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What Is the Best Coffee Franchises in 2025? Top Coffee Franchises Ranked
Written by: Patrick Findaro
Last Updated by
Facundo Bermudez : July 17, 2023
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In the bustling realm of the Food and Beverage industry, there’s a particular segment that stands tall with a distinct aroma – the coffee industry. Accounting for a significant chunk of the sector in the USA, coffee franchises have become an essential part of the American lifestyle. With an annual growth rate consistently around 2%, and the enduring affection for coffee among consumers, the arena is rife with competition. This article, titled “What Is the Best Coffee Franchises in 2023? Top Coffee Franchises Ranked,” aims to guide you through this caffeinated landscape, brewing an in-depth analysis of the most successful coffee franchises in 2023.
The coffee franchise landscape is a vibrant tapestry woven with threads from both industry titans and emerging challengers. Dominating the scene are the likes of Starbucks and Dunkin’ Donuts, their brand names synonymous with coffee itself. Yet, even within this saturated market, there exists a thriving undercurrent of innovation and entrepreneurship. The rise of new franchises, keen on challenging the status quo, has resulted in a dynamic environment filled with diverse business models and unique coffee offerings.
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Coffee Franchises Landscape
The appeal of owning a coffee franchise extends beyond the mere love for the beverage. The industry is notably accessible to first-time business owners due to its comparatively low entry barriers. Extensive industry-specific knowledge isn’t a prerequisite, making it an attractive option for those keen on entering the world of business. Information about general business practices and coffee shop specifics is readily available, making the learning curve less steep than in other sectors. However, a successful franchise owner will need to master more than just the basics. A nuanced understanding of coffee, awareness of current trends, and a comprehensive knowledge of coffee-related drinks are all essential facets of owning a thriving coffee franchise.
The world of coffee franchising is not without its challenges, though. High turnover rates and discretionary spending are defining characteristics of the industry. It's an arena where the dynamics shift quickly, and businesses must adapt or be left behind. Over the past decade, the industry has experienced a period of swift expansion. This growth spurt has led to a surge in competition, with franchises vying for their share of the market. Despite these challenges, there are silver linings on the horizon.
Profitability
Profitability within the industry has shown signs of recovery after experiencing some downturns in recent years. This resurgence of profitability is a testament to the resilience and adaptability of coffee franchises, a sign of their ability to weather the storm and emerge stronger. Looking forward, international expansion is projected to become a significant driver of revenue and profit growth for these franchises. In an increasingly globalized world, the opportunity for franchises to tap into new markets overseas represents an exciting frontier for growth.
As we delve into the details of the top coffee franchises in 2023, it’s important to remember that the “best” franchise is subjective. It can vary based on a variety of factors, including individual taste, location, investment capability, and business goals. Our ranking thus aims to provide a holistic view, assessing each franchise based on customer satisfaction, franchise growth, innovation, and of course, the quality of the coffee itself.
So, whether you’re a coffee connoisseur, an aspiring business owner, or simply a curious reader, we invite you to journey with us into the heart of the coffee franchise industry. Get ready to immerse yourself in a world of rich aromas, complex flavors, and intricate business models, as we explore and rank the top coffee franchises of 2023.
The Coffee Industry
The coffee industry has a rich and resilient history, spanning centuries and continents. Today, coffee has evolved from a delightful beverage to a global commodity and a significant economic powerhouse, becoming an integral part of millions of people’s daily routines.
In the United States, the coffee market reigns supreme on a global scale, generating revenues exceeding $81 billion annually. This industry thrives due to the high level of consumption, with Americans consuming an average of two cups of coffee per day. This consistent and widespread demand has led to a flourishing industry that encompasses various types of businesses, ranging from small local roasters to multinational chains. One defining characteristic of the coffee industry is its reliance on location for consumption patterns.
On the other hand, in the United States, people primarily enjoy their coffee at home, followed closely by their workplaces. This trend significantly influences the strategies devised by coffee businesses as they strive to meet the needs of both home consumers and office workers. Additionally, strong brand preferences dominate the industry’s landscape.
