A Winning Formula for Coffee Chains

Dutch Bros. and Starbucks stand out, having the strongest NPIs, maintaining their lead over the peers we evaluate. We look to understand why these brands beat the competition with respect to customer intent to visit more, digging into specific purchase intent drivers to uncover “the why behind the buy." Our analysis indicates coffee chains with the best Customer Satisfaction (CSAT) tend to do a better job than the peer group at delighting customers on Taste, Price, and Speed.

Speed

Tim Hortons, the Canadian coffee chain with about 5,000 locations worldwide, and Dutch Bros. are winning with customers in terms of sentiment toward “Speed.” Sentiment is measured using Net Positive Percentages (NPP), which represents the percentage of customers who view a factor as a positive (reason they liked the products, people, or experience) minus the percentage who see the same factor as a negative. For T3M August 2022, both had NPPs of 50%, well ahead of the coffee group’s 36% average.

Tim Hortons and its parent company RBI have prioritized speed recently, partnering with technology-vendor Verifone to roll out remote, contactless payment stations for drive-through lanes. The new digital experience, introduced to Tim Hortons and Burger King brands in 2020, is speeding up the drive-through experience, according to RBI.

During an earnings update earlier this year, RBI announced Tim Hortons’ 2021 annual sales remained about pre-pandemic levels, as more people return to the office and stop at the company’s drive-thru stations for their coffee fix.

Meanwhile, Dutch Bros. has long-listed speed as one of its core values, alongside quality and excellent customer service. The company is known for its efficient drive-thru experiences.

Taste

Regarding “Taste” Customer Satisfaction, Starbucks consistently remains near the top. NPP for T3M August 2022 was 76% vs. the peer group average of 74%. A quick look at food critic and influencer reviews of Starbucks products shows why ― Starbucks just tastes good. Indeed, comments provided to HundredX say the same:“A favorite go-to place for great quality coffee, both hot and cold,” one consumer told HundredX. Another said, “Delicious coffee in the morning!”

Also notable is the significant ground Caribou Coffee made up recently, rising from one of the weakest in Taste, with a 66% NPP in T3M March 2022 to reaching parity with the group, hitting a 74% NPP in T3M August 2022. Recent customer comments to HundredX indicate that Caribou’s investment in flavors is paying off. One recently said, “As an avid coffee drinker, I love to try new flavors and places ― while this one is not in my area, I love to frequent it when we are around one!”

Price

Sentiment toward “Price” has been slowly and steadily eroding for all, including leaders Tim Hortons and Dunkin Donuts, which both posted a 29% NPP for T3M August 2022, well ahead of the peer average -42%. The impact of inflation and price increases has concerned many industry executives, with the CEO of Dutch Bros. expressing concern on its 1Q 2022 earnings call.

Dunkin’ Donuts and Tim Hortons offer similarly low-priced coffees, donuts, and breakfast sandwiches compared to their peers. Since January 2021, this sentiment has remained stable among the Crowd ― despite price increases at both chains. “Coffee prices are good,” one person said to HundredX. Although, they said, “Donut prices are a little high.”

Attitude

While associate “Attitude” is not among the top-three drivers of Customer Satisfaction, we take a closer look, given it’s the fifth most selected driver out of 16, and likely to remain in focus and potentially become a bigger differentiator during coming months, as the entire industry deals with labor shortages. Associate training and retention were major topics at Starbucks’ analyst day.

Dutch Bros. has been the consistent leader in customer sentiment towards “Attitude” since January 2021, with T3M August 2022 NPP of 70% vs. the peer average of 51%. One happy customer told HundredX, “Everyone working there is positive and outgoing. They ask questions about you, your day, where you're from, etc. Looks like a fun place to work, and they have a great product.”

The landscape for selling coffee continues to evolve. Inflation and labor shortages will likely give way to new challenges over time, but we remain confident the changes in the ways we see everyday consumers want to order and consume their coffee are probably here to stay. Coffee chains that invest in taste and speed, along with managing associate attitude well will not only retain customers loyalty but put themselves in a better position to gain market share.