A café used to be a place to buy a drink.
Increasingly, it is becoming a place to work, meet, study, socialise and spend time. That shift is changing the economics of the global coffee business. The opportunity is no longer just selling more cups; it is increasing what each customer does inside the store.
Global coffee consumption reached 175.1 million 60-kg bags in the 2024/25 coffee year, up 1.4%, according to the International Coffee Organization. Meanwhile, the broader global coffee market was estimated at $249.3 billion in 2025 by Grand View Research.
The bigger change is happening at the customer level. Cafés are increasingly selling an experience around coffee rather than coffee alone.
The Café Is Becoming The “Third Phase”
The traditional café model was straightforward: customers arrived, bought coffee and left.
The modern café increasingly competes for something more valuable- customers’ time.
The concept resembles what sociologist Ray Oldenburg called a “third place”: an environment outside the home and workplace where people can gather and interact. The idea has become more relevant as work and social lives have become less tied to a single physical location.
JLL’s global workplace research has highlighted the growing importance of alternative work settings, including community spaces and collaborative environments. Its 2025 research also found that 38% of employees believe office experiences need to improve to meet expectations around flexibility and wellbeing.
For cafés, this creates a different business proposition. A customer working on a laptop for two hours is not simply buying a latte. The café is providing seating, electricity, Wi-Fi, ambience and a place to work or meet.
That does not automatically make long-stay customers more profitable. A table occupied for two hours can generate less revenue per hour than several customers making quick purchases. But it changes what successful cafés can sell: space and experience alongside food and beverages.
Coffee Is Becoming More Premium
The strongest evidence that cafés are selling more than basic caffeine comes from the growth of specialty coffee.
In the U.S., 48% of adults consumed specialty coffee in the past day in 2026, according to the National Coffee Association, exceeding traditional coffee consumption at 42%. Among Americans aged 25-39, 69% consumed specialty coffee during the previous week.
The distinction matters economically. Specialty coffee creates opportunities for higher-value beverages, premium beans, alternative brewing methods and seasonal products.
Specialty coffee consumers are also more likely to consume coffee outside the home. In 2026, 36% of past-day specialty coffee drinkers had coffee prepared away from home, compared with 23% for traditional coffee drinkers.
This helps explain why the café experience matters. A customer can make ordinary brewed coffee at home relatively cheaply. Paying several dollars for a latte, pour-over or cold coffee makes more sense when the purchase also includes convenience, craftsmanship and an environment.
The product is still coffee. But the value proposition has expanded.
The Menu Is Getting Bigger Because The Economics Are Different
Coffee remains the anchor, but cafés increasingly use food and other beverages to raise the value of each visit.
The economics are simple: a customer who buys only a basic coffee generates one transaction. Add a pastry, sandwich, dessert or second beverage and the same visit produces more revenue.
Large chains demonstrate how far the model can extend. Starbucks ended fiscal 2025 with 40,990 stores globally and generated $9.6 billion of revenue in its fourth quarter alone. Its international segment generated $2.07 billion in Q4 revenue, while the company continued operating a mix of company-operated and licensed locations.
Luckin Coffee provides a different model. In 2025, its revenue from freshly brewed drinks reached RMB34.6 billion, while other products generated RMB2.3 billion. It also generated RMB758.6 million from other activities including delivery fees and membership-related revenue.
That illustrates the evolution of the café business: the beverage remains central, but operators can monetise food, merchandise, delivery, memberships and partnerships around it.
The Store Itself Has Become Part Of The Product
Café interiors are no longer simply functional. Location, furniture, lighting, music, seating arrangements and design increasingly contribute to the reason customers choose one café over another.
This matters because coffee itself can be difficult to differentiate. A basic latte can be replicated by thousands of businesses. A recognisable environment is harder to reproduce.
