Coffee, other product sales chilled by summer heat, inflation worries
Naz Aminuddin, 20, of Bellerose, Queens, left, and Rivers Cafe USA owner Abby Rivera, 35, in the Floral Park shop. Credit: Rick Kopstein
Rivers Café USA is struggling to keep its door open.
This summer was the Floral Park coffee shop’s most difficult season since it opened in July 2020.
"I don’t want to close this shop. It’s like my baby," said Abby Rivera, who co-owns the shop with her husband, Gil Lopez. The increase in cold coffee sales has not been enough to offset the decline, Rivera said.
The shop was already being hard hit by inflation in the costs it pays for wholesale coffee, freight and other needs, said Rivera, who said most of the coffee is made from beans from Rivera's family farms in El Salvador.
While some providers of goods and services, such as air conditioning, had unusually high boosts in demand during the summer heat, other businesses ran into challenges that they still haven’t fully recovered from, despite the temperature drop in recent weeks.
This summer’s heat cut into sales of hot coffee, landscaping services, visits to amusement parks and other goods and services.
Weather-driven demand for hot coffee in June in the metro area was down 5% compared to the same month a year earlier, which was the biggest decline for June in at least 10 years, according to Planalytics, a Berwyn, Pennsylvania-based company that quantifies the economic impacts of weather. Meanwhile, weather-driven demand for cold coffee increased 6%, the biggest increase for June in 10 years, the company said.
Coffee shops that didn’t have a variety of cold coffees or drive-thrus might be more challenged to offset the losses.
June temperatures averaged 3 degrees above normal on Long Island, the Island's warmest June on record and the first June not to record a temperature below 55 degrees, said David B. Radell, science and operations officer at the National Weather Service in Upton. (Records date back to 1963.)
July’s average temperature as of Monday was about 1.3 degrees above normal, he said.
Some have benefited from the summer heat.
Weather-driven sales increased 70% for air conditioners and 32% for pool chemicals year-over-year in the second week of July, according to Planalytics.
At Stew Leonard’s eight supermarkets, two of which are on Long Island, iced coffee sales are the highest in three years, while sister chain Stew Leonard's Wines & Spirits is selling record numbers of prepared cocktails, said Meghan Bell, spokeswoman for the Norwalk, Connecticut-based chains.
"Water is matching volume sold during the summer of 2021 [COVID-19] pandemic hoarding," she said.
This summer, Chaikin Ultimate Pools in Deer Park has been receiving more calls for twice-a-week maintenance than it has in its 35-year history, said Kyle Chaikin, co-president of the pool installation, renovation and maintenance business.
Part of the reason is that high heat burns more chlorine, he said.
"We have to pay attention to the water chemical levels more frequently when it’s this hot, chlorine being one part of that," said Chaikin, who is also president of Northeast Spa & Pool Association.
Cold coffee drinks typically account for 65% of sales at Gregorys Coffee shops, but that rose to 70% this summer, which was helped by the chain introducing a line of blended cold drinks a few months ago, said Gregory Zamfotis, founder of the Manhattan-based chain of 46 coffee shops, including three on Long Island.
The cold coffee drinks, which are more expensive than hot drinks, have helped boost overall sales by 5% compared with last summer, he said.
The issue is not just heat when it comes to coffee.
Coffee sales at coffee shops and grocery stores have fallen as inflation-worried customers cut back on discretionary spending.
Some analysts cite other reasons.
Coffee sales are down because they have normalized since the pandemic surge, according to Darren Seifer, industry adviser in Consumer Goods & Foodservice Insights at Circana, a Chicago-based market research firm.
Trips for coffee at limited-service restaurants, including coffee shops, fell 3.4% from April to June this year compared to the same period in 2023, while the number of containers of coffee sold in supermarkets and other stores to be made at home fell 5.5%, according to Numerator, a Chicago-based market research firm.
The largest coffee chain in the world, Starbucks, saw its global sales at stores open at least one year decline for a second consecutive quarter, the Seattle-based chain said Tuesday. Same-store sales fell 3%, driven by a 5% decline in transactions, in Starbucks’ fiscal third quarter, which ended June 30.
Extremely hot weather can lead to one of four outcomes for businesses: lost sales; a net increase in sales, especially for things like bottled water, ice and pool chemicals; delayed sales; or sales pulled forward, said Evan Gold, executive vice president of global partnerships and alliances at Planalytics.
It even affects worker productivity when heat causes public transit issues or spurs workers to stay home regardless of how they commute to work, he said.
"Ultimately, it is a negative on the economy, which means people might work from home or take the day off because of delays. They won’t make that time up the next day. This is a net negative impact that is not made up," Gold said.
Delayed sales mean consumers will make purchases closer to when they need them, as with shopping for back-to-school clothes, he said.
"What’s actually changed is back-to-school season is being promoted earlier, but people’s behavior is buying closer to when the actual school year starts," he said.
The effects of extreme heat related to climate change will reduce the U.S.’ gross domestic product by an estimated 1%, or $288 billion, this year through declines in tourism, lost productivity, business closings, reductions in the workforce, increased health care costs, potential power outages and other expenses, said Chris Lafakis, director of climate and energy economics for Manhattan-based Moody’s Analytics.
That GDP reduction is projected to increase to 3.5% by 2050, he said.
"That’s the worst-case scenario, where no new environmental policies are adopted," he said.
Rivers Café USA is struggling to keep its door open.
This summer was the Floral Park coffee shop’s most difficult season since it opened in July 2020.
