In 2023, the wave of closures seems to have become the norm in catering. At the beginning of the year, there were a number of restaurants running away and going out of business; With the rise of the wave of store openings in the first half of the year, more than 2 million newly opened restaurants poured into the track, and the number of restaurant closures soared. As of August, the number of restaurant closures has reached 762,000, more than in the whole of last year. Some caterers even predict that in October and November after the National Day, a number of restaurants will close.
In this wave of continuous closures, coffee shops are undoubtedly the main force in it. According to the statistics of narrow door restaurant data, as of October 13, the total number of coffee stores is 170896, and 77,083 new stores have been opened in the past year, but the net increase is only 42,450, which means that nearly 35,000 stores have been closed in the coffee track alone in 2023.
That's just the net number of closures, and with the number of smaller coffee shops offset by store openings and unknown small coffee shops, the number of real coffee shops that have closed may have to multiply several times.
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Can't bear it!
Coffee shops close en masse...
For this year's wave of coffee closures, the most obvious feeling is undoubtedly the owner of the second-hand restaurant restaurant.
"The number of coffee machines recovered recently has reached a terrifying level, and the warehouses are so full that there is nowhere to put them." The head of a Shanghai-based catering equipment recycling company said. "Especially in recent months, the transfer of coffee machines has almost half as fast as in May, which shows that the wave of coffee closures has arrived."
Recycled coffee equipment
On social platforms such as Xiaohongshu, posts about the closure and transfer of coffee shops abound. "After the 90s couple joined the café, they lost 800,000 yuan in the past six months." "The first coffee shop at the age of 23, it closed down in 2 months" "The coffee shop downstairs of the company closed round after round. In August, some media broke that a female Internet celebrity invested 1 million yuan to open a coffee shop, which closed down in less than a year. Some shopkeepers on Xiaohongshu have even turned on the "countdown to closure" mode on the homepage.
Little Red Book Coffee bankruptcy transfer related posts
In addition, platforms such as short videos can also see many coffee shop closures.
"Our store opened last summer and business was very good. But because the store is close to the mid-levels, it is very cold and windy in winter, and there is basically no business, and it has lost money for several months. I thought that the business would explode again after the summer came, but the iteration of the wind outlet was too fast, and the business still did not improve, and the total investment of 600,000 yuan was basically all lost. The manager of Shenzhen Banshan Coffee shared on the short video platform.
"I'm really sad to see the coffee shop being demolished." The Fujian seven-pound coffee manager said sadly.
The owner of a closed coffee shop in Lanzhou City turned red when he shared the last video of the closure, "The store is empty, cleanly dismantled, full of scars, and everything that can't be used is sold as scrap." For failed caterers like us, it is a point to be able to sell a point, and a point to be able to recover is a point. ”
TikTok video shares the content of coffee shop closures
Even well-known chain coffee brands can't bear to usher in a large number of store closures. In June, catering O2O was the first to report that there were fewer and fewer Pacific coffee stores around, and a large number of Pacific coffee stores were closed in Shenzhen and Shanghai. In addition, around November last year, more than a dozen stores of Coffee were closed overnight.
Although some stores have not yet closed, they are already on the road to closure. Netizen "Cousin Open Shop" shared that since his coffee shop opened a Luckin nearby, "the income has increased from a few thousand a day to hundreds today, and the turnover has been directly reduced, and I don't know when it will close." ”
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Price wars may be the culprit
However, just when small coffee shops are struggling to live and die, coffee heads have ushered in explosive growth.
In August this year, Cudi Coffee directly announced that it had exceeded 5,000 stores. According to the narrow door restaurant, the total number of Kudi coffee shops has reached 6,081, distributed in 311 cities in 31 provinces across the country. Among them, nearly 6,000 stores are new stores opened by Kudi in 2023.
Luckin, as the first 10,000-store brand on the coffee track, is no exception. According to catering O2O statistics, as of September, the Luckin brand has added 2,213 stores this year, equivalent to nearly 10 new stores every day. At present, according to the data of narrow door dining eyes, the total number of Luckin coffee stores has reached 10,427.
Starbucks, as the head of coffee in the main coffee + third space, although it has been affected to a certain extent by the impact of coffee such as Luckin, but the speed of expanding stores is not slow. According to Narrow Door Restaurant, as of September, Starbucks has opened 753 new stores in 2023. At present, the total number of Starbucks stores has reached 7,587.
Affordable coffee lucky coffee has also grown rapidly, with 1,051 stores opened in 2023. In addition, the speed of Nova Coffee, specialty coffee manner, and TIM Tianhao Coffee is not slow. According to relevant media, the number of Nova coffee stores has approached 2,000.
