Spilling the tea on beverage splurges

Summary

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Marketplace Morning Report

Episode: Spilling the tea on beverage splurges
Date: September 25, 2025
Host: David Brancaccio
Special Segment Reporter: Kristen Schwab
Guest: Lauren Seidel Baker, Economist, ITR Economics

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Overview

This episode explores how consumer spending on beverages—especially premium, non-alcoholic drinks—is shaping trends in the restaurant industry against a broader economic context. Host David Brancaccio also provides updates on U.S. economic growth, regional headwinds in New England, and the status of renewable energy investments in the area. The episode closes with a brief mention of an upcoming history lesson on economic bubbles.

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Key Segments & Insights

1. Beverage Splurges Defying Broader Cutbacks

[01:37 - 03:36]

• Contradictory Trends:

  • Brancaccio sets the stage (01:37) noting, “40% of people in a survey last month said they're cutting back at restaurants. Yet census data show total dollars spent at restaurants ticked up in August.”
  • The surfacing trend: While many are spending less at restaurants in general, some are splurging more, particularly on specialty beverages.

• Rise of Beverage-Centric Concepts:

  • Chains like Chick-fil-A, Taco Bell, and McDonald’s are launching new drink offerings and dedicated beverage concepts (01:57).
  • Kristen Schwab reports on the growing popularity of premium coffee and “fancy non-alcoholic drinks,” highlighting how they are becoming “treats” for consumers.

• Everyday Habit, Small Luxury:

  • Lizzie Fryer, whose morning Starbucks visit is a ritual, reflects this:
    • “I see it as a treat to myself.” (02:19)
    • She points out the psychology, especially in tighter economic times, of justifying a smaller luxury:
      • “A coffee beverage that's seven bucks isn't cheap...it is definitely less expensive instead of getting a full, you know, meal.” (02:36)

• Business Perspective:

  • Beverage-focused offerings require less space, labor, and bring in higher margins for restaurants (02:47).
  • Dan Su, Morningstar analyst, notes the impact:
    • “They're probably going to drive better store traffic during the non meal times.” (03:02)

• Trendy & Customizable Drinks:

  • Consumers are attracted to limited-time and customizable beverages—think Boba tea, “dirty soda,” and TikTok-inspired hacks (03:08).
  • Lauren Seidel Baker adds: “The focus is really on companies’ ability to innovate.” (03:24)

• Seasonal Craze:

  • Schwab underscores the annual pumpkin spice trend as a prime example (03:29).

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2. Economic Growth & Market Update

[03:36 - 04:22]

• GDP Revision:

  • Brancaccio updates on economic numbers: “The US economy grew at a 3% annual rate in the April to June quarter. That's quite a bit higher than first calculated in a previous revision.” (03:36)
  • He cautions, though: “GDP is a useful benchmark, but note that growth does not equate with, well, being.”

• Potential Interest Rate Implications:

  • Stronger growth could “delay another cut in interest rates.”

• Markets at a Glance:

  • S&P futures are down 0.8%, Nasdaq futures down 1.25% (04:06).
  • 10-year interest rate rises to 4.18% (04:10).

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3. Regional Focus: New England’s Economic Trends and Clean Energy

[05:54 - 09:35]

• Offshore Wind Power Update:

  • Work resumes on a major offshore wind project, which will “power 350,000 homes in New England” after a federal judge reverses a prior pause (05:54).
  • The project is seen as an economic boon given it has "produced tens of thousands of jobs" (06:02).

• New England’s Mixed Economic Outlook:

  • Guest Lauren Seidel Baker offers insight on New England’s strengths and challenges:
    • “New England certainly has its challenges, especially with things like affordability and housing, but also some broad economic drivers, a very strong consumer base. And those trends aren't going away." (06:42)
    • Note on robust sectors: “Biomedical is a big one. Robotics is large up here, even aerospace.” (07:07)

• Labor Market and Demographics:

  • Region isn’t seeing strong population growth but is “still a somewhat tight labor market up here… Overall though, it doesn't feel like the bottom is falling out from our labor market, but it certainly doesn't feel as strong as it did, say, a year ago.” (07:43)

• Tourism Challenges:

  • “Vermont, New Hampshire and Maine usually do get much more cross border tourism coming in from Canada. We didn't see those numbers quite so high this year.” (08:26)
  • Outdoor tourism spike from Covid is receding, “stress[ing] a bit of our tourism sector.” (08:40)

