Cold coffee gets hot for restaurant sales
Servings of cold brew coffee ordered at quick service restaurants increased 27% in the 12 months ending April 2022, year-over-year, according to The NPD Group/CREST.
That equates to 373 million servings, which is no small number. Quick service frozen/slush coffee servings over the same period jumped 3% to 726 million, showing that customers are open to cold brew coffee in a myriad of formats.
However, iced coffee remained the cold leader, with customers ordering 2.8 billion servings in the calendar through April, up 11% from a year earlier.
Approximately 70% of all The Coffee Bean & Tea Leaf sales are cold coffee and cold tea. Sanjiv Razdan, President, Americas and India, attributes this to several factors:
First, beverage consumption in cafes has moved away from being first thing in the morning “and becoming a treat, a refill drink that people consume throughout the day,” he says.
“As this daily consumption has changed, people are using the drink very differently. The cold is more versatile and tends to be more suitable for different parts of the day until late at night. »
Second, the quality of these cold drinks has improved as consumers have become more sophisticated. “There’s an appreciation for the craftsmanship that goes into these drinks,” Razdan says. And finally, cold beverages fit right in with the offsite trend that has exploded under the conditions of COVID-19.
Over 58% of Bad Ass Coffee’s business falls on the cold bill, which includes everything from cold brew to smoothies and mixed drinks, with iced lattes being the top category by far. Bad Ass Coffee has 22 stores, eight of which are under construction.
Cold drinks also account for 70-80% of sales at Dutch Bros. “Cold travels better and more of our beverages travel with us instead of being enjoyed in the moment,” says CMO John Graham.
Innovation and OLT
To succeed in cold beverages, it is essential that coffee shops innovate and continue to generate enthusiasm in this category.
Coffee Bean & Tea Leaf launched a summer LTO with three cold brew teas: Mint Watermelon; peach jasmine; and mango caramel. Previously, the brand focused innovation on lattes and frozen drinks, but this year it’s moved to cold brew, says Razdan.
The brand has also embraced decadence with its Belgian Chocolate Ice Blended Drink.
To drive engagement, Coffee Bean & Tea Leaf is launching these drinks as LTOs, but adding them to the permanent menu if they do well. But limited print runs really drive sales, he says. “We’re a society driven by the fear of missing out and we want to try new things and be the first to try something our favorite brands give us,” says Razdan. “We’re creating that buzz and it’s playing really well for us.”
Bad Ass Summer LTOs included Beach Bonfire Latte (Iced, Frozen, or Hot): Espresso and Milk with Macadamia Nuts, Toasted Marshmallow, and Dark Chocolate Swirl Syrups; and Beach Bonfire Cold Lava Cold Brew: Hawaiian blend of cold brew, macadamia nut syrup, and toasted marshmallow cold lava (cold lava is a cold foam made from milk and syrup).
Staying ahead of trends is key, says CEO Scott Snyder, because customers love to personalize drinks. “Brands are listening and creating more and more innovation,” he says. “We have tea, coffee, cold brew, smoothies, and we use those as our staples and then listen to what our customers want. When you see a trend, you see innovation.
While patrons from all walks of life enjoy cold drinks, they tend to be more youth-oriented, Razdan says, and are also proving an option for the much younger crowd — non-drinking tweens and teens. no caffeine yet but want a drink when their parents go to the cafe.
Young consumers have grown up with coffees, adds Snyder. They are therefore used to ordering non-alcoholic mixed drinks before they were adults and are now comfortable with these options.
While hot drinks remain popular in the morning, the customer who buys this often returns in the afternoon for something cold, he says. “What we’re really seeing, especially with this younger demographic, is the afternoon kicking back with a cold brew product,” Snyder says. “Cold brew is potent enough that you can brew it straight or with cream or flavorings and it can be both a treat and a pick-me-up. We are seeing a greater influx [of these] in the afternoon.”
While Coffee Bean & Tea Leaf uses store menus and social media to promote cold drinks, especially news, the loyalty program is also ideal for this purpose. The concept sends members personalized messages based on what they’ve already drunk.
Bad Ass Coffee promotes its cold coffees with in-store tactics including posters, table cards, and menu highlights, as well as online marketing with location-based ads. Social networks are also exploding.
But more important is loyalty, says Synder. “It gives great access to customers who are our best customers, who are also our best word-of-mouth and influencers,” he says.
Dutch Bros.’ The loyalty database is also an excellent tool for promoting cold coffees.
“Our first stop in everything we do is our rewards program,” Graham says. “We support that on the social side with text and email programs. We have a great customer data program and we talk to customers the way they want. »
Cold drinks aren’t going anywhere, Razdan notes. “We will see significant growth in cold brew teas and coffees with their more delicate flavor, more nuance. The cold is here to stay, but the name of the game is innovation,” he says.
Synder echoes the thought. “The young audience who grew up in these stores are now creating the same family experience with their children,” he says.
“Diversity and creativity in your menu is also what customers are looking for. Everyone gets excited when there’s something new. In the same way, the heat does not go away; This is where it all began.
“But I believe cold as the dominant percentage is here to stay,” adds Synder.q