A perfect storm of economic and environmental factors has jolted the global coffee industry, sending shockwaves through both large and independent operators. Over the past year, a relentless rise in coffee prices, driven by inflation, climate challenges, and shrinking consumer spending, has forced several well-known coffee chains to shutter locations—and, in more severe cases, file for bankruptcy.
Arabica Prices Hit Record Highs
The most significant blow has come from the soaring cost of arabica coffee beans. The global benchmark price for the popular bean doubled between January 2024 and January 2025, according to market data, with a dramatic 25% spike recorded in January alone.
For the first time ever, arabica beans crossed $4 per pound in January, CNBC reported, a staggering figure that has sent roasting costs through the roof. This price surge has been largely attributed to erratic climate conditions impacting key coffee-producing regions, disrupting agricultural yields and supply chains.
Inflation, Labour, and Higher Interest Rates
Alongside raw material inflation, coffee chains have also contended with rising labour costs, increased overheads, and higher interest rates on business loans. Many operators, especially smaller boutique roasters and regional chains, are finding it increasingly difficult to stay afloat.
With consumers also tightening their wallets amid broader economic uncertainty, discretionary spending on takeaway coffee and café experiences has declined—creating a vicious cycle for retailers in this once-resilient category.
Closures Across the Board
Even industry leader Starbucks, with approximately 17,000 locations across the US, has not been immune. The company closed over a dozen underperforming stores in 2025 as part of a broader restructuring strategy.
Smaller chains have felt the squeeze more acutely. San Francisco’s Ritual Coffee Roasters, once a darling of the third-wave coffee movement, recently shuttered one of its five outlets. In Colorado, Switchback Coffee Roasters filed for Chapter 11 bankruptcy in August 2024, seeking protection and a chance to reorganise.
Perhaps most telling was the downfall of Corner Bakery Café, a once-prominent player with 175 outlets. The company filed for bankruptcy in early 2023 and has since been reduced to 138 units under new ownership.
A Wider Trend in the Retail Sector
The trend is not confined to coffee alone. A string of well-known brands across various sectors—from restaurants and bars to cosmetics and athletic wear—have filed for bankruptcy in the past year. This underlines a broader pattern of consumer caution, margin pressure, and debt fatigue across retail categories.
What Lies Ahead?
Looking forward, industry insiders warn that unless global supply chains stabilise and inflation subsides, more closures are likely. Sustainability and efficiency will become the new buzzwords for survival.
To weather the storm, coffee chains are expected to shift towards leaner models—fewer physical stores, tighter menus, and a renewed focus on digital sales, loyalty apps, and delivery.
One thing is clear: the golden age of unchecked expansion in the coffeehouse sector may be over. The survivors will be those who adapt quickly, trim costs wisely, and retain customer loyalty without compromising on quality.
