If you live in or visit a big city anywhere in the world, chances are you will be spoiled for choice when it comes to finding a specialty coffee shop. Over the last two decades, we have seen a proliferation of cafés and roasters worldwide as international markets have embraced third wave coffee culture.
In capital cities, this can mean thousands of options to decide between, including larger chains and independent outlets. For consumers, endless choice can seem appealing. But for café operators, an increasingly competitive market can be difficult to navigate.
To find out whether there is such a thing as “too many” coffee shops in bigger cities, I spoke to Jonathan Rubinstein, founder and CEO of Joe Coffee Company in New York City.
You may also like our article on whether offline coffee shops are a dream or a reality.
Bigger cities inevitably means more coffee shops
Given their higher populations and larger urban areas, it’s no surprise that bigger cities attract more coffee business owners. Even since the early coffee houses of the 1600s, cafés have thrived creating a sociable environment to bring in regular customers. Inevitably, bigger cities, which tend to house a higher proportion of working professionals with more disposable income, are hotspots to capitalise on this and generate more revenue.
In fact, a widely shared blog post shows that a high density of coffee shops can predict if an area of a city is “up and coming” – increasing the chances of business success. This, however, is also a marker of gentrification, which brings with it a number of complex problems.
So which cities are home to the most coffee shops?
Shanghai, China is believed to have the highest number of cafés in the world. A 2023 report stated that the world’s third most populous city has 8,530 coffee outlets, an increase of 673 on the year prior and accounting for 6.4% of the national total.
Tokyo, Japan has the highest population of any city in the world, and reportedly is home to over 3,826 cafés as of 2021. Given the country’s sophisticated coffee culture, this number is likely to have increased over the last three years.
The number of specialty coffee shops in London, UK has risen by some 700% over the past decade, with the capital city believed to include over 3,700 outlets (including larger chains).
New York City has the highest number of cafés in the US, with an estimated 1,571 outlets.
Other prominent cities which are home to a higher number of coffee shops include Melbourne (2,835), Berlin (1,009), Los Angeles (912), and Johannesburg (612).
Is coffee shop density a better measurement?
It’s difficult to accurately calculate the amount of coffee shops in a city, especially when larger chains often open numerous locations on a weekly basis. Café density – the number of coffee shops divided by the total area of a city – is perhaps a more useful metric to use.
In this case, London’s capita-per-café is around 2,300, similar to Shanghai’s ratio. Meanwhile, a Tokyo resident shares their coffee shop with over 9,000 people – making the city less densely packed.
This also means that some of the UK’s smaller cities are even more densely populated with cafés than London. Manchester, for example, has a capita-per-café of 1,356, while Edinburgh’s ratio is even lower at 911.
In theory, Brighton would be considered the “coffee shop capital” of the UK with one coffee shop for every 800 people – almost three times more cafés per capita than London.
But can there be “too many” coffee shops?
On the surface, a few thousand people per coffee shop doesn’t seem to pose too many challenges. In most big cities, market competition encourages strong economic growth. Moreover, a high concentration of cafés often means that coffee quality improves across the board as operators push to stand out.
However, margins can be fine. Too much competition can force operators with fewer resources and less capital out of the market, which would inevitably impact smaller businesses more. High street retail in particular is notoriously difficult to navigate, with larger chains better able to manage rental, staff, and other operational costs.
In the years following the pandemic, coffee businesses have grappled with rising inflation, record food and energy costs, and volatile coffee prices. These interconnected challenges have forced coffee shops and roasters to rethink their business strategies to maintain revenue growth. But increasing competition could make it even more difficult to adapt.
There have also been notable examples of over-saturation in different coffee markets, especially for bigger chains. In 2008, Starbucks closed an estimated 600 locations that weren’t meeting sales targets, simply because there were too many stores in the local areas.
Ultimately, there is such a thing as “too many” coffee shops, but it isn’t a clear red line.
Encouraging healthy competition
Jonathan Rubinstein is the founder and CEO of the iconic Joe Coffee Company in New York City. The company launched in 2001 and currently operates 24 locations in the city.
He explains how the NYC coffee shop market has grown since then.
“For the first ten years of the third wave movement, growth was slow, but with the launch of great companies like Café Grumpy and Gimme Coffee,” he says. “An explosion happened around 2011 when key industry players like Blue Bottle and Stumptown came to New York City. Suddenly, we were one of the busiest, and in my opinion, most innovative coffee cities in the US.
However, Jonathan points out that growth doesn’t just equate to opening more locations.
“Until about 2019, we were considered a small chain because we would open three to four new locations a year,” he adds. “But it’s not just about the number of cafés. It’s less capital-intensive to invest in other areas of your business, and you’re also able to expand the reach of your brand to people beyond a coffee shop.”
Developing a strong e-commerce presence and a vertically integrated supply chain, for example, can also contribute to the wider development of a local coffee scene.
Avoiding oversaturation
“New York City always has the capacity for more coffee shops, but I don’t necessarily think we need them,” Jonathan says. “When you have more options at different quality and price levels that also offer differentiated experiences to customers, however, the diversity of coffee obviously improves.”
Although he acknowledges the potential pitfalls of market saturation, such as lower footfall and revenue decline, Jonathan believes the New York coffee shop scene encourages healthy competition where well-managed businesses can thrive.
“I think many coffee shop owners in NYC will tell you that they have fewer daily transactions now that there’s more outlets,” he adds. “But to me, it doesn’t seem like any of the more established brands are closing, so something must be working well.”
Every café owner operating in a big city would welcome a bigger share of the market. But for the average consumer, having more options to choose from is generally preferred. Pre-existing coffee culture, property rates, and local consumer habits all influence trends in these markets.
In the end, it comes down to your own perspective. If you own or work at a coffee business that is innovating and expanding in a big city, market competition is likely to keep you on your toes. But if your business is struggling to compete in a crowded area, fewer coffee shops will work in your favour.
Enjoyed this? Then read our article on the differences between US West Coast and East Coast coffee culture.
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