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"Coffee with you" defeated China
When it first entered the Chinese market in 2012, Coffee Companion once claimed to open 5,000 stores to catch up with Starbucks, but now it has completely collapsed in the Chinese market.
Source 丨China Entrepreneur Magazine(ID:iceo-com-cn)
Image Credit / Visual China
After years of debt crisis, Caffe Bene, a joint venture in China, Caffe Bene, ended in bankruptcy. The company was included in the blacklist of enterprises with serious violations of the law and untrustworthiness, and the whereabouts of the legal representative were also unknown.
The Shanghai Fengxian District People's Court issued an announcement on October 9 that the creditors of Coffee Accompany you (Shanghai) Investment Management Co., Ltd. (hereinafter referred to as "Coffee Accompany You Shanghai Company") should declare their claims to the manager of Coffee Accompany you Shanghai Company before November 9, 2018, and are scheduled to hold the first creditors' meeting on the afternoon of November 16, and creditors who declare their claims in accordance with the law have the right to participate in the creditors' meeting.
Coffee Escort You Shanghai Company was founded in 2013, and Coffee Escort You Management Co., Ltd. is its sole shareholder, and the latter has been included in the blacklist of seriously illegal and untrustworthy enterprises by the court in 2015 for "three years through the registered residence or business premises can not be contacted." The legal representatives of both companies are Yu Yifan. At present, Yu Yifan's whereabouts are unknown and he has been issued a consumption restriction order by the court.
Since 2014, coffee has frequently been exposed to negative news of arrears of wages, arrears of payment to suppliers, termination of franchisees, and closure of stores in many places. On July 24, 2017, its founder, Jiang Xun, was overwhelmed and chose to commit suicide due to the difficulties of the company.
According to the data of the enterprise credit information reference platform Enterprise Investigation, coffee accompanies you to manage the company through coffee to accompany you to the Shanghai company, there are 230 enterprises investing in China, and there are 199 holding companies. According to industrial and commercial information, most of these enterprises are displayed as "deregistered, revoked" and "abnormal operation". Both companies were involved in more than 300 lawsuits.
Strong expansion
Founded in 2008, Coffee Companion is the largest coffee chain in South Korea, operating a variety of high-end teas, lattes, juices, waffles, bread and other goods in addition to coffee.
Different from the simple and business-oriented European and American cafes, coffee accompanies you with a spacious and bright space, everything in this space is full of design - high hanging crystal lights, clean floor-to-ceiling windows, fabric sofas, large tables in log tones, walls full of magazines and books, timed hourglasses... It creates a casual and warm atmosphere.
The target consumer group of Korean coffee represented by coffee accompanying you is couples, friends or families, hoping to use a larger and more comfortable space to let consumers stay in the store for a long time.
Xin Zixiang, the founder of Man Coffee, once said that these consumers who stay in the store will definitely "call friends" and bring more consumers. Lai Yang, president of the Beijing Business Circulation Strategy Research Institute, believes that coffee accompanies your consumption scene is more inclined to leisure, this style is very promising, compared with Starbucks, Costa and other small business coffee shops, coffee accompanies you in addition to attracting casual people, but also for designers, entrepreneurs and other groups to show the program to customers, investors provide a good place, which is also one of the reasons why coffee accompanies you to expand rapidly in China.
With the brand strategy of "star entertainment marketing + social interaction + store marketing", coffee accompanies you to expand rapidly in a short period of time, and becomes the largest coffee chain enterprise in South Korea with the opening speed of 100 stores per year, with more than 900 stores, and Starbucks's market share in South Korea is squeezed by only 15%.
In 2012, China's coffee industry was swept away by a strong Korean wave.
More than a dozen Korean coffee brands such as Coffee Companion You, Howllis, Zoo, Waff Bante, and Tushang have successively entered China and expanded vigorously. Among them, the most popular coffee accompanies you to enter China and quickly blossoms in first- and second-tier cities, expanding wildly, setting a record of an average of 200 stores per year, and saying that "by 2015, there will be 5,000 chain stores in China, becoming the No.1 of China's leisure coffee chains". At the end of 2013, the Korean drama "You from the Stars" swept the world, coffee accompanied you to collect the then popular Kim So-hyun, blue ocean market, star effect once accompanied you to the status of "the first korean chain coffee".
At the end of 2014, Coffee accompanied you to land nearly 600 stores in the franchise model, and its officials are proud of this achievement:
"Second only to Starbucks, an industry leader in China for 20 years (with 700 stores in China in fiscal 2012), we have become an industry leader in just over two years."
