Sales of hot dispensed beverages were down 24% in the third quarter of 2020 and 36% in quarter four, in large part because “the breakfast daypart was destroyed” with commuters working from home and competition in the breakfast category increasing, reported Eric Dzwonczyk, co-leader of the restaurant, hospitality and leisure practice at AlixPartners convenience store consultants. He also pointed to the research firm Statista’s “Consumer Market Outlook Hot Drinks Report 2020,” which estimated that revenues last year in hot dispensed beverage declined 18% compared to pre-COVID projections.
But, he noted, some top-quartile c-store chains are demonstrating their resiliency with the introduction of premium and seasonal products and innovative promotions. 7-Eleven, for example, added its Seven Reserve premium coffee, and Cumberland Farms offers a subscription program allowing customers to get two cups of coffee, tea, hot chocolate and/or cappuccino per day for a $25 monthly fee.
Pilot Flying J, which has 750 locations in 44 states and six Canadian provinces, offered a free cup of coffee for National Coffee Day and features various hot dispensed incentives through its app, said Jamie King, senior director of food and beverage for Pilot Co. The premium quality of its coffee has always been a point of pride for Pilot, as has its variety, including fun flavors such as caramel macchiato and seasonal and limited-time offers such as Reese’s or Pumpkin Maple Cappuccino.
Dzwonczyk suggested that retailers target post-breakfast dayparts for their hot dispensed promotions, even as pandemic restrictions ease.
“I don’t know if and when the breakfast daypart will come back because remote working policies are likely to endure,” he said. “Retailers would do well to shift their efforts to lunch and 2 p.m. to 5 p.m. dayparts to build this category.”
He also recommended that c-stores include more selections such as made-to-order specialty beverages that are difficult to replicate at home. Customers will also be looking for the most convenient ways to purchase their beverages, according to the National Coffee Association (NCA).
“As the pandemic is brought under control, we expect coffee drinkers will return to some pre-pandemic routines, but also look for more convenience like in drive-through, delivery and app ordering,” said Bill Murray, CEO of the NCA.