Coffee & Tea Report 2011: Find Out What’s Trending


chai-teaCanada’s beverage segment is a $1­billion business, not including cof­fee and tea sales at Tim Hortons and McDonald’s — the country’s two largest quick­service chains with beverage programs that account for a huge portion of total market sales.

Fifteen coffee and tea chains in the limited­-service beverage category hold a spot on the Chicago­-based research firm Technomic’s ranking of the Top 200 Canadian chains. Together, they raked in $1.6 billion in sales in 2010, an increase over 2009’s $1.5 billion.

Of the leading coffee and other beverage chains, nine out of 15 saw year­-over­-year sales increases, with Coffee Culture Café & Eatery and Good Earth Coffeehouse and Bakery reporting the biggest increases (29.7 per cent and 25 per cent, respectively).

The Coffee Culture team credits its big sales year with what Gary Sherbanow, director of Marketing at parent company Obsidian Group, calls “an adjust­ment” to Coffee Culture’s coffee formula.“We changed our formula; we increased the body of our coffee and, at the same time, we did not increase our prices,” Sherbanow says. He notes Coffee Culture’s market research found customers are apt to increase their cof­fee consumption in an economic downturn.

And, many industry execs would likely agree. In fact, most of the top beverage chains grew sales in 2010, suggesting the Canadian foodservice industry is seeing growth in coffee, tea and other drinks. The cat­egory’s sales increase of 4.3 per cent in 2010 is higher than the entire limited­service restaurant segment’s sales growth of 3.8 per cent.

This category growth is noteworthy. The Canadian economy is obviously stronger today than it was a few years ago as consumers regain confidence and begin spending again. Yet, interestingly, beverage sales are up while foodservice sales are still down. It’s quite puz­zling when you consider that the beverage category is driven largely by discretionary spending. Consumers don’t need to visit Second Cup for their morning cup of joe; they could just as easily make it themselves at home for much less.

So, the top beverage chains are responding to cus­tomer demands — and the competition — by creating innovative products and marketing campaigns. Take McDonald’s, which recently revved up its beverage focus, expanding its McCafé beverage program globally. It’s all about wooing customers and increasing the bottom line; below are some tips on how to make that happen.


Most restaurant operators know that the longer customers stay, the more they are likely to spend, so bev­erage concepts are increasingly marketing themselves as coffeehouses or cafés, versus grab­and­go drink spots. They’re targeting customers looking to work, study, read or eat by offering amenities such as Wi­Fi access, newspapers and comfortable seating. Since its inception, Coffee Culture Café & Eatery has told cus­tomers to “come for the taste, stay for a visit.”

Other chains began adopting this approach — or at least began taking steps toward it — much more recently. Last year, Tim Hortons introduced a new prototype to position the brand as a café and bake shop; décor upgrades include plush chairs, soft light­ing and fireplaces. And Starbucks and McDonald’s now offer free Wi­Fi service at select stores.


Many consumers have been slow to abandon their recessionary spending habits, so operators are contin­uing to promote value. But since value means different things to different people, operator initiatives include everything from price promotions to coupons to menu specials.

Second Cup provides a good example of this increased focus on value. Last summer, the chain host­ed an expanded happy hour daily, from 1 to 3 p.m. As part of the promotion, customers could get a 12­ounce Chiller drink for $2.75. And, in April, McDonald’s announced the return of its Dollar Drink Days beverage promotion, which offers any size iced coffee or soft drink for $1.


By putting more food on their menus, beverage oper­ators can capture some of the sales held by food focused brands. Canadian consumers told Technomic they often choose cafés over other types of restaurants because the quality of the coffee offered is higher there. Many consumers seek out a specific beverage chain because they like the type of coffee or tea served there; few do so because of a favourite food. So drinks, not food, drive traffic at these concepts. This can translate to low check averages, since a cup of coffee averages just $1.85 at the leading chains. Operators are therefore enhancing their food offerings. Last August, Café Suprême, for instance, added new items to its Sandwich Shop lunch menu, including a turkey and swiss wrap and a Lebanese fatouche salad featuring romaine lettuce, green peppers, tomatoes, cucumbers, sumac and toasted pita.


Starbucks is a leader in the Canadian coffee industry in more ways than one. In addition to being one of the country’s top­grossing chains, it also guides many in the beverage segment and helps drive the industry’s environmentally friendly initiatives.