For instance, Folgers and Starbucks stand out as the most popular ground coffee brands for at-home consumption in the U.S., based on their impressive sales numbers. An example worth mentioning is Folgers, owned by The J.M. Smucker Co., which achieved over one billion U.S. dollars in sales in 2020 alone.
New Coffee Trend
The coffee industry never remains stagnant; it continuously evolves as new trends emerge. One such trend gaining traction recently is cold brew coffee. Cold brew involves brewing coffee with cold or room temperature water over an extended period, resulting in a beverage with higher caffeine levels compared to regular hot brewed coffee. Younger Americans, in particular, have embraced this trend, considering cold brew coffees as excellent or very good far more often than their older counterparts.
Overall, it is evident that the U.S. coffee industry is a dynamic and essential sector, thriving due to consistent consumption, strong brand loyalty, and a willingness to embrace emerging trends. When examining this industry in more detail, it is important to consider how these overarching characteristics shape the operating landscape for coffee franchises.
The Top Coffee Franchises for 2023
What started in 1950, in the heart of Quincy, MA, as Dunkin’ Donuts, an unassuming coffee and doughnut chain, is now a defining feature of the American streetscape. The franchise, the brainchild of Bill Rosenberg, has morphed into an international phenomenon. In a strategic shift, Dunkin’ rechristened itself in 2019, shedding the ‘Doughnuts’ and embodying a “beverage-led” avatar, a change embraced by its US stores. This rebranding, poised to sweep across its international presence, underscores Dunkin’s adaptability and relevance in the constantly evolving food industry.
Dunkin’, with its network of approximately 12,900 stores spread across 42 countries, is a major player in the global coffee shop scene. It closed in 2021 with a remarkable tally of over 8,000 franchised locations in the US. Under the guidance of David Hoffmann, its CEO and President, and Nigel Travis, the former CEO, and current Executive Chairman, Dunkin’ continues to brew success, serving millions of customers every day.
As a prospective Dunkin’ Franchisee, you need a minimum of $250,000 as liquid assets and a minimum net worth of $500,000 per restaurant, depending on the market. You can also purchase an existing Dunkin’ location by satisfying the minimum financial requirements for your desired market. The estimated total investment necessary to begin the operation of a Dunkin’ Donuts Franchise ranges from $121,400 to $1,787,700.
Based on the median sales provided by Dunkin’s Store Front Type franchise locations, at an average of a 15% profit margin, it will take around 8.5 years to recoup your investment. This is longer than some other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment. When you sell a Dunkin’ Donuts franchise based on the revenue multiple of 1.03 and net median sales in 2021 of $1,420,783, it would sell for $1,463,406. This is much higher than the midpoint investment of $954,550.
Tim Hortons
Tim Hortons is a Canadian multinational coffeehouse and restaurant chain. It was founded in Hamilton, Ontario, in 1964 by Canadian hockey players Tim Horton and Jim Charade. The company began as a hamburger restaurant, but soon became known for its doughnuts and coffee. After Tim Horton died in 1974, Ron Joyce took over the company and expanded it rapidly. Today, Tim Hortons is one of the largest restaurant chains in North America, with over 4,800 locations in Canada and the United States. The company’s name has changed over the years. It was originally called Tim Horton Donuts, but it was changed to Tim Hortons in 1976. This change reflected the company’s growing focus on a more diverse menu.
The Tim Hortons Franchise must be operated in compliance with the Franchise Agreement. Tim Hortons will provide a Confidential Operations Manual that will contain standards that must be followed. These standards include what proprietary items may be sold and restrictions on store build-out, computer software, and supplier and product approval. Additionally, Tim Hortons expects new franchisees to participate in the Tim Hortons Training Program before opening their shop. This training program, based in Columbus, Ohio, provides the skills necessary to properly operate a Tim Hortons shop and takes approximately 20 business days over a 1 to 6-week period.
The estimated cost of a Tim Hortons franchise depends on a variety of factors; namely, whether you choose to franchise a Standard shop or a Non-Standard shop and whether the Standard shop follows the new model or is a “within petro” location.
Financial
- A Standard shop under the new model costs $1,044,000 to $1,441,500.
- A “within petro” Standard shop – a shop in partnership with a gas station – costs $246,500 to $641,500.
