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Companies in this industry sell coffee drinks and other food and beverages for consumption on the premises or for takeout. Major companies include International Coffee & Tea (The Coffee Bean & Tea Leaf), Peet's Coffee & Tea, and Starbucks (all based in the US), as well as Costa (part of hospitality firm Whitbread) and Caffè Nero (both based in the UK).
The biggest US coffee chains operate stores abroad, primarily through licensing agreements. Starbucks operates in about 70 countries worldwide and plans to continue its aggressive international expansion strategy, with the goal of generating half its total revenue outside the US. The company owns and licenses more than 10,000 locations outside the US.
The US coffee shop industry includes about 24,000 stores with combined annual revenue of about $12 billion. Coffee shops are part of the specialty eatery industry, which also includes outlets specializing in products such as bagels, donuts, frozen yogurt, and ice cream.
Consumer taste and personal income drive demand. The profitability of individual companies depends on the ability to secure prime locations, drive store traffic, and deliver high-quality products. Large companies have advantages in purchasing, finance, and marketing. Small companies can compete effectively by offering specialized products, serving a local market, or providing superior customer service.
Coffee shops compete with businesses such as convenience stores, gas stations, quick service and fast food restaurants, gourmet food shops, and donut ...
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