Starbucks feeling the heat as more chains vie for US coffee drinkers

NEW YORK (AP) — Americans are drinking more coffee than they have in decades. But fewer of them are getting it from Starbucks.

The company that revolutionized the United States' coffee culture remains America's biggest player, with nearly 17,000 U.S. stores and plans to open hundreds more. But it's facing unprecedented competition, which will make it harder to win back the customers it already lost.

Starbucks’ share of spending at all U.S. coffee shops fell in 2024 and 2025; it now stands at 48%, down from 52% in 2023, according to Technomic, a food industry consulting firm. Dunkin ', a perennial rival that just opened its 10,000th U.S. store, gained market share in both of those years.

Starbucks has other challengers, like the fast-growing drive-thru chains 7 Brew, Scooter’s Coffee and Dutch Bros. Chinese chains like Luckin Coffee and Mixue are opening U.S. stores. High-end coffee shop Blue Bottle, which has 78 U.S. stores, has opened two more since the start of the year. Even McDonald’s and Taco Bell are bolstering their beverage offerings.

“People haven’t fallen out of love with Starbucks, but they’re now polyamorous in their coffee choices,” said Chris Kayes, chair of the management department in the George Washington University School of Business. “People are now experimenting with other coffees, and they’re seeing what’s out there.”

Americans love coffee. In both 2024 and 2025, an estimated 66% of Americans reported drinking coffee every day, up from 62% in 2020, according to the National Coffee Association, an industry trade group.

Coffee chains are racing to cash in on that demand. The number of chain coffee stores in the U.S. jumped 19% to more than 34,500 over the last six years, according to Technomic, a consulting firm that researches the foodservice industry.

Seattle-based Starbucks was a small, regional chain when former CEO Howard Schultz acquired it in 1987. Now, other small chains are seeing explosive growth. Nebraska-based Scooter’s Coffee had 200 locations in 2019; it now has more than 850. Arkansas-based 7 Brew, which had 14 locations in 2019, now has more than 600.

“There’s too much supply relative to demand,” said Neil Saunders, a managing director and retail analyst at consulting firm GlobalData Retail

Saunders said Starbucks' size is somewhat of a disadvantage, since it has less ability to grow sales by opening new locations.

“Honestly, they’re pretty saturated,” Saunders said. “They’re a very mature business.”

Starbucks is undaunted. At a conference for investors on Thursday, the company said an ongoing effort to improve service while making stores warmer and more welcoming was boosting U.S. store traffic. It plans to add 25,000 seats to its U.S. cafes by this fall.

“Growth doesn’t require us to become something new. It requires us to be exceptionally good at what we already are,” Starbucks Chief Operating Officer Mike Grams said.

Starbucks expects to open more than 575 new U.S. stores over the next three years. It developed a smaller-format store that is cheaper to build but still has indoor seating, drive-thru lanes and mobile pickup. The company said the reduced scale would allow Starbucks stores to operate in locations they couldn't before.

Starbucks is also adding new products, like updated pastries and snackable foods that are high in protein and fiber, to try to win back customers.

Lack of menu innovation is one reason Starbucks has struggled, especially among younger consumers who like novelty and will try new places to find it, Saunders said.

Arizona-based Dutch Bros, for example, added protein coffee drinks in January 2024, nearly two years before Starbucks did. Energy drinks 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; executives said Thursday that customizable energy drinks would appear on the Starbucks menu soon.

Dutch Bros, which is led by former Starbucks executive Christine Barone, has just over 1,000 shops in the U.S. and hopes to double that number by 2029. It's betting that customers want speed and convenience; nearly all of its stores are drive-thrus with walk-up windows.

Dutch Bros also focuses on value. In a recent meeting with investors, Barone pointed out that Dutch Bros’ medium drinks are 24 ounces; at Starbucks, a medium drink is 16 ounces.

Luckin, whose app brims with coupons and promotions, is also value-oriented. On a recent afternoon, one of its nine New York stores buzzed with customers picking up mobile orders. The tiny shop had no seating.

Xunyi Xie, who was visiting New York from his home in Delaware, said he stopped by to try a Velvet Latte because Luckin had a $1.99 drink promotion. Xie said he normally brews his own espresso, but if Luckin opened a store that was on his way to work, he would go there.

As for Starbucks? “I think it's overpriced,” Xie said.

In 2024, the average customer spent $9.34 at Starbucks, compared to $8.44 at Dutch Bros and $4.68 at Dunkin', according to an analysis by the investment research company Morningstar.

Starbucks didn't raise prices in its 2025 fiscal year and has vowed to be judicious about future increases. But Ari Felhandler, an equity analyst with Morningstar, said it would be a mistake for Starbucks to try to win over customers with discounts because competitors will always go lower.

“Keep your prices the same and try to justify them,” Felhandler said. He thinks Starbucks' store redesigns and new menu items will bring back traffic.

Grams, Starbucks' chief operating officer, said the company firmly believes its best way forward is not drive-thru-only stores or mobile pickup kiosks. It's building cafes with comfortable seating — the “soul of Starbucks,” as he put it — that also serve mobile, drive-thru and delivery customers. Customers sometimes want something convenient, and they sometimes want to dwell, he said.

