Bagel shops have become a common business venture in the U.S. But it wasn’t always that way. First considered a luxury, then a fad, and now an everyday breakfast item, bagels went through their own identity-crisis of sorts. Americans have had a hard time placing this baked-good in a specific category, which made it difficult for bagel shop owners to meet customer expectations. Eventually, bagels found themselves a spot in the industry and on the menu.
Bagel shops operate under the Coffee & Snack industry. This is a booming industry in America, with revenue totaling over $50 billion in 2019 and an annual growth rate of almost 5 percent. What can we say, consumers love to snack.
If you own a bagel shop or are thinking of buying one, it’s important to gain as much knowledge as you can about the sector. Keep reading to uncover the past, present, and future successes of bagel shops in the U.S.
History of Bagels
Bagels arrived in the United States in the late 19th century. Being introduced by Jewish immigrants, bagels were first considered a cultural food among Americans. However, it didn't take long for this fresh, baked-good to rise in popularity. In fact, by the 1980s the New York Times published an article about the “americanization of bagels.” And bagel shops started to open their doors from coast to coast.
This business continued to thrive, so much so that big-name brands such as Sara Lee and Lender’s entered the bagel market themselves. They were major players in the industry and even introduced frozen bagels and packaged bagels to grocery stores. This surely changed the game for small bagel shops trying to compete.
Yet it was in the 90s that the industry started to experience a downfall. Consumers were beginning to consider bagels a fad, and grouping it with other snacking trends like froyo. Many bagel shops closed their doors, and the remaining ones knew they needed to freshen up their business model to stay relevant. This is when business owners started to diversify their menus by adding coffee, sandwiches, and dessert items.
The past few years have been favorable to the Coffee and Snack industry. And this is because the industry, bagel shops included, are capitalizing on many emerging trends. For starters, Americans are experiencing an increase in disposable income. More disposable income means more consumer spending, and, food just so happens to be the third-largest expense for Americans. Even more, almost 44 percent of total food spending is allocated to eating out.
Convenience is the second major trend supporting the snack industry. Today’s consumers are constantly on-the-go and crave foods that are just as quick as their lifestyles. Bagels are the perfect balance between fresh and fast. They are filling enough to be an adequate meal for breakfast or lunch while being easy to purchase and consume.
According to IBISWorld Industry Analyst, “Consumers have become increasingly health-conscious and are avoiding foods that are high in fat and salt content.” This can be an issue for bagel shops considering that bagels aren’t the healthiest foods. However, business owners who can adapt the growing health trend a real chance for success. That’s because bagel shops that offer whole-grain bagels and low-fat toppings can attract these health-conscious consumers.
There is a lot of competition within the Coffee and Snack industry, with chain brands such as Starbucks and Dunkin’ Donuts dominating the sector. However, smaller businesses can still compete. As previously said, bagel shops have to broaden their food and beverage selection, to offer the same array of products as their competitors. This may entail investing in more equipment and reorganizing your facilities.
Future of the Trade
Bagel shops have a promising future. Predictions suggest that the trends we are experiencing today — health-consciousness, convenience, disposable income — will continue to take hold for years to come. Therefore, it’s important that small business owners are able to leverage these trends and remain flexible with consumer behavior.
Ready to buy a bagel shop?
Are you ready to get your hands dirty and run a bagel shop of your own? If so, you are in the right place. At businessesforsale.com, you can browse through hundreds of available businesses all in one place — making it simple to find the shop that’s right for you.
And, if you need any more information about the industry or guidance on what it takes to be a successful business owner, you can check out our blog. It is refreshed monthly with expert insight on owning a small business.