- A Non-Standard shop costs $94,000 to $270,000.
A 15% profit margin would yield estimated annual profits of $158,144. This means it would take nearly 11 years to recoup your investment. Note that these calculations account for the 2 years it takes, on average, for a franchise in the food and beverage industry to scale up to full production. Also, note that these calculations do not account for inflation or interest rates that are compounded over the timeframe. However, many Tim Hortons and quick-service restaurant franchises might make their return on investment back much faster through a triple net lease (NNN).
Biggby Coffee
Biggby Coffee, colloquially pronounced “big B”, is an American coffeehouse franchise originating in Lansing, Michigan. It was founded in 1995 by Bob Fish and Mary Roszel, both hospitality students at Michigan State University, who opened their first location in East Lansing. Originally named Beaner’s Coffee, the company changed its name to Biggby Coffee in 2008 due to concerns about the term “beaner” being derogatory. The name Biggby was derived from the prominent ‘B’ in the company’s logo.
Since its establishment, Biggby Coffee has experienced significant growth, expanding to over 280 locations in twelve states as of 2022. These states include Michigan, Florida, Kentucky, Illinois, Ohio, New Jersey, Virginia, North Carolina, South Carolina, Wisconsin, Idaho, and Indiana. Offering a wide range of products such as coffee, tea, made-to-order beverages, food items, bottled beverages, and smoothies, Biggby Coffee has become a beloved fixture in the American coffeehouse scene. In 2011, CNBC recognized it as the fastest-growing coffee chain in America, highlighting its remarkable expansion.
Biggby Coffee requires franchisees to lease around 1300-1700 sq ft. for a “freestanding, storefront or strip center location.” The franchisee will also be responsible for maintenance. At the time of signing, the franchisee is required to have a grand opening advertising plan, which is to be implemented at the franchisee’s own cost. A minimum of $9,000 is required to be spent on this. The estimated total investment necessary to begin the operation of a Biggby Coffee Franchise ranges from $276,000 to $439,000. When you go to sell a Biggby Coffee franchise based on the median multiple of .44 and net sales averaging between 2020 and 2021 of $722,745, it would sell for $318,000. This is slightly lower than the median investment of $357,000.
PJ’s Coffee Franchise
PJ’s Coffee Franchise is a retail coffeehouse chain in the south. It was founded by Phyllis Jordan (and, thus, PJ) in 1978. Since 2004, they have been competing with Starbucks in the local areas and aim to go countrywide. They had 134 franchised and 13 affiliate-owned locations as of 2023.
PJ’s requires a minimum of $150K in liquid capital and a net worth minimum of $500K for a single unit. Creditworthiness, favorable debt-to-income ratio, and secondary sources of income are also considered when determining eligibility. The estimated total investment necessary to begin the operation of PJ’s Coffee Franchise ranges from $406,000 to $1,024,000.
Based on the median sales provided by PJ’s Coffee franchise locations, at an average of a 15% profit margin, it will take around 8.5 years to recoup your investment. This is longer than other franchise opportunities. When you go to sell a PJ’s Coffee franchise based on the median multiple of .44 and net sales in 2021 of $808,284, it will sell for $355,629. This is significantly lower than the midpoint investment of $715,000.
Scooter’s Coffee
Scooter’s Coffee is an American chain of coffee stores specializing in quick service of espresso drinks, smoothies, and baked goods founded in 1998 and has grown to about 250 stores in the United States. Boundless Enterprises, a Nebraska-based LLC, serves as the parent company for Scooter’s. The parent company also owns two affiliate companies – Harvest Roasting and Boundless Operations.
Scooter’s requires new franchisees to participate in two training sessions, both based in Omaha, Nebraska. The 3-day Immersion Training workshop occurs between 90 and 120 days after signing the Franchise Agreement and discusses the business management principles of owning a franchise. The 4-week Operations Training workshop must be completed 6 to 8 weeks before store opening and details the day-to-day practice of running a store.
Scooter’s median franchise sales in 2022 were $587,723 for Kiosks and $710,292 for Coffeehouses.
We hope you enjoyed reading our article. Check out our website, Vetted Biz for more information on franchises!
