NEW YORK (AP) — Coffee consumption is on the rise in America, but many coffee lovers are turning away from Starbucks.
Despite being the largest coffee chain in the U.S. with around 17,000 stores and plans for even more, Starbucks is facing stiff competition. Its share of customer spending dropped from 52% in 2023 to 48% in 2024 and 2025, according to Technomic.
Rivals like Dunkin’, which just opened its 10,000th store, are gaining ground. New players such as 7 Brew, Scooter’s Coffee, and Dutch Bros are quickly entering the market. Even Chinese brands like Luckin Coffee are setting up shop in the U.S., while fast-food chains like McDonald’s and Taco Bell are expanding their beverage offerings.
Chris Kayes, a management expert at George Washington University, noted that while people still enjoy Starbucks, they are exploring other options. “They’re trying different coffees and seeing what else is out there,” he explained.
Caffeine Craze
Coffee is a staple for many Americans. A national survey found that 66% of adults reported drinking coffee every day in 2024 and 2025, up from 62% in 2020. The demand is prompting a growth in coffee chain stores, which increased by 19% over the last six years, bringing the total to over 34,500 nationwide.
Starbucks was once a small chain when former CEO Howard Schultz took over in 1987. Now, other smaller chains are thriving. For example, Scooter’s Coffee grew from 200 locations in 2019 to over 850 today. In just a few years, 7 Brew expanded from 14 to more than 600 stores.
Neil Saunders, a retail analyst at GlobalData, noted a shift in the market. “There’s too much supply for the demand,” he stated, suggesting that Starbucks, being a large player, has limited room for growth.
Starbucks’ Response
Despite challenges, Starbucks remains optimistic. At a recent investor conference, the company emphasized efforts to enhance customer service and create a more inviting atmosphere. They plan to add thousands of seating options to their cafes.
Starbucks is also innovating with smaller store formats that are more economical to build, featuring indoor seating and drive-thrus. In addition, the chain is revamping its menu to include new, healthier snacks and beverages aimed at re-engaging customers.
However, experts point out that Starbucks has fallen behind in menu innovation, particularly among younger customers who seek variety. For instance, Dutch Bros introduced protein coffee drinks in early 2024, well before Starbucks announced similar offerings.
Price Point and Competition
As of 2024, average spending at Starbucks was around $9.34 per visit, compared to $8.44 at Dutch Bros and $4.68 at Dunkin’. Starbucks hasn’t raised its prices recently, focusing instead on maintaining their value. Analysts believe it would be unwise to offer discounts given the fierce competition.
Ari Felhandler from Morningstar advises that Starbucks should justify its prices rather than chase discounts. He remains hopeful that the company’s renovations and new offerings will attract customers back.
Starbucks COO, Mike Grams, believes in maintaining the café environment that customers cherish. He emphasized the importance of providing a space to relax and enjoy coffee, rather than simply serving takeout.
However, some experts, like Kayes, worry that Starbucks may have lost its uniqueness. “They might be a victim of their own success,” he remarked, questioning if customers looking for a special experience might have already moved on to smaller, upscale coffee shops.
As the coffee landscape evolves, companies will need to adapt to keep customers’ attention. The competition remains fierce, and Starbucks will need to innovate while staying true to its roots to maintain its status as a coffee leader.
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