First Watch in November shared what’s been a steady sentiment over recent months. Many restaurants are struggling with traffic without losing share. That’s the reality of the present spending climate with price hikes sending guests to at-home options. Breakfast, in particular, is a daypart in full-service that doesn’t see trade down into quick or convenient options. So the entire category softened when customers began searching for places to cut back.

And where does coffee come in? Like breakfast, morning beverage navigated a headwind it couldn’t control. COVID disrupted habits and then, in the wake, brands dealt with work-from-home and hybrid migrations. Were people grabbing drinks on their way to the office? Was there an office?

It’s why chains from Dunkin’ to Starbucks and local cafes to fast-casual spots observed transaction peaks thin out and spread. Afternoon occasions rose alongside cold beverage consumption and people began looking at coffee trips as breaks in the day or chances to indulge. And while things have leveled out a bit since, this remains a nuanced corner of quick service. Chains are shrinking footprints, adding drive-thrus, walk-up windows, delivery, and, all the while, finding markets where bringing back the café experience makes sense, too. That latter point also speaks to the rise of digital, as Starbucks has touted since former Chipotle head Brian Niccol arrived as CEO.

Even if customers don’t stick around, beverage brands lost some of their DNA by ignoring the atmosphere of their lobbies, even for customers who are just walking through to grab a drink off a counter. Mobile ordering and pickup algorithms arguably define more of the sector’s relationship with customers than any. You could make a similar case for loyalty. A customer who taps a beverage order doesn’t want to see a long-wait time pop up. It doesn’t match the spontaneity. And the same is true of drinks not being ready when promised, and a holding area that feels like throwing your hand up in a bidding war.

All said, though, and in light of ongoing uncertainty, where is the category now? Placer.ai looked at 2024 visits to Starbucks and Dunkin’ to draw a picture of beverage going into 2025—a story that’s likely to shift dramatically as Starbucks implements watershed changes. But for today, here’s a status check:

Visits to Starbucks and Dunkin’ last year were not all that different than 2023. Traffic trends ranged from 2.9 percent down, year-over-year, to 1.9 percent up for Starbucks, and 1.3 percent down to 1.9 percent higher for Dunkin’.

To note, on a comparable store basis from systemwide company data, North America and U.S. same-store sales declined 2 percent at Starbucks in fiscal 2024, driven by a 5 percent decline in comparable transactions, partially offset by a 4 percent increase in average ticket. Traffic fell 10 percent in Q4, year-over-year.

Although visitation trends appeared similar for Starbucks and Dunkin’ in 2024, patterns were not. Dunkin’ brought in 39.9 percent of its guests during the early morning daypart (6 to 9:59 a.m.). Starbucks only received 29.9 percent before 10 a.m. Results shifted into the evening, with Starbucks capturing 23.7 percent of visitors between 3 and 6:59 p.m.—higher than Dunkin’s 16.4 percent. “These visitation patterns highlight distinct opportunities for both chains to expand their appeal across different dayparts,” Placer.ai said. “Dunkin’ could offer afternoon specials to attract more visitors in the afternoon and evening daypart, and Starbucks could broaden its breakfast offerings to capture a larger share of the early morning crowd.”

The morning window for Starbucks has been a concern/opportunity area for some time. Going back to May, when traffic fell 7 percent in Q2, then-CEO Laxman Narasimhan shared more than 60 percent of the brand’s morning U.S. business flowed from rewards members, who, naturally, overwhelming ordered from the app. Yet, despite strong mobile order and pay sales, the chain witnessed a mid-teens percent order incompletion rate within the channel. In other terms, morning customers put items into the cart and decided not to hit send, citing “long wait times of product and availability.”

Again, the morning daypart is a razor-thin stakes game in QSR. Unlike dinner (broadly speaking), customers are on their way to … somewhere. Missing a product or the wait time being too long, or inaccurate, will send beverage seekers elsewhere. These days, “elsewhere” isn’t just Starbucks competing with the mom-and-pop you have to park for, either; it’s Dutch Bros, which is nearing 1,000 units, Caribou Coffee, Tim Hortons’ recent U.S. acceleration, and other emerging, regional chains that have coupled convenience with quality product at scale—something you didn’t see much of a decade or so ago.

A closer look from Placer.ai at Starbucks revealed the brand’s historical strength to leverage calendar moments and promotions to drive traffic. Events like Red Cup Day and some holiday-specific deals, like Mother’s Day, drove visit bumps ranging from 28.1 to 40.4 percent higher than its 2024 daily average.

Niccol, in his early appointment conversations, said he would pivot away from the discounting and promotions that become increasingly common under Narasimhan in 2024. He wants instead to return Starbucks to a premium positioning and focus on unique beverages that encourage guests to stick around and come back. Those prior promotions also stressed production and, as data shows, forced employees to try to serve high-volume spikes for a brand unequipped to slide out orders. In 2024, Starbucks ran several promotions, from BOGO weekends, “Summer App-y Days” featuring personalized offers every Monday and 50 percent off every Friday, and $3 grande-sized drinks on Thursdays. Niccol’s flip calls for Starbucks to get away from luring on price and more on experience, rewards, and brand identity that better associates the chain with quality coffee and community; not just quick transactions and discounts (but done in 4-minute throughput windows).

And speaking of adjustments, Placer.ai found a bevy of short visits on both chains’ traffic charts—not exactly surprising given the evolution of preference. But still, something Starbucks is trying to address from décor changes to store layouts and working to segment orders and focus on off-premises and dine-in, not at the expense of each other (upgrades like using Sharpies to write names on drink cups, free refills for all, and bringing back the condiment bar for hot coffee so that doesn’t bottleneck the line, as well as future Siren upgrades that strip some of the monotonous steps out of making coffee and enables employees to better focus on customer experience).

Most visits were less than 10 minute long in 2024. Mobile orders made up nearly a third of orders for Starbucks, so it’s a natural result.

Overall, what lies ahead for coffee will continue to represent one of quick service’s dynamic battlegrounds. There’s more parity and choice in the marketplace than years past and democratized technology that’s empowered regional players to punch above their weight class. Especially as Starbucks regains ground, 2025 will make for another compelling year where the bar raises throughout—a win for customers and a massive piece of runway for operators.

Beverage, Consumer Trends, Fast Casual, Fast Food, Story, Dunkin' Donuts, Starbucks