When Eirik Holth co-founded Black Sheep Coffee with his college roommate 13 years ago, they intentionally chose a name that would ID them as a renegade brand.
“Everyone was serving specialty grade Arabica coffee but we decided to launch with a single origin Robusta as our house espresso,” said Holth. “We couldn’t understand why nobody was serving Robusta. It was higher in caffeine and lower in acidity, so it's lighter on your stomach. We also liked that it was more full-bodied, so it would really punch through milk. And our Robusta has taste notes of hazelnuts and chocolate, which we thought would resonate well with the wider coffee market.”
The co-founders came up with the name Black Sheep because they were going completely against the Arabica trend, said Holth. The brand established a large presence in the U.K. before crossing the pond two-and-a-half years ago and opening cafes in Texas and Florida. The chain, with headquarters in both London and Miami, now has 130 cafes worldwide, including two in the Middle East, and is in expansion mode.
So are a lot of other coffee concepts. The coffee category experienced a 4.7% increase in store counts year over year, according to the most recent data from market research firm Technomic. That growth was driven mostly by major players like Starbucks, Dunkin’ and Dutch Bros, which collectively opened 950 new locations. Emerging brands like 7 Brew and Scooter’s also demonstrated significant growth, with location counts exceeding 20%.
“I believe there’s still white space for smaller brands to grow or take root, but they have to be very clear about who they are and where they fit in,” said Darren Spicer, industry consultant and founder of 20-unit Clutch Coffee, which he sold to Dutch Bros in January. “I think it's important for brands to understand where they fall in the competitive landscape and what makes them unique. You have to be part of a wave of momentum but you don't want to simply copy everything.”
Black Sheep and the other brands we spoke with—Black Rock Coffee and Coffee Bean & Tea Leaf—have carved a niche in the competitive and increasingly crowded coffee segment. Continuous menu innovation, an obsession with quality and service, a unique perspective and a spirited vibe are differentiating these small but mighty concepts.
Beverages get bolder
Functional coffees are the latest innovation from Black Sheep—beverages with benefits. “We’ve done a lot of trial with different ingredients but we really want products where the coffee flavor and quality come through,” said Holth. “We had to do some work to get the add-ins to blend well with the drink so you still get that distinctive Black Sheep latte flavor.”
Black Sheep recently launched functional lattes enhanced with mushrooms, collagen or prebiotics. | Photo courtesy of Black Sheep
The beverages incorporate ingredients like Lion’s Mane mushrooms, collagen and prebiotics into a full-range latte menu. The add-ins are said to increase mental clarity and focus, promote healthier hair and skin and support digestive health.
The latte lineup includes Get the Glow Latte boosted with a mushroom blend and collagen; Gut Revival Latte with prebiotic fiber; Lion’s Mane Latte to promote mental acuity; and the Functional Iced Latte developed to boost gut health, sharpen focus and give skin a glow-up. All are brewed with Black Sheep’s signature Robusta espresso. There are also three shots that can be added to enhance any beverage on the menu: a Gut Shot, Beauty Shot and Brain Shot.
But Black Sheep also has fun with flavor. Earlier this month, the concept rolled out a banana-inspired spring menu called “Banana Arcade.” Banana lattes and matchas were singled out as a top trend for 2026 by several forecasters and Black Sheep debuted six variations. There’s iced or hot Banana Lattes and Banana Matcha Lattes as well as a more indulgent Coffee & Banana Frappe made with Robusta coffee, banana syrup, salted caramel, whole milk and ice. Matcha fans can order a Banana Matcha Frappe with the same combo, made with ceremonial-grade Japanese matcha.
The new banana lineup at Black Sheep. | Photo courtesy of Black Sheep
“We call it ‘arcade’ as a throwback to the games of the ‘90s,” said Holth. “Our cafes have a retro-vintage feel with unique artwork localized to the neighborhood, so it was a good fit. We’re planning a big event in one of our stores with arcade games and banana handouts.”
While refreshers and energy drinks are taking market share in the beverage space, coffee still dominates Black Sheep’s sales mix.
Phoenix-based Black Rock Coffee Bar is also laser-focused on its coffee—the premium product that has nurtured its growth from one location in 2008 to 184 today. The brand’s goal is to grow 20% year over year, said CMO Jessica Wegener-Beyer, and it is projecting 1,000 locations by 2035.
“We definitely lean into our quality of ingredients,” she said. “We small batch roast all of our beans, so if you're having a cup of coffee, it is less than 14 days old. And the flavors we use in our coffee drinks are designed to enhance the coffee profile. We really want the coffee to come through, because it is so delicious.”
Flavor innovation can originate with the guest. “We look at the trends but also what's going on with our guests at that moment in time,” said Wegener-Beyer. “Where's their mental headspace? Is it summer? Is it spring? Is it winter? What flavors can we pull out of that season that meet our guests where they are and enhances what's going on around them?”
Right now, Black Rock is celebrating sunny, warmer spring flavors in an LTO campaign called “Desert Springs.” “We have a lot of locations in the Pacific Northwest where it’s been rainy and gloomy and these flavors celebrate patio season,” she added. The trio includes Orange Blossom Mocha with a coffee and spiced chocolate base and notes of orange; Sonoran Latte blended with agave and a splash of lime; and Prickly Pear Fuel Energy, prickly pear mixed into Black Rock’s signature Fuel energy recipe.
