Coffee is the king of the hot dispensed beverages category, which also consists of cappuccino and specialty coffee, refills, hot chocolate, other hot dispensed beverages, coffee club mugs and hot tea. Together, these beverages form the third-largest c-store category behind prepared food and cold dispensed beverages. Last year, hot dispensed beverages generated 8.4% of c-store foodservice sales, a slight decrease from 8.5% in 2023, according to the NACS State of the Industry Report® of 2024 Data.

“The gross margin percentage increased very slightly from 63.53% to 63.87%,” Emma Tainter, research manager at NACS, said. “Sales also increased slightly from $6,207 to $6,353, while gross profits increased from $3,944 to $4,057. Sales grew by 2.3%, but that was not enough to beat inflation.” NielsenIQ (NIQ) data confirms that hot coffee is slowing down, with an 8.8% unit decline year over year as July. 

The price of coffee beans is another challenge. Weather issues in 2023 caused coffee crop failures. In November, the cost of wholesale coffee beans jumped 30%, and the industry is still recovering.

All that said, coffee is still a beloved American drink. Over the past five years, consumption of specialty coffee has increased nearly 18% (consumed by 46% of American adults during the past day as of January 2025, compared to 39% in 2020). Past-day consumption of non-espresso-based beverages (frozen-blended coffees, cold brew and nitro) shot up almost 42% between 2020 and 2025. Consumption of traditional coffee held steady over that same period (consumed by 42% during the past day as of January 2025 as compared to 43% in 2020), reported the NCA, which also notes that coffee is 8% of the entire U.S. foodservice sector.

Customers continue to turn to c-stores for the coffee fix. Cumberland Farms and the eight other EG America c-store brands recently sold 99-cent cups of coffee to loyalty members at select stores. 

“At Cumberland Farms, we prioritize offering value and convenience to our guests,” said Shauna Seidenberg, category manager for dispensed beverage at EG America. “Offering 99-cent coffee to rewards members is a way to deliver value while also showing appreciation to our most loyal guests. While rising coffee costs are a factor industrywide, we understand the importance of our relationship with our guests. We want them to know they can rely on us for a great cup of coffee at a great value.” The promotion was so well received that EG America extended the offer.

Mandatory Beverage Bar

According to the National Coffee Association (NCA), 77% of consumers want to customize a c-store beverage and they want it to be easy. “This shift is driven by a desire for variety, personalization and café-style indulgence that extends beyond the morning daypart,” said Jason Worby, sales vice president, coffee, at Keurig Dr Pepper.

That’s why c-stores need well-stocked beverage bars that encourage customization and creativity, said Art Lopez, vice president of marketing at Finlays Solutions, which creates proprietary beverage flavors and additives. 

“It’s essential to treat it as a strategic priority,” Lopez said. “That means designing a dedicated, visually compelling area tailored to the customer experience and supported by strong, consistent signage. Staff engagement, live demos, organized traffic flow and sampling are powerful tools to draw attention and build habits. When done well, it becomes a destination within the store and a key differentiator.”

“Adding inspiration, such as recipes and ingredients like dairy alternatives, unique flavored syrups, rotating seasonal flavors and toppings to the coffee bar helps fuel the beverage customization customers crave,” said Worby.

“The consumer wants to be able to play,” agreed Jennie Jones, senior vice president convenience and retail at Seb Professional. 

Cold foam toppings are “a huge trend in cold coffee now,” said Kristen Hjelm, senior director of business development at Bunn-O-Matic Corporation. “There is a lot of innovation on the West Coast, such as a crème brûlée latte with a crispy sweet topping or a cherry cold foam chai with cherry sprinkles on top. For convenience stores aiming to compete with coffee shops, it’s important to offer these options.”

Spencer Turer, vice president of Coffee Enterprises, urges retailers to stay current on new coffee add-ons. At a recent specialty coffee expo, he sampled a plant-based milk made from corn. Produced by Maizly, the milk is dairy and gluten free. “It’s perfect for baking or adding to coffee, a good source of calcium and vitamins, and it actually tastes good,” Turer said. “It has a sweet tinge to it.”

Retailers should regularly review their beverage bar set up, advised Vicky Jones, director of contracts at Brisk Coffee Roasters. “They should ask themselves: Can customers personalize their drinks? Is the setup clean, fast and easy to navigate?” she said.

Jones praised a store she visited recently that struck the right mix of options and simplicity. “The merchandising is phenomenal. The signage is phenomenal. You walk in the door and you see a sign. It’s simple, but the consumer sees that this retailer is in the beverage business.”

Good for You

A survey by the American Heart Association and American Diabetes Association found that three-quarters of Gen Z adults (ages 18 to 23) worry about possible ill health, a higher percentage than other generations, including Boomers. Fortunately, drinking java is healthy in moderation, which the FDA defines as 400 milligrams of caffeine a day or about two or three 12-ounce cups of coffee. 

