Before taking the plunge and opening your own cafe, it’s wise to take the time to understand the coffee market and its potential for growth. While there is plenty of market data available about the coffee industry as a whole, specialty coffee is a more niche product, so reliable data is harder to find.

Defining specialty coffee

One of the biggest hurdles for market research into specialty coffee is that the term “specialty” is not clearly defined. Confusion over the definition of “specialty” helps explain why estimates for the size of the market vary a lot.


The most widely-cited definition comes from the Specialty Coffee Association (SCA), which states that specialty coffee must achieve a quality rating of at least 80 points on a 100-point scale. However, even the SCA themselves acknowledge that this definition is incomplete because it ignores factors such as the quality of roasting and preparation. In a paper published last year, the SCA acknowledged that “a concise, comprehensive definition for specialty coffee has never been published by the Specialty Coffee Association.”

To further complicate matters, market researchers tend to use very different metrics to define specialty coffee. For example, the market research company Mintel defines a “specialty coffee shop” as any business that makes more than 55% of its revenue from coffee or coffee accessories, no matter what the quality of the coffee; while most consumer studies ask the respondents to decide for themselves if the coffee they drink is “specialty” or not.

The size of the global specialty market

When talking about the size of the specialty market, there are two main numbers to take into consideration: the amount of specialty-grade green coffee that is exported, and the size of the specialty coffee consumer market (in other words, cafes and beans for brewing at home). In both cases, the higher prices paid for specialty coffee mean that it has an outsized impact on the coffee market as a whole.

According to one estimate, about 20% of coffee exports worldwide are specialty grade. However, because of the higher prices of specialty coffee, it makes up about half of the total value of coffee traded globally. The current value of specialty exports are estimated at SAR 188 billion (US$50 billion), and are projected to grow to SAR 313 billion (US$83.5 billion) by 2025.

A similar pattern can be found in the consumer side of the industry. According to one study in the United States, the specialty industry accounts for about 20 percent of the total volume of coffee sales, but more than 40 percent of the revenue — and an even greater share of its profits. The total global coffee consumer market is worth around SAR 1.7 trillion (US$460 billion).

The coronavirus pandemic hit the coffee industry hard, as consumers were forced to stay home. However, the market seems to be recovering despite the knock-on effects of rising prices for consumer goods worldwide. The specialty coffee industry has historically performed relatively well during recessions, as it is seen as an affordable luxury.

Since the onset of the pandemic, many more customers have taken to brewing specialty coffee in their own homes. This represents a challenge to specialty coffee shops — but also an opportunity to leverage their expertise to sell brewing equipment, beans, and even barista training to keen coffee drinkers.

The Middle Eastern market

The Middle Eastern coffee market is small compared with Western countries, but potentially lucrative and growing rapidly. In the Middle East and Africa, there are 4.5 specialty cafes per million inhabitants, compared with nearly 125 in Australia or 30 in Western Europe.


In Saudi Arabia, the coffee shop industry is worth around SAR 18 billion (US$4.8 billion), growing at 9.6 percent yearly, making it the fastest-growing coffee market in the Middle East, followed by Kuwait and UAE. This rapid growth is driven by a rise in per capita income, and increasing numbers of tourists; but also by changing consumer tastes. Younger coffee drinkers are behind the increase in sales of coffees served with milk, flavored syrups, and blended drinks, while older consumers are more likely to stick to traditional styles of coffee.

Despite the growing popularity of specialty coffee, the majority of coffee industry leaders in the Middle East think that convenience is more important to their success than coffee quality or the level of service, according to research from Allegra.

The profit margin for specialty shops

On the face of it, the profit margins in the coffee industry look attractive. The cost of the beans is a relatively small part of the cost of a coffee, which means that the gross profit on a coffee can be much higher than on food, for example. The biggest challenge for a coffee business is that the average spend is fairly low, so even with a healthy profit margin, it takes a lot of sales to make a sustainable business.

Since specialty coffee shops can charge significantly more for their coffee, offering a high-end specialty experience is an opportunity to greatly increase the revenue per customer. The average price of a cappuccino in the Middle East is SAR 12.86 (US$3.43). A cappuccino in a typical specialty shop, on the other hand, can easily be double that price, while rare and exclusive filter coffees can be considerably more expensive.

To estimate how profitable a typical specialty coffee shop is, the Specialty Coffee Association surveyed its members worldwide in 2017 for data on their operating costs. Based on that survey, they published a typical scenario for the profit margin on a single cup of specialty coffee.

In their model, the roasted coffee costs SAR 77.56 (US$20.68) per kilogram, and a single large cup of coffee is priced at SAR 10.50 (US$2.80), with about 30 grams of coffee used to brew each cup.

Cost per cup Percentage of sale price
Roasted coffee 2.36 23%
Other materials (cups, lids, condiments) 0.90 9%
Gross profit 7.24 69%
Labor 2.21 21%
Rent and utilities 1.31 13%
General and administrative expenses 1.58 15%
Marketing and other costs 0.53 5%
Earnings before interest, taxes, depreciation, and amortization (EBITDA) 1.61 15%
Interest, taxes and depreciation 0.90 9%
Net profit 0.71 7%

Figures in SAR. Source: SCA

Naturally, the specific costs and profitability of an individual cafe can vary significantly from this, but the figures are broadly in line with the typical costs found in other parts of the hospitality industry.

With a typical cafe earning just SAR 0.71 (19 US cents) per cup, once all costs are taken into account, a huge volume of sales is needed to make a healthy profit with this business model. A high-end specialty coffee shop, however, can charge much more than SAR 10.50 for a cup of coffee. Even if all the other costs remain in the same proportion, this means that a high-end specialty shop will earn a higher profit per cup. Focusing on the top end of the specialty market, therefore, represents an opportunity to increase the average spend, and to create a much more profitable business.


Still searching for The One?

Contact our team for a free personalized consultation,
and we will help you find what you’re looking for.

REQUEST FREE CONSULTATION