“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.”

But Kayes, of George Washington University, wonders if that strategy will be enough to keep Starbucks on top, or if customers who want a cozy or premium experience have already moved on to independent coffee shops or upscale chains like Blue Bottle.

“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.”

Employees work in a Luckin Coffee store in New York, Friday, Jan. 30, 2026. (AP Photo/Richard Drew)

Pedestrians pass a Luckin Coffee store in New York, Friday, Jan. 30, 2026. (AP Photo/Richard Drew)

Signage displays in the window and a cup sits on the counter of a Luckin Coffee store in New York, Friday, Jan. 30, 2026. (AP Photo/Richard Drew)

A Ristretto model of future Starbucks stores is displayed during the Starbucks Investor Day event, in New York, Thursday, Jan. 29, 2026. (AP Photo/Richard Drew)

Executive Vice President and Chief Operating Officer Mike Grams speaks during the Starbucks Investor Day event, with an image of the company's Mastrena 3 espresso machine, in New York, Thursday, Jan. 29, 2026. (AP Photo/Richard Drew)

JAKARTA, Indonesia (AP) — Indonesian authorities arrested 72 people suspected of starting some of the forest and peatland fires as huge blazes in central and west Indonesia triggered choking haze.

Indonesia has been battling fires driven by an intensifying El Niño pattern and a prolonged dry season, generating dense smoke that crossed into Malaysia, according to Indonesia’s National Disaster Management Agency, or BNPB.

Fires are a regular problem in Indonesia that strain relations with neighboring countries.

Plantation owners and traditional farmers often start fires to clear land for farming, said Mohammad Irhamni, director of special crimes at the National Police’s Criminal Investigation Agency.

The arson suspects were being investigated in connection with 89 forest and land fire cases across five provinces on the island of Borneo and four on Sumatra, Irhamni said.

He said most of the suspects were accused of deliberately burning land to clear areas for plantations at lower cost. Investigators were still tracing financial records to determine whether companies financed or ordered the land clearing, signaling the probe could expand beyond those arrested.

“We will not stop at the perpetrators on the ground,” Irhami said in a news conference in the capital, Jakarta, on Sunday. “We will determine who benefited from these activities and who was ultimately behind them.”

The suspects face charges that carry penalties ranging from hefty fines to prison terms of up to 15 years, he said.

Blazes on Sunday blanketed parts of Borneo, the world’s third-largest island shared by Indonesia, Malaysia and Brunei. Indonesia administers about three-quarters of the island, where the country’s Environment Ministry recorded more than 3,700 hot spots on Sunday.

BNPB chief Suharyanto said fire activity had increased in West, Central and South Kalimantan provinces on Borneo, where many blazes worsen due to peatlands, prolonging haze in several areas.

“Land that appears extinguished on the surface may still contain embers underneath, so sufficient rainfall is crucial to rewet the peat and fully suppress the fires,” said Suharyanto, who, like many Indonesians, uses a single name.

The western island of South Sumatra also battled blazes, with more than 1,700 hot spots detected on Sunday, causing choked haze and reducing visibility to only 10 meters (33 feet) in some areas, the ministry said.

Cloud-seeding operations resumed over Kalimantan on Sunday, deploying 30 helicopters for water-bombing and aerial patrol missions over Kalimantan and another 22 helicopters covering Sumatra.

Meanwhile, Malaysia has suffered severe smoke from the blazes, with its eastern state of Sarawak among the hardest hit. One district recorded “very unhealthy” air quality Friday, while eight others posted unhealthy readings, prompting the closure of nearly 600 schools and affecting about 200,000 students, the Sarawak government said.

A man is silhouetted against the haze from wildfires that blankets Musi River in Palembang, South Sumatra, Indonesia, Sunday, Aug. 23, 2026. (AP Photo/Muhammad Fajri)

People walk along the Ampera Bridge as haze from wildfires blankets the city of Palembang, in South Sumatra, Indonesia, Sunday, Aug. 23, 2026. (AP Photo/Muhammad Fajri)

In this aerial photo released by Indonesia's National Disaster Mitigation Agency (BNPB) on Friday, Aug. 21, 2026, smoke billows as a wildfire rages through a peatland forest in Bulungan, North Kalimantan, Indonesia. (BNPB via AP)

A boat cruises on the Kapuas River as haze from wildfires blankets the city of Pontianak, West Kalimantan, Indonesia, Friday, Aug. 21, 2026. (AP Photo/Stefanus Taman)

Motorists ride on a road as haze from wildfires blankets the city of Pontianak, West Kalimantan, Indonesia, Friday, Aug. 21, 2026. (AP Photo/Stefanus Taman)

In this aerial photo released by Indonesia's National Disaster Mitigation Agency (BNPB) on Friday, Aug. 21, 2026, smoke billows as a wildfire rages through a peatland forest in Bulungan, North Kalimantan, Indonesia. (BNPB via AP)