SOURCE: Franchise Direct

Franchise Direct

April 20, 2009 13:05 ET

New Franchise Direct Study Finds Opportunities Brewing in the Coffee Franchise Sector

ATLANTA, GA--(Marketwire - April 20, 2009) - The coffee franchise industry is growing and diversifying, according to new research by Franchise Direct. Following an exhaustive study of more than 29 Franchise Disclosure Documents, Franchise Direct has learned that coffee franchises are poised to profit as other business models struggle to cope with the economic downturn.

The coffee franchising sector is recession-resistant and an integral part of American lifestyle -- these were the findings of a recent Franchise Direct study of the coffee franchise industry. After examining the FDD/UFOC documents of 29 coffee franchises, Franchise Direct has found that this $11 billion industry, after weathering a slight dip at the start of the recession, is growing and diversifying, and thus presenting real opportunities for the future.

At the moment, the coffee shop industry is extremely competitive at the top and fragmented at the bottom. Starbucks, despite its recent struggles, continues to be the industry leader, with over 10,000 cafes around the world. Because of competition from fast food restaurants and convenience stores, coffee franchises, with their established brand identity, continue to be a reliable investment for those seeking to profit from this incredibly popular beverage.

While the global recession has forced many consumers to rethink their spending habits, Franchise Direct's research shows that America's love affair with coffee continues unabated. A quoted poll tracking coffee consumption found an increase in coffee drinking last year in the pivotal 25-39 demographic, as drinking habits remained level amongst 40-59 year olds last year. We can safely assume that Americans will still buy coffee even as they look to cut their personal budget.

With coffee production slated to reach record levels this year, the right coffee franchise has enormous potential for profit. The population of Italy, for instance, is five times smaller than America's, but the Italians sustain more coffee shops. A niche investment may be the ideal approach to fill untapped areas of the market. In line with the popularity of eco-friendly tastes, there has been an undoubted switch towards organic/fair trade coffee. Our report identifies this as a $1billion industry in itself.

Our study states that location is the most important thing to consider when purchasing a coffee franchise, with 75% of coffee business success pending on where it is situated. With that in mind, we advise prospective franchisees to consider van-based franchises or kiosk units, as they provide a cost-effective means of establishing a business. Beyond that, our study lists a number of other trends and factors prospective franchisees must consider before purchasing a coffee shop, such as ambience, marketing and staff. It is also worth noting that 65% of all coffee is consumed during breakfast hours.

Another reason to consider coffee franchises is the growing consensus among experts that coffee has a number of health benefits. Past perceptions that coffee presented health risks have been erased by authoritative research from universities like Harvard, UCLA and USC. In line with these studies, new polls of coffee drinkers show an acknowledgement of this new consensus.

People exploring franchises for sale will find that coffee franchises sell a product with broad public appeal that is seamlessly adapting to American consumer trends towards healthiness, social responsibility, and environmental sustainability.

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