"I don’t want to close this shop. It’s like my baby," said Abby Rivera, who co-owns the shop with her husband, Gil Lopez. The increase in cold coffee sales has not been enough to offset the decline, Rivera said.
The shop was already being hard hit by inflation in the costs it pays for wholesale coffee, freight and other needs, said Rivera, who said most of the coffee is made from beans from Rivera's family farms in El Salvador.
WHAT TO KNOW
- This summer’s heat cut into sales of hot coffee, landscaping services, visits to amusement parks and other goods and services.
- June temperatures averaged 3 degrees above normal on Long Island, the Island's warmest June on record and the first June not to record a temperature below 55 degrees.
- Weather-driven sales increased 70% for air conditioners and 32% for pool chemicals year-over-year in the second week of July.
While some providers of goods and services, such as air conditioning, had unusually high boosts in demand during the summer heat, other businesses ran into challenges that they still haven’t fully recovered from, despite the temperature drop in recent weeks.
This summer’s heat cut into sales of hot coffee, landscaping services, visits to amusement parks and other goods and services.
Weather-driven demand for hot coffee in June in the metro area was down 5% compared to the same month a year earlier, which was the biggest decline for June in at least 10 years, according to Planalytics, a Berwyn, Pennsylvania-based company that quantifies the economic impacts of weather. Meanwhile, weather-driven demand for cold coffee increased 6%, the biggest increase for June in 10 years, the company said.
Coffee shops that didn’t have a variety of cold coffees or drive-thrus might be more challenged to offset the losses.
June temperatures averaged 3 degrees above normal on Long Island, the Island's warmest June on record and the first June not to record a temperature below 55 degrees, said David B. Radell, science and operations officer at the National Weather Service in Upton. (Records date back to 1963.)
July’s average temperature as of Monday was about 1.3 degrees above normal, he said.
Some have benefited from the summer heat.
Weather-driven sales increased 70% for air conditioners and 32% for pool chemicals year-over-year in the second week of July, according to Planalytics.
At Stew Leonard’s eight supermarkets, two of which are on Long Island, iced coffee sales are the highest in three years, while sister chain Stew Leonard's Wines & Spirits is selling record numbers of prepared cocktails, said Meghan Bell, spokeswoman for the Norwalk, Connecticut-based chains.
"Water is matching volume sold during the summer of 2021 [COVID-19] pandemic hoarding," she said.
This summer, Chaikin Ultimate Pools in Deer Park has been receiving more calls for twice-a-week maintenance than it has in its 35-year history, said Kyle Chaikin, co-president of the pool installation, renovation and maintenance business.
Part of the reason is that high heat burns more chlorine, he said.
"We have to pay attention to the water chemical levels more frequently when it’s this hot, chlorine being one part of that," said Chaikin, who is also president of Northeast Spa & Pool Association.
Cold coffee drinks typically account for 65% of sales at Gregorys Coffee shops, but that rose to 70% this summer, which was helped by the chain introducing a line of blended cold drinks a few months ago, said Gregory Zamfotis, founder of the Manhattan-based chain of 46 coffee shops, including three on Long Island.
Clinton Hein, 58, of Miller Place, picks up his order from Jana Elzarkawy, 17, of Huntington, at Gregorys Coffee shop in Melville. This summer's hot weather has affected sales of coffee more this year. Credit: Rick Kopstein
The cold coffee drinks, which are more expensive than hot drinks, have helped boost overall sales by 5% compared with last summer, he said.
More than heat
The issue is not just heat when it comes to coffee.
Coffee sales at coffee shops and grocery stores have fallen as inflation-worried customers cut back on discretionary spending.
Some analysts cite other reasons.
Coffee sales are down because they have normalized since the pandemic surge, according to Darren Seifer, industry adviser in Consumer Goods & Foodservice Insights at Circana, a Chicago-based market research firm.
Trips for coffee at limited-service restaurants, including coffee shops, fell 3.4% from April to June this year compared to the same period in 2023, while the number of containers of coffee sold in supermarkets and other stores to be made at home fell 5.5%, according to Numerator, a Chicago-based market research firm.
The largest coffee chain in the world, Starbucks, saw its global sales at stores open at least one year decline for a second consecutive quarter, the Seattle-based chain said Tuesday. Same-store sales fell 3%, driven by a 5% decline in transactions, in Starbucks’ fiscal third quarter, which ended June 30.
Extremely hot weather can lead to one of four outcomes for businesses: lost sales; a net increase in sales, especially for things like bottled water, ice and pool chemicals; delayed sales; or sales pulled forward, said Evan Gold, executive vice president of global partnerships and alliances at Planalytics.
It even affects worker productivity when heat causes public transit issues or spurs workers to stay home regardless of how they commute to work, he said.
"Ultimately, it is a negative on the economy, which means people might work from home or take the day off because of delays. They won’t make that time up the next day. This is a net negative impact that is not made up," Gold said.
Delayed sales mean consumers will make purchases closer to when they need them, as with shopping for back-to-school clothes, he said.
"What’s actually changed is back-to-school season is being promoted earlier, but people’s behavior is buying closer to when the actual school year starts," he said.
The effects of extreme heat related to climate change will reduce the U.S.’ gross domestic product by an estimated 1%, or $288 billion, this year through declines in tourism, lost productivity, business closings, reductions in the workforce, increased health care costs, potential power outages and other expenses, said Chris Lafakis, director of climate and energy economics for Manhattan-based Moody’s Analytics.
That GDP reduction is projected to increase to 3.5% by 2050, he said.
"That’s the worst-case scenario, where no new environmental policies are adopted," he said.
Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.
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