The Coffee Shop is a type of establishment that offers and serves various types of coffee to customers. The Coffee Shop business also goes by the name of café, coffeehouse, and coffee shop. Along with serving coffee, many café also serve various other cold drinks like iced coffee or the iced tea. Today, we’ll discuss the PESTLE analysis of Coffee Shop; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Coffee Shop
Some of the main political factors in the Coffee Shop PESTLE analysis are as follows;
I-Government Regulations
The consumer protection, health, and food safety government regulations are very strict and tight for the cafés, coffeehouses, and coffee shops. They focus on areas like health and food safety, shop hygiene, cleanliness, labor laws, consumer protection laws, data privacy, and dietary requirements. The objective of strict food safety laws is to ensure the health and wellness of ordinary consumers.
II-Trade Policies
Coffee Shops procure coffee beans from various countries all over the world. The trade policies of different countries are variable and it depends on the country’s foreign policy and diplomatic relations. For instance, if the coffee-producing countries don’t have good relations with the US, they would impose strict regulations to reduce their trade.
III-Political Stability
The stable political environment plays a key role in the growth of Coffee Shop businesses. Most of the coffee-producing regions are developing countries like Ethiopia, Nigeria, Ghana, Chile, and others. Often, they experience political turmoil, violent procession, and roadblocks and it negatively impacts the supply chain and distribution of raw supplies to the production facilities.
Economic Factors Affecting Coffee Shop
Some of the main economic factors in the Coffee Shop PESTLE analysis are as follows;
I-Competitive Market
Coffee Shop business has become highly competitive in recent years. It is due to multiple factors like easy entry, low investment to start, easy licensing, same taste and no differentiation, and others. There are multiple retail chain brands like Starbucks and other small coffee shop businesses in the market, and they have made the coffeehouse market highly saturated.
II-Currency Exchange Rate
Coffee Shops procure coffee beans and coffee powder from various countries in multiple currencies. The currency exchange rate market is highly unstable and it keeps changing regularly due to various geopolitical and socio-economic factors. A small change in currency exchange rate would negatively impact the cost and expenses of the Coffee Shop.
III-Ethical Sourcing
Coffee Shops and retail chain stores are receiving a lot of pressure from customers to ensure the ethical sourcing of coffee beans to avoid the exploitation of workers. In order to ensure the ethical sourcing of coffee beans, Coffee shops are investing a lot of resources in the development of farmers. It has significantly increased the sourcing cost of the Coffee Shop, and it ultimately impacts the company’s retail price and net profitability.
Social Factors Impacting Coffee Shop
Some of the main social factors in the Coffee Shop PESTEL analysis are as follows;
I-Changing Lifestyle
The lifestyle of the ordinary customer market has changed a lot in recent years. Nowadays, people are leading busy lives and they don’t have time to perform all the traditional cooking and making coffee for themselves. Rather, they go to the nearest coffee shop and the restaurant to buy food and drink to enjoy their meal.
II-Coffee Culture
The trend of coffee-drinking culture has been increasing over the years. It is due to the fact that coffee contains caffeine and it instantly boosts the energy level of ordinary users and consumers. That’s why people want to have a cup of coffee in the morning while going to work to boost their energy levels.
III-Health Conscious
The consumer market has become highly cautious about their health and diet and they’re making conscious choices about their food and drink. Coffee offers a lot of health benefits like lower cholesterol levels and cardiovascular diseases. However, the health benefits of black coffee without sugar comply with the health and dietary trends of the customer’s market.
Technological Factors Affecting Coffee Shop
Some of the main technological factors in the Coffee Shop PESTEL analysis are as follows;
I-Automation Technology
Coffee Shops are investing a significant amount of capital resources in the latest coffee bean roasting technology. It allows them to maintain the unique aroma and freshness of coffee beans without jeopardizing the taste of the coffee powder. Automation technology would help them to smoothly and efficiently perform various operations without any delays and disruption.
II-Advanced Technology
Coffee Shops are implementing the latest advanced technological tools and equipment like AI, ML, data analytics, and others. It allows them to accurately predict customer shopping patterns and retail sales of the upcoming seasons to avoid overstocking and stockout issues. However, it helps companies to reduce warehousing and inventory management costs.
III-Online Ordering
Coffee Shops are investing a lot of resources in the development of their e-commerce platform and online store. It allows them to connect and engage with the targeted customers online. The Coffee Shop could offer them the choice of ordering online and picking up at the store, it helps them to avoid waiting in the lines.
Legal Factors Impacting Coffee Shop
Some of the main legal factors in the Coffee Shop PESTEL analysis are as follows;
Regulatory Compliance
Coffee Shop needs to comply with the government regulations and policies of different countries. They comprise consumer protection laws, health and food safety laws, ingredient disclosure, packaging and labeling, labor laws, and others. Regulatory compliance would help them to smoothly perform their operations without any delays and disruption.
Environmental Factors Affecting Coffee Shop
Some of the main environmental factors in the Coffee Shop PESTEL analysis are as follows;
Sustainability Initiative
Coffee Shop should make a strong commitment to the environmental sustainability initiative. It comprises investing in renewable sources of energy, ethical sourcing of coffee beans, and biodegradable packaging to reduce the carbon footprint. However, it helps them to keep up with the growing environmental sustainability trends of the customer market.
Conclusion: Coffee Shop PESTLE Analysis |PESTEL Analysis of Coffee Shop |External Environmental Analysis of Coffee Shop | Strategic Analysis of Coffee Shop
After an in-depth study of the pestle analysis of Coffee Shop; we have realized that Coffee Shop is the world’s top growing retail business. If you are learning about the Coffee Shop PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
