Beverages

September 11, 2023

Photo 44545712 © Todd Lipsky | Dreamstime.com Recent data from Kastle Systems, which tracks keycard swipes across 2,600 buildings, set office occupancy at 49% of pre-pandemic levels in the top 10 most populous U.S. cities. This statistic is undoubtedly having an impact on sales in the coffee service industry, which are significantly lower than pre-pandemic numbers. In perfect reflection of the in-office population, Automatic Merchandiser’s 2022 State of the OCS Industry Report showed sales that are still 50% below peak levels. The annual operator survey showed revenue increasing 20% from 2021 to $2.49 billion in 2022 – well below 2019 sales of $5.97 billion. With only half of workers returning to the office so far and with returning to the office usually meaning a hybrid model of only three days per week, coffee service operators are not seeing a quick recovery. Despite these challenges, revenue is up in the OCS channel, as operators are taking steps to increase prices and embrace revenue generating opportunities, which should have a positive long-term impact. Facing the challenge of inflation, transportation costs, product costs, high green coffee prices and increasing labor costs, the OCS Industry Report revealed that 50% of the operators relied on raising prices, while 45% adjusted their product mix. That change in product mix meant adding additional services (37%), adding pantry service (34%), micro markets (24%) and water service (31%). Based on the report, these additional services might have contributed more to the 20% industry revenue increase than workers returning to breakroom offices.