(Bloomberg) -- U.S. coffee chains will take two years to fully recover from an $11.5-billion sales plunge that wiped out a quarter of their market in a year when Covid-19 kept customers from cafes, according to market researcher Allegra Group.

The U.S. branded coffee chain segment, which is dominated by Starbucks Corp. and Inspire Brands Inc.’s Dunkin’ Donuts, saw sales plunge 24% to $36 billion in the past 12 months predominantly due to Covid-19 disruptions, the London-based group said Monday in a report. The industry will return to pre-pandemic sales by 2023, Allegra said, adding that 65% of surveyed U.S. industry leaders say trading conditions will improve during the next 12 months.

“With a changing political situation, the prospect of mass vaccinations and operators rapidly adapting with new trading formats, there is now light at the end of the tunnel after an incredibly challenging year,” Allegra founder and Chief Executive Officer Jeffrey Young said in the report. “We expect trading to begin stabilizing from summer 2021, however it will take a number of years for operators to fully readjust to the ‘new normal’.”

The market will recover to $40 billion in sales during the next year and exceed $50 billion by 2025 at a 7% annual growth rate, according to Allegra. The number of outlets, which shrank 0.6% to 37,189 locations in the past 12 months, will exceed 40,900 by the end of 2025.

The pandemic played havoc on U.S. coffee chains, with Allegra calling the period “the worst trading environment in living memory.” Operators reporting losses due to Covid-19 estimate the cost is approximately $32,500 per store per month, according to the Allegra report. Still, while top-paying operators in prime city locations and at transport hubs endured a “catastrophic drop” in 2020, some surburban and rural locations saw significant sales upswings as customers shopped locally.

Covid-19 store closures compelled many major American chains including Starbucks and Dunkin’ Donuts, which control 65% of the U.S. market, as well as Peet’s Coffee & Tea Inc. and boutique operators including Bluestone Lane and Intelligencia to accelerate the roll-out of mobile ordering, curbside pick-up and e-commerce platforms, the report said.

Drive-thru, which now accounts for 37% of all U.S. branded cafe outlets, is “becoming an increasingly attractive strategy to mitigate the impact of Covid-19,” the report said. Dunkin’ Donuts is the largest drive-thru operator in the U.S. with 6,391 sites, compared to 3,900 drive-thru locations for Starbucks.

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