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Starbucks Faces Increased Competition as U.S. Market Share Declines

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U.S. Coffee Market Trends

U.S. coffee consumption has increased, with an estimated 66% of Americans reporting daily coffee intake in both 2024 and 2025, up from 62% in 2020.

Starbucks' share of spending at U.S. coffee shops declined to 48% in 2024 and 2025, down from 52% in 2023, according to Technomic, a food industry consulting firm.

Rival Dunkin' gained market share during these periods.

The Competitive Landscape

Starbucks, which operates nearly 17,000 U.S. stores, faces substantial competition. The number of chain coffee stores in the U.S. increased 19% over the last six years, reaching more than 34,500. Competitors include:

  • Dunkin', which recently opened its 10,000th U.S. store.
  • Fast-growing drive-thru chains such as 7 Brew (over 600 locations), Scooter’s Coffee (over 850 locations), and Dutch Bros (over 1,000 locations).
  • International chains like Luckin Coffee and Mixue expanding into the U.S.
  • High-end chains like Blue Bottle.
  • Fast-food chains such as McDonald’s and Taco Bell enhancing their beverage offerings.

Starbucks' Strategic Response

Starbucks plans to enhance service and improve store environments, with an aim to add 25,000 seats to its U.S. cafes by fall. The company intends to open over 575 new U.S. stores in the next three years, including smaller-format stores designed to operate in previously unfeasible locations. Starbucks is also introducing new products, including updated pastries, high-protein and fiber snackable foods, and customizable energy drinks.

Starbucks Chief Operating Officer Mike Grams stated that the company's growth strategy focuses on being exceptional at its existing model, emphasizing cafes with comfortable seating as the "soul of Starbucks" while also serving mobile, drive-thru, and delivery customers.

Competitor Innovations and Pricing

Competitors have introduced various strategies:

  • Dutch Bros launched protein coffee drinks in January 2024, nearly two years before Starbucks, and offers larger medium drinks (24 ounces compared to Starbucks' 16 ounces).
  • Value-oriented chains like Luckin Coffee utilize coupons and promotions.

An analysis by Morningstar indicates that the average customer spent $9.34 at Starbucks in 2024, compared to $8.44 at Dutch Bros and $4.68 at Dunkin'.

Starbucks did not raise prices in its 2025 fiscal year and plans to be judicious with future increases. An equity analyst suggests Starbucks should justify its prices rather than attempt to compete with discounts.