Rising coffee supply prices, the increasing cost of living, a generational change in consumption habits, and the blurring of lines between consumer categories has made the battle for your morning coffee a hot space to be in. Or, as data suggests – maybe a colder place to be in as Generation Z lean toward colder café style drinks.
A review of consumer expenditure in cafes and bakeries reveals that the average spend per person has increased by 28% since 2021; Australians spent $412 per person in 2024, compared to $321 in 2021.
Fonto reviewed daily transaction data shared by members, then surveyed those consumers who had purchased cafe style drinks at cafes and at Quick Service Restaurants. Results showed a clear generational gap emerging as Generation Z (aged 18+) preferred cold drinks such as iced coffee, smoothies, and frappes over hot drinks. Cold drinks were included in 56% of orders by Gen Z, compared to only 52% of orders with hot drinks (Note: the data accounts for orders that include multiple drinks). Conversely, Baby Boomers ordered hot drinks 86% of the time and cold drinks 21%.
For coffee servers and suppliers, considering the changing preferences of Generation Z is key to growth. They represented the fastest growing generational segment, with a 20% increase in spending year on year. Millennials, who included cold drinks on 35% of orders, additionally grew their total spend by 12% year on year.
An additional dynamic has been the growing attention paid by QSR brands to taking share of morning coffee runs. Along with broader inflationary and other economic pressures, being able to grab a cuppa (or a frappe) from your favourite QSR brand on the way to work has helped contribute to an increase in spend per person in the category of almost 20% since 2021. Guzman y Gomez in fact recently reported that breakfast sales had increased 19%, contributing to a significant portion of their overall growth. Conversely, the recent closure of the Michel’s Patisserie brand in Australia reinforced the significant challenges facing specialist retail and coffee operators as both consumer behaviour and preferences shift.