• Clean Energy Uncertainty:

  • On clean energy, Baker notes: “It's a tough game right now. There is just so much uncertainty as something is being reconsidered. But overall we are just going to need more sources of energy in the future.” (09:18)

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4. Notable Quotes & Memorable Moments

• On Everyday Luxuries:

  • "I see it as a treat to myself." – Lizzie Fryer, on her daily Starbucks (02:19)

• On Beverage Economics:

  • “A coffee beverage that's seven bucks isn't cheap...it is definitely less expensive instead of getting a full, you know, meal.” – Fryer (02:36)
  • “They're probably going to drive better store traffic during the non meal times.” – Dan Su (03:02)

• On Corporate Innovation:

  • “The focus is really on companies ability to innovate.” – Lauren Seidel Baker (03:24)

• Economic Perspective:

  • “GDP is a useful benchmark, but note that growth does not equate with, well, being.” – David Brancaccio (03:36)

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5. Additional Features

• Upcoming Episode Preview:
  • “This week on Million Bazillion, we’re giving you an extra special history lesson on bubbles. Economic bubbles that is...” (09:54)

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Timestamps of Important Segments

| Segment | Timestamp | |--------------------------------------------------------------|------------| | Restaurant & Beverage Spending Trends | 01:37-03:36| | Economic Growth Information (GDP, markets) | 03:36-04:22| | New England Economic Pulse & Offshore Wind Power | 05:54-09:35| | Million Bazillion (economic bubbles preview) | 09:54-10:19|

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Tone & Language

The episode’s tone is conversational yet informative, balancing a breezy survey of quirky consumer behavior (“pumpkin spice everything is everywhere”) with sober economic analysis and regional reporting. Guest Lauren Seidel Baker maintains an analytical, but accessible approach in her explanations, while Brancaccio’s style mixes personal connection (“I try not to be biased, but if I have a bias, it's I like New England...”) with journalistic clarity.

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Summary

This Marketplace Morning Report dives into the phenomenon of beverage “treats” as a small luxury defying wider cost-cutting, underscores the growing importance of beverage-centred strategies for restaurants, and reviews the economic pulse of New England in light of labor, tourism, and clean energy ups and downs. The episode offers a concise yet textured exploration of how simple daily choices—like a $7 latte—mesh with bigger economic patterns.

Transcript

[Marketplace Host]

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[David Brancaccio]

Life, turns out, is more than minute made Coke and Pepsi. I'm David Brancaccio in Los Angeles. 40% of people in a survey last month said they're cutting back at restaurants. Yet census data show total dollars spent at restaurants ticked up in August. That may be a subset of restaurant goers spending more, and some of that may be on fancy non alcoholic drinks. Chick Fil a has started a drinks focused thing called Daybright. Taco Bell is expanding its Live mas Cafe and McDonald's has some new drinks. Marketplace's Kristen Schwab went out recyclable straw in hand.

[Kristen Schwab]

Lizzie Fryer has a standing date with Star Starbucks every morning before work.

[Lauren Seidel Baker]

A oat milk, vanilla latte or cold brew drink. I see it as a treat to myself.

[Kristen Schwab]

Fryer is with Technomic, a food service research firm, and she says as people's wallets have tightened, they've become more willing to spend on smaller treats like drinks.

[Lauren Seidel Baker]

And so yes, while you know, a coffee beverage that's seven bucks isn't cheap by any means, it is definitely less expensive. Instead of getting a full, you know.

[Kristen Schwab]

Meal for companies, beverage concepts require less space, equipment and labor, which means better margins. And Dan Su, a consumer equity analyst at Morningstar, says people who stop in for drinks are more likely to grab food too.

[Lauren Seidel Baker]

They're probably going to drive better store traffic during the non meal times.

[Kristen Schwab]

Sue says consumers are especially attracted to limited time beverages. They want to try trendy drinks like Boba tea and dirty soda. That's soda with creamer and flavored syrups. And they like to customize orders so they can try out hacks from TikTok.

[Lauren Seidel Baker]

The focus is really on companies ability to innovate.

[Kristen Schwab]

It's why this time of year, pumpkin spice, everything is everywhere. I'm Kristen Schwab for Marketplace.

