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Coffee Competition in Minnesota

Written by Stefanie Meyer, Sr. Vice President

There's no doubt that Minnesotans love their coffee; they need something to keep them awake and warm for six months out of the year.  Minnesota has plenty of options when it comes to satisfying your caffeine addiction.  However, as a non-coffee drinker, I know these coffee businesses are important to new developments and the individual communities. Recently, Minnesota has had a few new coffee concepts entering the market along with national chains introducing new store concepts to try and keep their competitive edge.

The coffee shop can be as important as the local tavern is for warming our souls and providing a place in our neighborhoods where people know your name AND your drink.   These coffee houses are striving and competing to bring an experience with a sense of community to win over the loyalty of the Minnesotan.  Starbucks has expanded its menu by acquiring Teavana and La Boulange bakery chain to offer additional food items of higher quality, as well as tea offerings.  Caribou Coffee is now cobranding with Einstein Bagels and Argo Tea with a similar goal in mind.  Both concepts feel it is necessary to add these additional choices to continue to grow their customer base.  

Currently in Minnesota, Caribou Coffee has 163 store locations and Starbucks has 71 (and counting). Some may ask: is there really room for more coffee shops? The answer is yes! In Caribou Coffee's hometown, even Starbucks, the national darling, has to work aggressively to compete for new locations.  With Tim Hortons and Dunkin Donuts coming to the market, landlords have a few new faces to choose from.  Don't forget Dunn Brothers, Spyhouse and a few other local chains to add to the mix. These days it comes down to who will pay the most rent or, if the developer is planning to sell the property, who has the best credit.  To secure high profile sites, these concepts, along with other retailers, are having to step up to unprecedented rent levels and show more flexibility in their lease terms than preferred.  The astute coffee companies will do the right deals in the right markets.  Others might just do deals to meet store count expectations. 

Mid-America Real Estate - Minnesota is proud to work with Starbucks on their Minnesota expansion, and we will continue to track the flurry of activity in the coffee market.     

Coffee

Stefanie Meyer
| Sr. Vice President – Principal
Mid-America Real Estate – Minnesota, LLC
5353 Wayzata Boulevard, Suite 650 | Minneapolis, MN 55416
Direct: 952.563.6677 | Fax: 952.563.6633 | Mobile: 612.961.5412
smeyer@midamericagrp.com | www.midamericagrp.com

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