employed by all U.S. firms—down from 40% of all employees in 1989, the Wall Street Journal reports, citing U.S. Census Bureau data. Meanwhile, larger companies keep getting bigger.
In a survey of 6,325 small-business owners conducted by Alignable, a small business social-networking company, 42% of respondents said they faced the prospect of closing shop in the fourth quarter due to revenue shortfalls. And in a separate poll, a third of the 7,726 small business owners surveyed said they are having trouble paying their rent, with 34% indicating they couldn’t make October’s payment.
What’s more, about 1 in 5 businesses that were open in January have stopped transacting entirely, according to small-business transaction data collected by software and business-services provider Womply, the Journal reports.
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