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Many companies offer coffee, beverages, and snacks to their employees for free. What is the size of this market in the US?
OVERVIEW
Hi there! Thank you for your question about the market size of in-office snacks and beverages in the US. The short version is we found that no specific information was available on the market size of in-office snacks and beverages in the US. However, we discovered only about 22% of companies in US offer free food and beverages to their employees. Furthermore, company spending on free snack and beverages varies between companies based on company size. In general though, the cost of providing coffee per year is averaged at $650 per employee while the cost of providing snacks varies between companies, even though Sprint has said the perk was costing them about $600,000 annually.
Below is a deep dive of my findings.
FINDINGS
We searched trusted media sites and industry reports to gain an insight on the market size of in-office snacks and beverage in the US. While specific reports are not available on the in-office snack/beverage market in particular, and due to lack of statistics/info on the market, we have provided related data on how much companies spend in general on in-office snacks/beverages and coffee as well as meals in general.
COST TO INDIVIDUAL COMPANIES
Statistics gathered from Fractl shows that the annual cost for an employee with a $60,000 base salary, free snacks and coffee cost $650 each. Eric Jackson, an investor who has been critical of Yahoo, charged that "the company is spending US$450 million annually on employee food." However, CEO Marissa Mayer has countered that "the total was more like $150 million."
Emily Farris, an office manager at Lucid Software says the company budgets just under $70 per employee each month for snacks and meals." Meanwhile, Jennifer Folsom, chief of corporate development says "Summit Consulting LLC, a company with 85 employees, spends approximately $650 per employee each year to have snacks delivered every two weeks." Another company, The Penny Hoarder, discloses that the company budgets about $1,000 per month for food, but says, "that amount doesn’t include the salary for the full-time staff member who preps and creates the mini meals." Of course, costs at different companies would vary depending on what is provided and the number of employees.
PROS AND CONS OF FREE SNACKS AND BEVERAGES
In one survey, 67% of employees who work in offices that provide complimentary food said "they were very happy at work." According to the most recent BI Worldwide survey, "that is 12% higher than the percentage of all employees who said they were happy at work."
The Wall Street Journal reported that Sprint’s CEO Marcelo Claure began buying snacks for the company’s headquarters and "the perk was costing the company about $600,000 annually." In spite of that, some advocates for office snacks argue that doing away with free food may not be a good idea. According to the Society for Human Resource Management, "only about 22% of companies offer free food and beverages to their employees." Yet, studies have shown that this benefit can boost productivity.
A study from office supply retailer Staples found that one-in-two office workers leaves work on a coffee or snack run at least once a day, with some people making up to five runs a day. "All that foraging accounts for roughly $2.4 billion in lost productivity a year" according to the study. The study also found that "more respondents (55%) work in offices that provide free beverages as opposed to offices that provide free snacks (16%)."
In an attempt to boost its bottom line, Sprint decided to cut the practice of free office snacks for its employees. This move represents just a tiny fraction of its effort to cut US$2.5 billion from its total operating expenses. Removing the free food will shave US$600,000 from the budget. However, Andrew Chamberlain, chief economist at Glassdoor says "They would never have given the snacks to begin with if they didn't think it was helping boost productivity somehow." It is said that the cost of "shedding free snacks" goes beyond lost productivity and an office that once had snacks "puts itself at risk by eliminating the perk."
"These small perks may be small in dollar amount, but they can be highly symbolic," said Chamberlain. "They have this image as a gift; he said, "pulling it away can have a psychological effect that far outstrips the dollar amount."
Research shows "while more than half (55%) are provided with free beverages such as coffee, tea or hot cocoa, far fewer (16%) are provided with free food in the form of snacks, treats, and groceries. In addition, millennials, who will make up 46% of the US workforce by 2020, particularly appreciate snacks and other food perks at work. Interestingly, 66% of millennials agree if they were offered or found a job at another company with better perks, including availability of snacks, they would take it.
THE COFFEE SERVICE MARKET
Technavio’s market research analyst predicts the office coffee service market in the US "will grow at a CAGR of over 4% during the period 2016-2020." According to Technavio, "office business comprises the largest share of revenue of the office coffee service market in the US with nearly 49% in 2015." PR Newswire reports that a survey found "nearly half of workers (48%) who are provided with free food or beverages in the workplace, consume in-office snacks or beverages 1-4 times per week, while another three in ten (29%) do so once a day or more often."
CONCLUSION
To wrap it up, after reviewing the data, we found that no specific information was available on the market size of in-office snacks and beverages in the US. However, we discovered only about 22% of companies in US offer free food and beverages to their employees. Furthermore, company spending on free snack and beverages varies between companies based on company size. In general though, the cost of providing coffee per year is averaged at $650 per employee while the cost of providing snacks varies between companies, even though Sprint has said the perk was costing them about $600,000 annually.
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