Three beverages make up Black Rock's Desert Springs LTO. | Photo courtesy of Black Rock
Although the concept is coffee-forward, the menu has to meet guests’ needs, said Wegener-Beyer, and guests want energy drinks. “We introduced energy about eight years ago and it accounts for about 20% of the product mix,” she said. “We will always stay coffee-focused, but sprinkle in a little energy, a little chai and matcha. We also introduced protein cold foam and partnered with Olipop for elevated dirty sodas. And we’re leaning into functional and playing around with fiber.”
Black Rock partnered with Olipop on a dirty soda. | Photo courtesy of Black Rock
She emphasizes the importance of staying true to guests’ preferences. “I don't think we'll ever do something just because someone else has it, like boba. We're not looking at boba because that doesn't work for our guests, but protein and functional beverages are definitely what our guest wants.”
Black Rock does about six limited-time menu drops a year to drive excitement and incremental visits. Coming up next is a camp theme for summer, with a s’mores coffee in the mix.
Consumers as ideators
Los Angeles-based Coffee Bean & Tea Leaf has been around since 1963 and currently operates 185 cafes in the U.S., mostly out West. But global locations are expanding, with the chain’s acquisition by Jollibee Corp. in 2019 powering international growth.
The brand has built its reputation on taste and craftsmanship. “We whisk every flavored latte by hand,” said Dana Castaneda, VP of marketing. “The actual craft is very important to us to make sure that we get a creamy, balanced taste. We are also very well known for our pebble ice. This ice not only creates a really great cold beverage, which is one of our biggest sellers, but gives our blended beverages a creamier texture.”
Coffee Bean & Tea Leaf focuses on flavor as well as platform innovation. “We obviously watch what our competitors are doing, just to make sure that we do it differently, but we also listen to our consumers,” said Castaneda. “And through our Jollibee ownership we're also able to study global trends. We also have a development and innovation team based in Singapore.”
The cold brew tea energy platform at Coffee Bean & Tea Leaf. | Photo courtesy of Coffee Bean & Tea Leaf
Like Black Rock, Coffee Bean & Tea Leaf customers in the U.S. are extremely interested in energy, she added, but in a move to “do it differently,” the chain created a cold brew energy tea platform. “The energy we're using actually comes from green coffee extract and green tea extract with a dose of Vitamin B-12. These are high-quality ingredients,” she said. Three cold brew tea energy beverages launched earlier this month: Mango Passionfruit, Mixed Berry and Pineapple Yuzu; each has pieces of real fruit or berries.
Coffee Bean & Tea Leaf has also been following the rise of horchata in the U.S. According to Technomic data, menu mentions have increased 7.8% year over year. Although the chain previously launched a horchata beverage platform, the team wanted to put a new twist on it this year.
“Something that we're really well known for is our Dry Ice Americano, and through customization and modification, our guests created a Horchata Dry Ice Americano and it went viral,” said Castaneda. Earlier this month, it officially launched on the menu.
Consumers helped inspire the horchata collection at Coffee Bean & Tea Leaf. | Photo courtesy of Coffee Bean & Tea Leaf
To create the beverage, two shots of espresso are poured over ice and the barista whisks in vanilla powder and cinnamon-forward horchata, then finishes the drink with half-and-half and a caramel drizzle. “It’s balanced, it’s rich and it's creamy,” said Castaneda. Joining it on the new horchata platform are an Iced Horchata Protein Latte with 20 grams of protein and an Iced Matcha Horchata Latte.
“Coffee and espresso are still the biggest percentage of sales, but tea is growing,” said Castaneda, “and protein, energy and functional wellness have become table stakes for our industry.”
Food as a differentiator
Each of these beverage concepts also offers food items that stand apart. Black Sheep is known for its Norwegian waffles—a signature developed at the start and served at all the cafes. “We have our own recipe, and it's the same from Dallas to Dubai,” said Holth. The thin, heart-shaped waffles are freshly made and served with various toppings. “But then we have other products where we'll customize to the local market,” he said. “So there’s a Za’atar Croissant in our shops in the UAE, for example.”
Heart-shaped Norwegian waffles are a Black Sheep signature. | Photo courtesy of Black Sheep
Black Rock Coffee also tailors food items to cafes in different parts of the U.S. “We kind of split between savory and sweet, but also have regional specific menus,” said Wegener-Beyer. “In Arizona, we go heavy on breakfast sandwiches and burritos, but also have our traditional baked goods, like coffee cake and blueberry muffins. But in Austin, Texas we have a partnership with a local taco company that does breakfast tacos. And then in San Antonio, we sell breakfast kolaches.”
Coffee Bean & Tea Leaf offers traditional breakfast foods like burritos and sandwiches, but also menus seasonal items. “Right now we have a Dulce de Leche Danish to pair with morning coffee and a Raspberry Lemon Muffin to have with a cold brew tea. We typically will bring in seasonal food that is a good pairing to our seasonal beverages,” said Castaneda.
Off the menu
While craveable food and beverages draws in customers, all these smaller brands agreed that relationships are key to running a coffee concept—something that Starbucks is working to rekindle.
“Our teams build organic relationships with our guests on a daily basis, which is so impressive when you think about your experience takes just three minutes,” said Black Rock’s Wegener-Beyer. “Our baristas and store teams have used every point of contact to create different connections at each. “They’ve built these really sustainable, long-lasting relationships just by being personable, caring and authentically themselves.”
Relationships are what made Clutch Coffee unique and what will power success in the segment, Spicer believes. “We really believe that at Clutch, that we were in the relationship business,” he said. “We happened to be selling coffee and energy drinks, but we were building those relationships each and every day with customers who oftentimes came in twice a day, five times a week. So that experience had to be elite, from the music that's playing, the face-to-face engagement, the wait time, all that factors into that experience.”
As the competition heats up, relationship building will become even more of a differentiator.