For chains, store design also becomes a branding tool. Starbucks ended fiscal 2025 with 18,311 North American stores and 22,679 international stores, giving the company an enormous physical footprint through which it can deliver a consistent brand experience.
Smaller specialty cafés use the same principle differently. They can differentiate through local identity, coffee origin, brewing techniques, interiors or community.
The physical store therefore becomes something closer to a marketing asset and customer-acquisition channel rather than merely a place where transactions happen.
But this strategy comes with a cost. Better locations, larger stores, comfortable furniture, staff and longer opening hours all increase operating expenses. The experience has to generate enough additional spending or repeat visits to justify the investment.
Convenience Is Creating A Different Kind Of Café
Not every customer wants to sit inside a café. The industry is increasingly serving two opposite behaviours: customers who want an experience and customers who want speed.
The U.S. data shows this clearly. In the National Coffee Association’s Fall 2026 survey, 55% of past-week out-of-home coffee buyers used a drive-through, while a record 40% ordered through an app.
This means the modern coffee business does not have one customer journey.
One customer may spend two hours working inside a café. Another may order through an app and collect a drink in minutes. A third may use a drive-through without entering the store.
Successful operators therefore increasingly design different formats around different occasions.
Luckin is an extreme example. By December 2025, it had 31,048 stores, including 20,056 pickup stores, while only 178 of its self-operated stores were classified as “relax stores.” Its model prioritises convenient locations such as offices, commercial areas, residential neighbourhoods and universities.
The lesson is important: being a café does not necessarily mean being a place where customers sit.
The Real Competition Is For Customer Occasions
The café industry’s next phase is less about coffee consumption itself and more about capturing different moments during the day.
Morning coffee can be a routine. An afternoon café visit can be a work session. A weekend visit can be social. A takeaway order can be a convenience purchase. A premium drink can be an affordable indulgence.
This gives café companies several opportunities to increase frequency without fundamentally changing their core product.
The numbers from Luckin demonstrate the scale possible when frequency and convenience are combined. Its average monthly transacting customers reached 94.2 million in 2025, up 31.1% year over year, while total items sold increased to approximately 4.4 billion from 3.1 billion.
Dutch Bros shows another version of the model. It had 1,136 shops across 25 U.S. states at the end of 2025, generated $1.64 billion in revenue, and reported record average unit volumes of $2.1 million.
These businesses are not identical, but they demonstrate the same principle: café economics depend increasingly on frequency, convenience, format and customer value, not simply the price of coffee.
But More Time in a Café Does Not Always Mean More Profit
The transformation also creates a difficult trade-off.
A café that encourages customers to stay longer needs more seating and potentially larger premises. Customers may buy one beverage and occupy a table for hours. That can reduce revenue generated per square foot.
Conversely, a pickup-focused store can process more transactions from a smaller footprint but offers less of the social experience that differentiates cafés from delivery and convenience channels.
This is why the industry is developing different formats rather than pursuing one universal café model.
Starbucks’ restructuring illustrates the challenge. In fiscal 2025, the company closed 627 stores during Q4 as part of its restructuring plan, ending the year with 40,990 locations. Its North American operating margin in Q4 fell to 4.5%, partly reflecting restructuring costs, inflation and investments in store operations.
The physical café remains valuable, but every square foot has to earn its place.
Conclusion
The café industry is changing because coffee itself is no longer the entire product.
The strongest cafés increasingly combine beverages, food, convenience, community, workspace and brand experience. Specialty coffee is attracting younger consumers, while apps and drive-throughs are making coffee purchases faster and more convenient. At the same time, physical stores are becoming environments where customers spend time rather than simply places where they collect a drink.
The numbers show that there is no single winning format. Luckin is scaling through high-volume pickup stores, Dutch Bros through drive-through-led locations, while Starbucks continues to operate a huge global network of traditional coffeehouses and licensed stores.
The bigger business shift is therefore straightforward: cafés are no longer selling only coffee. They are monetising the occasions built around coffee.
