The American coffee landscape is shifting, and the giant that once defined it is watching its grip loosen. While more Americans are drinking coffee than at any point in recent memory, the Seattle-based chain that taught the nation to order a venti half-caf macchiato is seeing its customers spread their loyalty around.
The numbers tell a story that would have seemed impossible just a few years ago. Starbucks' share of spending at U.S. coffee shops has dropped from 52% in 2023 to 48% in 2025, according to Technomic, a food industry consulting firm. Meanwhile, competitors are multiplying faster than espresso shots on a Monday morning.
Nearly 17,000 Starbucks locations dot the American landscape, with plans for hundreds more on the drawing board. But size alone doesn't guarantee success anymore. The company faces challenges from every direction: long-time rival Dunkin' just celebrated opening its 10,000th U.S. store while gaining market share two years running. Upstart drive-thru chains like 7 Brew, Scooter's Coffee, and Dutch Bros are expanding at breakneck speed. Chinese chains including Luckin Coffee and Mixue are planting their flags in American cities. Even McDonald's and Taco Bell are getting serious about beverages.
Chris Kayes, chair of the management department at George Washington University School of Business, put it bluntly: "People haven't fallen out of love with Starbucks, but they're now polyamorous in their coffee choices. People are now experimenting with other coffees, and they're seeing what's out there."
A Nation Running on Caffeine
Americans are more caffeinated than they've been in decades. About 66% of Americans reported drinking coffee daily in both 2024 and 2025, up from 62% in 2020, according to the National Coffee Association. That's a lot of potential customers, and everyone wants a piece of the action.
The proof is in the proliferation. Chain coffee stores in the U.S. jumped 19% to more than 34,500 over the last six years, according to Technomic. The growth stories are remarkable. Scooter's Coffee, based in Nebraska, operated 200 locations in 2019. Today that number exceeds 850. Arkansas-based 7 Brew had just 14 locations in 2019 and now boasts more than 600.
This explosion creates a fundamental problem for the market leader. Neil Saunders, a managing director and retail analyst at consulting firm GlobalData Retail, sees oversaturation ahead. "There's too much supply relative to demand," he said.
For Starbucks, the mathematics of growth get complicated. When Howard Schultz acquired the small regional chain in 1987, expansion meant opportunity. Now, with stores seemingly on every corner in major markets, opening new locations offers diminishing returns.
"Honestly, they're pretty saturated," Saunders said. "They're a very mature business."
Fighting Back with Fundamentals
Starbucks isn't rolling over. At a Thursday investor conference, the company outlined an aggressive plan to remind customers why they fell for the brand in the first place. An ongoing initiative to improve service while creating more inviting spaces is already boosting U.S. store traffic, executives reported. The company plans to add 25,000 seats to its U.S. cafes by fall.
Chief Operating Officer Mike Grams delivered a message of confidence: "Growth doesn't require us to become something new. It requires us to be exceptionally good at what we already are."
The expansion strategy reflects both ambition and adaptation. More than 575 new U.S. stores are planned over the next three years. A newly developed smaller-format store costs less to build while still offering indoor seating, drive-thru lanes, and mobile pickup. The reduced scale opens possibilities for locations that couldn't accommodate traditional Starbucks stores.
The menu is getting attention too. Updated pastries and snackable foods high in protein and fiber represent an attempt to reclaim customers who drifted away. But here's where the company may have stumbled—moving too slowly on innovation while competitors raced ahead.
The Innovation Gap
Menu innovation, or the lack of it, has become a particular weakness, especially among younger consumers hungry for novelty. They'll go somewhere new to find it, and competitors are serving up what they want.
Dutch Bros, the Arizona-based chain, added protein coffee drinks in January 2024, nearly two years before Starbucks got around to it. Energy drinks now make up 25% of Dutch Bros' business, almost 14 years after the chain introduced them. Starbucks offered iced energy drinks for a limited time in 2024. Only now, executives said Thursday, will customizable energy drinks join the regular menu.
Dutch Bros, led by former Starbucks executive Christine Barone, operates just over 1,000 shops in the U.S. and aims to double that by 2029. The strategy centers on speed and convenience—nearly all locations are drive-thrus with walk-up windows. No lingering over laptops here.
Value matters too. Barone pointed out in a recent investor meeting that Dutch Bros' medium drinks come in at 24 ounces. At Starbucks, a medium is 16 ounces. Simple math makes an impression on wallets.
The Price of a Cup
Price has become a sticking point. The average customer spent $9.34 at Starbucks in 2024, compared to $8.44 at Dutch Bros and $4.68 at Dunkin', according to Morningstar investment research.
Luckin Coffee leans hard into value. The Chinese chain's app overflows with coupons and promotions. On a recent afternoon, one of Luckin's nine New York stores hummed with customers grabbing mobile orders. The tiny shop had no seating—just quick transactions.
Xunyi Xie, visiting New York from Delaware, stopped by to try a Velvet Latte because of a $1.99 drink promotion. He normally brews his own espresso at home, but said if Luckin opened a store on his commute route, he'd become a regular.
His take on Starbucks? "I think it's overpriced."
Starbucks didn't raise prices in its 2025 fiscal year and has promised restraint on future increases. But Ari Felhandler, an equity analyst with Morningstar, cautioned against chasing competitors down the discount rabbit hole. Someone will always go lower.
"Keep your prices the same and try to justify them," Felhandler advised. He believes the store redesigns and new menu items will bring traffic back.
Betting on the Experience
Grams, Starbucks' chief operating officer, made clear the company won't abandon what made it famous. Forget drive-thru-only stores or mobile pickup kiosks. Starbucks is building cafes with comfortable seating—what he called the "soul of Starbucks"—while also serving mobile, drive-thru, and delivery customers. Sometimes people want convenience. Sometimes they want to settle in.
"There's always going to be competition. We're aware of it, we keep an eye on it for sure, but we don't try to be them," Grams told The Associated Press. "We offer something that most people don't, which is a legitimate space to sit down, enjoy and use it for a variety of different reasons."
It's a reasonable strategy, but questions remain. Kayes from George Washington University wonders whether customers seeking a cozy or premium experience have already moved to independent coffee shops or upscale chains like Blue Bottle, which operates 78 U.S. stores and opened two more since the year began.
"In some ways, I think they are a victim of their own success," Kayes said. "I do think that the aura of Starbucks as being something special and unique and exciting isn't there anymore."
The company that revolutionized American coffee culture now finds itself in unfamiliar territory—defending rather than defining. With Americans drinking more coffee than ever, there's plenty of business to go around. The question is whether Starbucks can convince customers that what it offers is worth the premium, or whether the once-special experience has become just another commodity in an increasingly crowded market.
The answer will determine whether Starbucks remains the dominant force in American coffee or becomes just another chain competing for attention in the morning rush.
