Starbucks feels the heat as more chains compete for U.S. coffee drinkers

Starbucks loses some share as coffee chains multiply

Americans have been drinking more coffee than they have in decades, but Starbucks is facing stiffer competition for the customers who are buying it. The company remains the largest operator of U.S. coffee shops, with nearly 17,000 stores and plans to add more, yet its share of U.S. coffee-shop spending has declined in the past two years, according to industry data cited by the Associated Press.

Technomic, a food industry consulting firm, reported that Starbucks’ share of spending at all U.S. coffee shops fell in 2024 and 2025 to 48%, down from 52% in 2023. Dunkin’, a long-running rival, gained market share in both 2024 and 2025, Technomic reported.

The competitive pressure comes as more chains expand in formats aimed at speed and convenience. The AP report said fast-growing drive-thru chains including 7 Brew, Scooter’s Coffee and Dutch Bros are opening U.S. locations, while other operators such as Blue Bottle and large quick-service restaurants are also adding beverage options.

In addition to the growth in rivals, Starbucks faces a shift in how some customers explore coffee. Chris Kayes, chair of the management department in the George Washington University School of Business, said customers have not stopped choosing Starbucks but are trying more alternatives. “People haven’t fallen out of love with Starbucks, but they’re now polyamorous in their coffee choices,” Kayes said.

Coffee demand is rising even as the market spreads across more brands. The National Coffee Association, an industry trade group, reported that 66% of Americans drank coffee every day in both 2024 and 2025, up from 62% in 2020. Technomic also reported that the number of chain coffee stores in the U.S. jumped 19% over the last six years to more than 34,500.

In the middle of the expansion, some analysts said Starbucks’ scale limits how much it can grow through simple store additions. Neil Saunders, a managing director and retail analyst at GlobalData Retail, said “There’s too much supply relative to demand,” and described Starbucks as “pretty saturated.” Saunders said Starbucks’ size can be a disadvantage because it has less ability to grow sales by opening new locations, calling it “a very mature business.”

Starbucks is planning a multi-pronged response aimed at traffic and experience. At a conference for investors, the company said its ongoing effort to improve service while making stores warmer and more welcoming is boosting U.S. store traffic, and it expects to add 25,000 seats to its U.S. cafes by this fall, according to the AP report.

Starbucks also said it expects to open more than 575 new U.S. stores over the next three years, including smaller-format locations that are cheaper to build but include indoor seating plus drive-thru lanes and mobile pickup. The company told investors the reduced scale would let Starbucks operate in locations it could not before, and it is also updating its menu with new pastries and snackable foods that are higher in protein and fiber.

Analysts cited menu and value differences as part of Starbucks’ challenges, particularly with younger customers who seek novelty. Saunders said lack of menu innovation is one reason Starbucks has struggled, and he pointed to other chains moving first on certain product categories. The AP report said Dutch Bros added protein coffee drinks in January 2024, nearly two years before Starbucks did, and that executives said Thursday that customizable energy drinks would appear on Starbucks’ menu soon.

The report also described Dutch Bros’ growth strategy as centered on speed and convenience, with nearly all stores operating as drive-thrus with walk-up windows. It said Dutch Bros is led by former Starbucks executive Christine Barone and has just over 1,000 U.S. shops, with a goal to double that number by 2029. The AP report further noted that Luckin Coffee is value-oriented and uses promotions in its app, including a $1.99 drink promotion that drew customers to a small New York City location described in the story.

Starbucks’ pricing and experience remain central to the company’s outlook. The AP report said Morningstar analysis showed that in 2024, the average customer spent $9.34 at Starbucks, compared with $8.44 at Dutch Bros and $4.68 at Dunkin’. Ari Felhandler, an equity analyst with Morningstar, said it would be a mistake for Starbucks to rely on discounts because competitors will go lower; he said instead, “Keep your prices the same and try to justify them,” in remarks carried by the report.

In response to that competitive landscape, Starbucks executives emphasized they are not trying to become a purely drive-thru or mobile-first brand. Mike Grams, Starbucks chief operating officer, told the AP that the company’s approach is to build cafes with comfortable seating—described as “the soul of Starbucks” in the report—that can still support mobile, drive-thru and delivery customers. “There’s always going to be competition. We’re aware of it, we keep an eye on it for sure, but we don’t try to be them,” Grams said, adding: “We offer something that most people don’t, which is a legitimate space to sit down, enjoy and use it for a variety of different reasons.”

Even with the plan, some experts questioned whether Starbucks can hold its lead among customers who may already be choosing other types of coffee experiences. Kayes said Starbucks can be a victim of its own success, and he said “In some ways, I think they are a victim of their own success,” adding that “I do think that the aura of Starbucks as being something special and unique and exciting isn’t there anymore.”