When you first enter China, you will taste the sweetness, and also let the coffee accompany you with great confidence. "At the end of 2014, Coffee accompanied you to try to open 1,000 stores in China, and will continue to maintain this rapid development trend in the future." At that time, no matter where you walk in China, whether it is a first-tier city, or a third- or fourth-tier town, as long as you want to drink coffee, there will be a coffee company waiting for you. This passage was once written on the official website of the company that accompanies you with coffee.
Crisis breaks out
However, coffee with you is soon met with a frenzied expansion. When you open more than 700 stores, coffee comes to the surface with the hidden dangers you have buried due to crazy expansion.
Since 2014, coffee has frequently been exposed to negative news of arrears of wages, arrears of payment to suppliers, termination of franchisees, and closure of stores in many places. In the face of media reports, its official statement has been issued:
"Encountering opponents with ulterior motives using small media to compile negative information, malicious slander."
But a single statement cannot hide its doom in name only.
In May 2015, a resignation letter from Qi Dong, CEO of Coffee With You, was exposed on social networks. In addition to the resignation statement, the letter also exposed many problems with coffee accompanying you, such as "the Chinese shareholder unilaterally stopped advancing funds 3 months ago, the work could not be carried out, and he personally did not receive a salary for 8 months", in addition, the letter also mentioned that "due to the mistake of coffee accompanying you in capital management, the operation is stretched".
Overnight, negative news about coffee with you is broken, wage arrears, and executive departures spread rapidly on the Internet.
A departing employee who accompanied you with coffee told reporters in June 2015 that there were more than 1,200 employees when coffee accompanied you at its peak in 2014, and only about 500 people were left in 2015, and dozens of people in the Shanghai headquarters alone were owed wages, and the longest half a year did not receive wages, he did not get a salary since January 2015, and the company had not been on social security for 7 months when he left. The departing employee said that some suppliers were owed millions of yuan, and some equipment manufacturers owed tens of millions of yuan. At present, some employees of franchise stores have applied for labor arbitration in the local area, and some people have successfully received wages and compensation, but it is useless for headquarters employees to apply for arbitration, "the company has no money on its books."
At the same time, there have been cases of franchisees coming to the door to ask for termination of claims in many parts of the country. There are reports that including Chongqing, Kunming, Xiamen, Guangzhou, Guiyang and other cities of coffee to accompany you stores have a wave of closures, many stores have gone to the empty building, leaving those gathered outside the store to ask the coffee to accompany your company to give a statement of franchisees, the amount of claims up to hundreds of millions of yuan. 69 franchisees went to the coffee to accompany you to Beijing and Shanghai headquarters, found that people had already gone to the building, and reported the case to the Chaoyang Branch of the Beijing Municipal Public Security Bureau, hoping to return the intention to join.
Complete one's misery.
According to the news released by the Seoul Police Department of South Korea on July 25, 2017, Kang Hoon, a representative of KH Company who has the title of "Coffee King" in South Korea and has single-handedly created a number of coffee chain brands such as Coffee Companion, Howlys Coffee and Mangosix, committed suicide at home on the afternoon of July 24, 2017. The police claimed that Jiang Xun had previously sent a text message to a friend to express his current state of exhaustion, and he had also applied for the business rebirth procedure before, hoping to change the current business difficulties of the enterprise.
Coffee accompanies you to the collapse of the Chinese market, Mangosix store sales are declining, and the heavy burden of the deficit may be the last straw that crushed the founder.
Jiang Xun's suicide makes coffee accompany you in your efforts to change the status quo with uncertainty. A year later, the coffee that swept the whole of Asia accompanied you and came to an end in China.
Textbook-level failure cases
Some insiders have commented that coffee accompanies you:
"Korean chain cafes are mainly about making money, not how to make a cup of coffee that satisfies customers." If any chain of cafes also takes this road, sooner or later it will end up the same way. ”
In the industry, coffee with you is regarded as a typical textbook failure case, and the lesson of the past has become a taboo for opening a store:
Blind expansion, the franchise system is unreasonable
Coffee accompanies you to set a record of 200 stores per year in China, but the speed of brand expansion is too fast, resulting in a weak censorship system for franchisees, and there is no complete standardized management system.