Starbucks Coffee Company’s Shared Planet pro­gram shows how the brand is meeting its goal of “being a responsible company.” One facet of the program involves building greener stores. In late 2009, the com­pany entered the construction phase of the U.S. Green Building Council’s LEED Volume Certification pilot program with the goal of achieving LEED certification for all new company­owned stores by the end of 2010. The chain began opening LEED­certified units across the country last May with seating made of reclaimed materials and LED and low­voltage lighting.

And, it doesn’t end there. This year, the chain launched an in­store recycling initiative at its corporate stores in British Columbia. Labelled bins placed in front of participating stores accept hot­beverage cups, lids and sleeves as well as plastic iced­coffee cups and lids. The program is operational in all of its British Columbia stores where it controls waste collection and where recycling is available at the community level.

Starbucks may be responsible for the bulk of green efforts, but Tim Hortons is not sitting by idly. The top chain in Canada, by sales and units, is collecting its used paper cups and, through a partnership with the University of Manitoba, using the waste to make bio­fuel. University researchers found that about 100 Tim Hortons cups generate 1.3 litres of ethanol. Furthermore, the chain has a contract with Toronto­based Turtle Island Recycling to recycle its paper cups and plastic lids.

Starbucks and Tim Hortons, like much of the restaurant industry, are moving in a socially responsible, eco­conscious direction and are likely to spur other chains into action — if they haven’t already. The result may be that coffeehouse and tea­shop patrons will go from merely appreciating these efforts to fully expect­ing them.


Breakfast may be the most important meal of the day, but it’s not the most important daypart to many restaurant operators who welcome the bulk of their business during lunch and dinner. Yet the daypart has been enjoying a renaissance of sorts with an increas­ing number of chains — including a number of coffee and tea brands — beefing up their morning menus with limited­time offers and permanent additions.

Coffee and tea are already synonymous with the breakfast daypart in the minds of many consumers, which helps to explain the recent spike in new morn­ing food offerings. Technomic’s 2010 Canadian Beverage Consumer Trend Report asked consumers about their beverage attitudes as well as their purchas­ing and consumption behaviours. The report found coffee and tea go hand in hand with breakfast for many consumers. As you’d think, regular hot coffee is con­sumed more often during breakfast hours than during lunch or dinner hours at coffee cafés and fast­food chains. For regular hot tea, the percentages are not quite as high but still noteworthy. (see sidebar, pg. 36 & 37)

Canadians strongly associate coffee and tea with breakfast and drink both liberally and often. Seven out of 10 consumers said they have had regular hot coffee at least once in the past month, and more than half (58 per cent) said they have purchased it away from home in the past month. More than four out of 10 consumers have had hot tea within the past month, and nearly one in five purchased their hot tea from a restaurant or foodservice outlet.

The report also shows that when consumers make their coffee and tea purchases, they’re likely to buy food to go along with it. Fifty­five per cent of respon­dents said they purchased food and a non­alcoholic beverage at least once on their last visit to a café; a staggering 89 per cent said the same about fast­food restaurants.

There’s no question coffee and tea operators stand to benefit from paying more attention to their break­fast menus and adding items where needed. Some chains have already risen to the challenge. Good Earth Coffeehouse and Bakery added the vegetarian break­fast panini, steel­cut oatmeal and a southwest break­fast bake as part of a campaign, before making them permanent menu items. Meanwhile, Timothy’s World Coffee added oatmeal to its menu.


Canadians drink close to nine­billion cups of tea annually, according to the Toronto­based Tea Association of Canada, with restaurant staff serving 380­million cups of hot tea and 202­million cups of ready­to­drink tea over the past year.

Technomic’s menu­tracking resource, MenuMonitor, found that, among the top 200 Canadian chains and leading Canadian independent restaurants, herbal and chai teas are trending upward on menus. A menu comparison shows more herbal and chai tea drinks were offered in the second half of 2010 than in the sec­ond half of 2009. The number of menu items with the word “herbal” in their menu description increased from 22 to 28 items. Second Cup was responsible for the bulk of this growth in herbal teas on menus; the chain added herbal tea varieties such as blueberry, chamomile and peppermint. Chai tea also rose in inci­dence, from 36 items to 40 items, during the same time period. Chains such as Lettieri Espresso Bar + Café and Second Cup added chai tea varieties, with the latter introducing a chai tea and an iced chai tea latte.

Restaurants across Canada are recognizing tea’s grow­ing popularity with consumers, who are increasingly calling for healthful food and drink options and who enjoy tea’s myriad preparation, flavour and ingredient possibilities. If the growing popularity of tea is any indication, restaurant operators are answering that call.