[David Brancaccio]

The government calculates economic growth does it again with new information. Then again, there's word just now that the US economy grew at a 3% annual rate in the April to June quarter. That's quite a bit higher than first calculated in a previous revision. GDP is a useful benchmark, but note that growth does not equate with, well, being. A busier economy could delay another cut in interest rates. And S and p futures are down 8, 10%. Nasdaq futures are down 1.25%. The bond market turned down pushing the 10 year interest rate up to 4.18%.

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[David Brancaccio]

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[David Brancaccio]

This week, work resumed on a huge offshore wind power complex in the Rhode island sound, managed by Denmark's Rsted company that will power 350,000 homes in England. This after a federal judge reversed a Trump administration order to pause the project, which was 80% complete. The project has produced tens of thousands of jobs at a time. New England's Economy Faces Headwinds We've been getting snapshots of America's regional economies as part of our Economic Pulse series. Let's get more on Connecticut through Maine by consulting Lauren Seidel Baker at ITR Economics in New Hampshire. Welcome.

[Lauren Seidel Baker]

Thank you. Great to be here.

[David Brancaccio]

I try not to be biased, but if I have a bias, it's I like New England because I grew up there. How are my brothers and sisters doing here? As we get into autumn of 2025.

[Lauren Seidel Baker]

Economically, you know, this region is interesting. New England certainly has its challenges, especially with things like affordability and housing, but also some broad economic drivers, a very strong consumer base. And those trends aren't going away.

[David Brancaccio]

Right. And when I think of Route 128 around Boston, I think of the biomedical industry that tends to be a driver of the New England economy.

[Lauren Seidel Baker]

Biomedical is a big one. Robotics is large up here, even aerospace. We have a lot of aerospace and defense work that's being done. So it's a somewhat diverse economy. Service sector is still the biggest driver as we're watching those kind of broad metrics, but a lot of growth in that high tech sector space, those are coming in at higher growth rates. So New England will continue to benefit from that R and D type work.

[David Brancaccio]

What about hiring in that part of the country? I mean, we've seen and reported on the revised statistics that shows a much weaker jobs picture nationwide than we had first thought.

[Lauren Seidel Baker]

Some of our population growth trends just aren't as strong as other areas of the country. So we're not seeing so much regional immigration into the New England area. But that said, it's still a somewhat tight labor market up here. Starting to feel a little bit of that increased availability in labor. I don't think we will be hit as hard by things like negative net migration this year as other areas of the country that are maybe a little bit more dependent. Overall though, it doesn't feel like the bottom is falling out from our labor market, but it certainly doesn't feel as strong as it did. Say a year ago, many Canadians were.

[David Brancaccio]

Reluctant to travel to the US Amid border tensions and tariffs. So you have a sense of how it played out this summer in New England.

[Lauren Seidel Baker]

First of all, Vermont, New Hampshire and Maine usually do get much more cross border tourism coming in from Canada. We didn't see those numbers quite so high this year. The other impact though is just the reciprocal effect from the very strong Covid draw. Everyone wanted to go hiking and canoeing and do all of these wonderful outdoor activities. We're starting to see some of those trends ease up. So coming from two very different directions but at a similar timeframe, I think that is going to stress a bit of our tourism sector.

[David Brancaccio]

Now an engine for growth has been clean energy under the Biden administration, a lot of investment, but the Trump administration is reconsidering some permits for especially offshore wind that I would assume is tied to a lot of jobs in the region.

[Lauren Seidel Baker]

It's a tough game right now. There is just so much uncertainty as something is being reconsidered. But overall we are just going to need more sources of energy in the future.

[David Brancaccio]

Lauren Sydell Baker is an economist at the New Hampshire based consultancy ITR Economics. Lauren, always good to catch up.

[Lauren Seidel Baker]

Thank you so much. Great to speak with you.

[David Brancaccio]

Taking the Marketplace Economic Pulse Regular views on the economy from a wider range of perspectives. In Los Angeles, I'm David Brancaccio. It is the Marketplace Morning Report from APM American Public Media.

[Million Bazillion Host]

This week on Million Bazillion, we're giving you an extra special history lesson on bubbles. Economic bubbles that is. We'll learn all about the housing boom and bust of the 2000s. Plus we'll explore other famous bubbles like tulips and dot coms to uncover why they happen and why it's so hard to know you're in one until it pops. Don't miss this week's episode of Million Bazillion. Listen on your favorite podcast.

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