In addition, half of Gen Z adults consider “high protein” a dietary essential, reported Morning Consult, a consumer insights platform. Other U.S. adults do too, but Gen Z places a premium on protein’s benefits. In response, some retailers are enhancing their coffee offering with protein add-ons.

In June, Starbucks announced that five U.S. stores are testing a banana-
flavored cold foam topping with 15 grams of protein. Scooter’s Coffee sells protein-enhanced shakes and will top coffee with vanilla protein cold foam upon request. Dutch Bros has a protein coffee menu, including a protein latte, vanilla protein latte, Hopscotch protein latte and Hopscotch protein mocha. All drinks are made with “protein milk” and are available in regular or sugar-free versions. Dutch Bros also features protein-enhanced LTOs and seasonal beverages.

“Functional beverages have always been on fringe of the coffee industry,” said Turer. “But if you can improve the healthfulness, it’s a plus for the consumer.” 

Key to Coffee

Developing or upgrading a hot beverage operation is challenging, but turnkey programs can be the solution. Widely available, turnkey programs can simplify operations by providing everything from equipment and maintenance to coffee products, training and marketing support. 

CupZa! from McLane, a complete hot and cold beverage solution, features coffees, teas and lemonades. “We simplify the process. If a customer wants whole bean coffee for bean-to-cup units or frac packs for regular coffee brewers, we can supply that,” said Javier Carro, senior product manager for coffee and beverages for McLane. 

“CupZa! is a flexible program, and retailers can use our CupZa! branding or their own,” he said. “We also have energy products and RTDs, along with LTOs and new innovative flavors, that we’ll launch throughout the year. We help customers expand their portfolio to fit consumer preferences. We’re constantly showing our customers new products ranging from iced cold brew, espresso-based drinks, premium and energy lemonades to refreshers. And we have access to a lot of research to support these trends.”

Keurig Dr Pepper offers proprietary solutions with customizable blends, along with equipment, marketing and R&D capabilities. “Retailers should regularly assess their dispensed coffee programs to ensure customer satisfaction,” said Worby. “Today’s coffee drinkers—especially Gen Z—seek more than just a caffeine fix. They want personalization and seasonal variety.”

Brisk Coffee Roaster’s program can provide retailers with proprietary, branded blends. 

“Convenience-store coffee is trending toward functional upgrades, bold flavors and higher-quality beans,” said Denise Reddick, president of Brisk Coffee Roasters. “Flavor innovation is strong. Options like churro, brown sugar and seasonal blends are gaining popularity. There’s also a clear shift toward premium, café-style offerings using better beans to meet rising expectations for quality. Partnering with a reputable roaster is the fastest way for convenience stores to elevate their coffee program.”

Jones, for her part, says don’t disregard the importance of the machines. “What I’ve learned is the integral part that the equipment plays in the hot beverage category. I think a lot of times people just buy what’s cheap, or they don’t understand that that is a marketing tool for them. It’s not just equipment. That equipment now, with our newest machine, is a marketing tool.”

Cold Stays Hot

NCA research shows that nearly half of all coffee consumed by 18–24-year-olds is cold, and 82% of cold coffee consumed away from home is flavored. Experts at Bunn advise retailers to offer customers both hot and cold brews.

NACS State of the Industry data showed that other cold dispensed beverages, a subcategory of cold dispensed beverages that includes iced coffee, iced cappuccino, iced latte, cold brew coffee and more, experienced growth from 2023 to 2024. Average sales per store, per month increased from $1,889 to $2,324, and gross profits increased from $1,201 to $1,400.

“A recent Technomic study found that cold beverages are outpacing hot in both sales and volume increases,” said Chairil McClain, vice president of product strategy at Bunn-O-Matic Corporation. “From 2023 to ’24, hot beverage sales grew by 2.8%, but cold beverages grew by 4.7%. This isn’t just coffee. This is everything under that umbrella purchased away from home for immediate consumption.”

Serving only hot coffee limits customer options. “It’s the growth in cold where you can experiment more by adding espresso shots or mashed fruit or puree, a trend coming from Asia,” said McClain. “For a busy store, we recommend at least two coffee machines—one for hot and one for cold.”

Tea and Hot Chocolate

Don’t overlook the supporting players.

“Now is the perfect time for c-stores to enhance their tea programs,” said Emily Wood Forehand, executive vice president of Red Diamond Coffee & Tea. “With the FDA’s recent update to its healthy labeling guidelines, tea officially qualifies as a healthy beverage in its natural state. This label reinforces tea’s role in a wellness-focused lifestyle.”

“Hot chocolate has emerged as a silent hero,” said Erica Brown, vice president of Costa Coffee Americas. “In c-stores, it makes up 16.5% of Costa Coffee’s sales—outpacing other channels. It’s not just for kids. It’s for anyone seeking a moment of comfort and nostalgia any time of day. It also plays well in bundling—think warm drink plus an afternoon snack—and helps drive transactions during off-peak hours.” NIQ data shows a hot chocolate boom, with sales up 47.9% year over year as of July.