A staple across the pond, tea hasn’t enjoyed the same prestige as coffee in North America. But, Dilhan Fernando, marketing director of the Sri Lanka­based MJF Group (producers of Dilmah Tea), says the beverage’s pur­ported health benefits are compelling Canadians to take notice. But, while he says his brand doesn’t have much retail pres­ence yet (though it’s distributed by several Ritz­Carlton and Four Seasons hotels internationally), he does note interest in tea and food pairings is growing. What are some interesting ones? “A bitter almond tea goes well with crème brûlée,” says Fernando, “while some like to pair Moroccan mint vari­eties with chocolate fudge. A medium oolong pairs especially well with Camembert cheese.” — Ashley Newport


Lettieri Espresso Bar + Café brings a taste of Italy to Canada Italian espresso. Biscotti. Panini with names like Milanese, Caprese and Italiano. One look at the menu at Lettieri Espresso Bar + Café, and you may feel like you’re visiting a café in Rome, but the 12­unit quick­service chain operates half a world away in the Greater Toronto Area (GTA).

The chain of espresso cafés has been growing steadily in southern Ontario since its inception inYorkville, Ont., in 1991. Today, the chain’s president and founder, John Lettieri, is ready to grow his brand even further with several new stores slated to open in the GTA this year, including one in a Toronto health club. It will represent a new venue for the chain, which already operates in shopping malls, office buildings, medical centres and hospitals in a variety of prototypes, including kiosks.

Its new store openings and estimated $5 million (not including its Hero Certified Burger sister chain) in 2010 system­wide sales might seem low in comparison to the heavy hitters — such as Tim Hortons, which raked in $5.2 billion in 2010 — but the café has many features that set it apart. Take the Italian menu, which is almost evenly divided between drinks and food — with far more food offerings than a typical coffeehouse.

The beverage side of the menu centres on “rich, full­bodied” Italian espresso made with high­quality beans and prepared by trained baristas. Guests can also throw back specialty coffees, freshly squeezed juices, smoothies and organic whole­leaf teas. Espresso may be part of its name, but tea is actually a big focus at Lettieri, with more than a dozen types of tea served hot or cold.

The food menu is just as big, featuring substantive made­to­order offerings. Panini that are grilled in a ridged cast­iron press are the main attraction, but hearty pasta and salad dishes, pastries and frozen yogurt are also available. And the menu is about to get even bigger. “We’re looking to add more of a food element,” says Lettieri of his plan to add 12­inch thin­crust stone­baked pizzas with dough and tomatoes imported from Italy. The pizza line is expected to roll out in three to six months, while hot and cold cereal and oatmeal are also in the pipeline.

The café’s marketing message under­scores its premium ingredients and authentic roasting techniques. Central to this position­ing is the decor and ambiance found at every Lettieri store. The brand draws inspiration from contemporary European­style cafés with small café tables and long communal tables inside and patios outside in the sum­mer. Units boast a modern decor with stain­less­steel fixtures, including steel­topped countertops and hanging light fixtures. Every store features a retail area where patrons may purchase a variety of products, from packaged teas and ground Lettieri coffee, to stovetop espresso makers.

When you add it all up, Lettieri is hardly your average coffeehouse. “We started with and have always been about our espresso drinks and tea selections. We also have a wide range of food offerings, and that’s real­ly what differentiates us from everybody else,” sums up the president.


Technomic’s 2010 Canadian Beverage Consumer Trend Report divided Canadian consumers into three demographic groups based on their away­-from­-home consumption behaviour over the past month. Heavy beverage users purchased 16 or more beverages; moderate beverage users purchased between six and 15 beverages; and light users purchased five or fewer.

  • Nearly three out of five heavy users are male. This user group is made up of a disproportionate percentage of younger consumers; 57 per cent of these con­sumers are between the ages of 18 and 44.
  • Twenty­seven per cent of moderate beverage users, compared to just 23 per cent of the total sample, report an annual household income of $50,000 to $74,900; moderate users are slightly more likely to be aged 55 and older.
  • Light beverage users heavily skew older; consumers aged 55 and older com­prise 45 per cent of light users. Lower­income consumers are also more likely to be in this group.

More in Feature Articles:

Feasting on Favourites: 50 Favourite things from Canada’s Top Chefs

A Chicken in Every Pot: What Chicken Can Do for Your Foodservice Operation

Prescription for Change: Hospital Foodservice Gets Healthier With Infusion of Local Food

Notable Quotes from Top Chefs

This site uses Akismet to reduce spam. Learn how your comment data is processed.