"Franchise + direct operation + cooperative operation" is the main business model of coffee to accompany you in China, of which franchise and cooperative operation are the mainstay, and the proportion of direct operation is only 10%. This directly leads to coffee accompanying you in the later development, has been facing the membership card can not be universal, different stores have different service quality, franchise stores for their own war, seriously dragging down its reputation in China.
What is more serious is that the individual franchise model used when coffee accompanies you to open up the franchise also makes the control of the enterprise seem weak.
A coffee with you franchisee once told reporters that after joining the coffee to accompany you, in addition to the early site selection, equipment procurement and staff training, the operation of the store is basically independent, and the procurement of food raw materials is also carried out through its own channels. It can be said that joining the coffee to accompany you is to buy this brand, and to attract popularity in the early stage of store business through the influence of the brand. A high degree of liberalization means that the control of the franchisees that accompany you to the coffee is lacking, which further leads to the difficulty of brand quality control. As a result, consumers often accuse coffee of having a very different experience with different stores on relevant review sites.
Shen Gang, the person in charge of the East China region of coffee with you, once admitted in an interview that the company has made some mistakes in the development process, and some franchisees in the rapid expansion are not doing well.
Some analysts also pointed out that the way coffee accompanies you to allow franchisees to grow freely has greatly reduced the default cost of franchisees, which is not only one of the reasons for the running away of Korean coffee franchisees represented by coffee with you, but also more likely to lead to the emergence of cottage stores due to lack of control.
This franchise system has also become the main reason for the break of the capital chain of coffee with you, in 2015, Qi Dong said in an interview that the reason for the shortage of funds is because coffee accompanies you 70% of the franchisees take the franchisee to invest 51%, coffee with you to invest 49% of the joint venture form.
"The number of joint ventures is a bit much, which takes up a lot of our funds. After the negative information comes out, there are fewer new franchisees, and the original franchisees have to get back the money, which is a run effect. ”
In the industry's view, the franchise model has its development bottlenecks: on the one hand, it is difficult to form an unbreakable common relationship of interests between brand enterprises and franchise stores, and the performance of brand enterprises has a ceiling. On the other hand, due to the ineffective supervision in the later stage, it is difficult for brand enterprises to control the actual operating conditions of franchisees, which also leads to the distrust of franchise owners in brand owners.
A relevant person from the China Chain Store & Franchise Association said that when the number of stores increased sharply, the entrusted business model put forward very high requirements for the logistics, supply chain management and even the construction of the franchise system of brand owners, and once the enterprise could not keep up, it was easy to have a series of chain problems caused by the inability to guarantee product standardization.
Disordered shareholding structure
When coffee accompanies you into China, it did not enter with "pure Korean" blood, but established Coffee Accompaniment Management Co., Ltd. through a Sino-Korean joint venture to expand and operate the brand in the Chinese market. At that time, the company's three major shareholders were China Enterprise Asia Pacific Investment Co., Ltd., Vice Chairman Jin Shanqi and Coffee Escort Hong Kong Holdings Limited.
However, at the beginning of china's entry into China, China and South Korea did not deal with the shareholding structure. When the brand development encountered problems, the Korean side took the lead in withdrawing funds.
It is reported that the coffee accompanies you at the beginning by the South Korean side responsible for the control of the company, but because the Proportion of South Korean investment is relatively small, the profit share is half of each, which causes dissatisfaction on the Chinese side.
In addition, according to people familiar with the matter, the two sides have also had conflicts due to different business philosophies, so South Korean shareholders have been reducing their investment in coffee with you Chinese companies until they completely withdrew. At the end of 2014, the joint venture was in negative news, but at that time, the South Korean headquarters did not send any rescue signal to the outside world for a long time.
Lai Yang believes that the disorder of the equity structure is the most important reason for the collapse of coffee with you, which also sounded the alarm bell for other brands, "In order to ensure the stable operation of the brand, the operator must do a good job in the early stage of equity, franchise, management and other strategic planning."
Resources
"Korea's largest chain coffee brand "Coffee with you", bankruptcy of a joint venture company in China", interface
"Where does the 50 million franchise fee go into mystery Coffee accompanies you into "coffee deceives you"? ), Chinese entrepreneur
"Shareholder infighting, founder suicide, once claimed to open 5,000 stores of the "café" lost china", invested in the network
"Founder Suicide Coffee Accompanies You To Revival Difficulty", Beijing Business Daily
"Coffee with You" Founder Suicide: His Shop Opening Experience Is Worth 5 Billion, but In the End He Lost to China", doing business
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This issue is edited by Si Chen, Intern, Lu Jieyi
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