On the one hand, the cliff of frequent closures and death struggles of coffee shops, and on the other hand, the hot heat of the crazy growth of the head coffee brand, why is this situation in the coffee market? The ongoing price war under extreme involution is undoubtedly the culprit.
This year's coffee price war can be described as in full swing. First, CoCo launched 3.9 yuan American, and then the market continued to emerge 5 yuan, 4 yuan and other series of cabbage price coffee. There are brands that simply call 3.9 yuan coffee... With the launch of the daily 9.9 activity, in order to cope with the competition, Luckin Wandian announced that coffee entered the era of 9.9 yuan of high quality, which dragged the entire track into the vortex of a protracted price war.
Couddy's $9.9 and Luckin's $9.9 coffee
Short-term low prices may be used as a means of attracting customers with performative low prices. However, long-term low price is a comprehensive brand capability, involving not only the brand product itself, strong supply chain system support, low-cost capability at the channel end, organizational and operational efficiency, and also requires the brand to have scale effect and capital reserve confidence.
As Restaurant O2O Luo Huashan said. "It's destined to be a game of capital."
Extreme cost reduction can not be done for individual players, can only enter the situation of "well-known brand price reduction - sales decline - follow price reduction - product cost reduction - quality reduction - competitiveness decline - sales continue to decline", and finally either work hard to maintain the store, or directly close down to become the object of shuffling.
After all, behind every big fish grows, there are thousands of small fish and shrimp that have been sacrificed.
As coffee brands move from "price war" to scale "hegemony war", the catering Matthew effect will become more and more obvious, big brand winner-take-all will become the norm, and small coffee brand business will undoubtedly decline further. In other words, this wave of coffee shop closures may only be the beginning.
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A few ideas to break the game
Selling emotional value, coffee +
The industry is hot and cold, the head occupies an absolute advantage, what should you do as an individual coffee entrepreneur?
As the catering O2O has always emphasized, "If you lose money in the land, you lose all the money; Save money and lose land, get all money. "If your coffee store is now in a sub-healthy or unhealthy state, the revenue cannot reach the capital preservation point, or even the revenue can no longer cover the expenditure, and you do not have a breakthrough strategy, it is best to put down your cards, rationally close the store, and stop the loss in time."
If coffee entrepreneurs are still eager to continue in the catering track, they should strive to increase store revenue and withstand the pressure. It is recommended to start in the following directions.
1. Coffee +, become a daily breakfast restaurant, noodle restaurant, nail shop, etc
"If you insist on only making coffee until now, it will be a very dangerous thing for coffee shops." Catering O2O Luo Huashan said. A single coffee store can only constantly seek customer acquisition and repurchase rates. Once the number of customers acquired by the store declines, the revenue will immediately decline or even be cut. "Coffee shops must learn to broaden their thinking and do business complexing."
"Especially in community coffee shops, make your coffee shop a part of customers' daily lives, such as the "breakfast shop" where customers drink a cup of coffee every day, the "small noodle shop downstairs" where customers can drink coffee and eat noodles downstairs, and the "nail shop" where customers can drink coffee while manicures, becoming a gathering place for community customers to relax daily. ”
Of course, in addition, coffee + roasting, coffee + breakfast rice balls, coffee + bookstore, coffee + e-sports, coffee + cultural creativity, and even coffee + bun shop are all directions that can be tried. According to the manager of Green Pine Coffee, the store's turnover has increased by 20% since adding pork chop buns and cloud leg crisps. It can be seen that the revenue capacity of coffee shops in complex categories is stronger.
2. Create another way, sell emotional value, and create emotional coffee
People are emotional animals, and this generation of Z young people is more easily driven by emotions. Buddhism, back waves, lying flat, wild consumption, emo (depression), rotten, "post-00s rectification of the workplace"..... Behind a series of buzzwords, all reflect the collective mood of young people today. Young people's emotions such as anxiety and stress need a way to escape, and whoever can provide this channel to help them temporarily withdraw from real anxiety can win the hearts of young people. The popularity of temple coffee at the beginning of the year is the best example.
As a category that has been linked to literature and romance since ancient times, coffee is a natural emotional grip. It is a good choice to cater to the emotions of young people, sell emotional value, and create emotional coffee. At present, many coffee brands have been exploring this track, such as Chongqing No Anxiety Coffee, once popular workers' coffee, etc. Moreover, the coffee itself comes with its own "advertising space", and each coffee name, each outer packaging, can refer to a mood.
However, coffee entrepreneurs don't have to be too frustrated, and although the current price war will be difficult to end for a while, it is unlikely to last long. After all, the price war is essentially a user battle for the brand, and when coffee users do not continue to grow under the price stimulus, the price of coffee will naturally return to rationality.
The future is difficult, but it is not without hope.
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Author | Produced by Susu | Catering O2O