Beijing, September 17 (Zuo Yukun) The long-established Tongrentang opened a sale of health coffee, the rise of domestic Internet coffee brands such as Santo and Yongpu, and the exquisite decoration of internet red cafes dominated the list of hot topics... The coffee scene has been particularly lively lately.
However, the buzz is all someone else's, and has nothing to do with COSTA, which is deeply involved in the tide of store closures, and Starbucks, which handed over the "worst in history" quarterly wealth.
Nowadays, under the attack of milk tea, the coffee market is "ice and fire double heaven", just like the feelings of different people on coffee: some people taste huigan, and some people only feel bitter.
People who work or relax in coffee shops. Photo by Zuo Yukun
COSTA was caught in the tide of store closures, and Starbucks submitted its worst report card
According to media reports, COSTA, a veteran British coffee brand that has been operating in China for many years, has fallen into a wave of large-scale store closures.
The most serious is Qingdao, which closed all stores; followed by Beijing, which closed nearly 20 stores, closing more than 10% of the total number of stores in the Chinese market.
Recently, China News Network visited a COSTA store in Xicheng District, Beijing, although it is a weekday, there are many customers in the store, quite lively, and the in-store service staff is also actively promoting the brand's preferential card coupons.
When asked about the plans of the unrelated store, the clerk said that his store had not received relevant notices and that business in the store had been very good recently.
"Costa in China is divided into two lines, the United Kingdom and the United States, the closure of the store is mainly the British line, and the Operation of the American Line where its stores are located is good." The clerk said.
COSTA coffee outlets. Photo by Zuo Yukun
"The closure of loss-making stores is part of the optimization and adjustment of business in China, which is affected by changes in store traffic and economic operations." COSTA responded.
When it first entered the Chinese market, COSTA had set a "small goal" of increasing its stores to 2,500 by 2018; but in 2015, COSTA lowered its requirements for itself: from 350 stores to 900 by 2020.
The reality is even harsher than COSTA expected, and after this wave of store closures, the number of COSTA stores in the Chinese market is currently only about 400.
Born in the same year as COSTA, Starbucks in more than 4,000 stores in China seems to have a lot of scenery, but from the latest financial report of Starbucks, the two are now considered "difficult brothers and difficult brothers".
In the third quarter of fiscal 2020 (March 30 to June 28), Starbucks net revenue was $4.2 billion, down 38.2% year-over-year, while net loss was $678 million, compared to a profit of $1.37 billion in the same period last year.
After suffering the worst financial report in history, Starbucks had to "break its arm to survive." In August, Starbucks announced plans to permanently close about 400 stores in the Americas over the next 18 months and cut the number of new stores it plans to open this fiscal year in half to about 300.
Established famous enterprises fell miserably, and street shops became winners
Although the big names of Starbucks and COSTA can be said to be well known in the coffee industry. However, looking at the ranking of coffee shops in various review software, few of the top ten chain brands are on the list, but some small coffee shops with solitary characteristics are quite popular.
Mr. Wei is the owner of an Internet celebrity café in Beijing. There are several stores, but each one is not large, and some are even just a small window store, designed like the commissary of the past, and the coffee will be sent out of the small window after it is ready.
In Mr. Wei's view, flexibility is the biggest advantage of small shops. While large-brand chain coffee shops have been hit by the epidemic, small shops with relatively weak risk tolerance are naturally not spared, and "Small and Spirit" has helped Mr. Wei at a critical moment.
"Window" coffee shop. Courtesy of respondents
"During the epidemic period, some of our stores were closed for almost two or three months, during which time we made coffee for guests who worked from home to deliver, and we also had linkage with some flower shops and the like, and also filmed a small video publicity." After the epidemic stabilized and reopened, the fastest recovery was also a take-away stall store, because there was no face-to-face burden of dine-in. Mr. Wei said.
Prior to starting his business, Mr. Wei had more than 10 years of working experience at Starbucks. In his view, drinking coffee in chain coffee shops is functional, drinking coffee in small coffee shops is leisure, and there is an essential difference between the two.
"Everyone is a little aesthetically tired of the chain coffee brand, and the penetration influence of photos on social media such as circle of friends has become lower and lower, in other words, those chain stores 'look the same, not cool enough'." Mr. Wei feels that the advantages of small stores can still make the store personalized, coffee beans can be roasted by themselves, product ideas can adapt to the market faster, and large stores cannot turn around so quickly.
"At the same time, in the entire coffee chain brand, Starbucks ran in the first place, and the others followed homogeneously, and the brand culture was not established very clearly." Mr. Wei said.
This is one of COSTA's big worries. After COSTA, which originated in the United Kingdom, entered the Chinese market, it still held the "European aristocratic" style, and its target positioning was biased towards high-end white-collar workers. In the stage of Chinese is still becoming increasingly "coffeeized", compared with Starbucks, which has created many out-of-the-loop blockbusters such as "cat's claw cup", it is difficult to sink whether it is a consumer group or urban expansion.
This high-cold positioning can also be seen from COSTA's little-known Chinese "Coffee Family", which is in stark contrast to Starbucks, which has nicknames such as "Star Daddy", and was once complained by netizens that it was not simply called "thirst to death".
Will coffee be the next milk tea?
Not long ago, the "2019 Guangdong Top 100 Catering List" released by the Guangdong Provincial Catering Association showed that Heytea beat established catering enterprises such as Guangdong Restaurant ranked third, and Naixue's tea also ranked eighth. In last year's list, the two ranked only tenth and fifteenth.
Young people's "fat house happy water" milk tea, recently popular, a few steps in a business circle, found five or six different brands of milk tea shops is a common thing. The same is available on the street, can coffee be as popular as milk tea?
According to the "2020-2025 China Coffee Industry Market Demand and Investment Planning Analysis Report" released by the Prospective Industry Research Institute, the average annual growth rate of Coffee consumption in China has reached 15%, and by 2025, the size of China's coffee market will reach 217.1 billion yuan. The huge market shows that the number of people who drink coffee has been growing, depending on how you make them drink.
Unique internet celebrity coffee. Courtesy of respondents
"It's true that in the past few years, milk tea shops have been better to do because it is simpler and the audience is wider. Milk tea can easily sink to third- and fourth-tier cities, but the coffee shop business will be slightly narrower. Mr. Wei said, "But the simpler something is, the more difficult it is, the camp is fiercely competitive, and the profit margins are pressed again and again." ”
The low cost of milk tea is nothing new. Some insiders have said that the net cost of a cup of milk tea is about 2-3 yuan. Counting the cup straw, the equal rent and water and electricity costs, and the labor expenditure, the total cost of a cup of milk tea is probably not more than 5 yuan. However, the industry's low-price competition is fierce, and most tea shops usually only sell milk tea for about 10 yuan a cup, or even 8 yuan.
Although coffee sounds higher, the cost is not much higher. A barista who has worked at COSTA told China News Network that chain coffee companies have a very large material cost advantage, under the premise that coffee beans are imported and milk is fresh milk, the net cost of a latte is about 5-6 yuan.
"While coffee shops tend to have larger storefronts than milk tea shops, the rest of the additional costs are also more. But the pricing is also much higher than milk tea, selling to 30 yuan is very easy, the overall calculation of the profit is still higher than milk tea. The barista said.
Under the temptation of objective profits and huge potential market, many freshly ground coffee brands began to squeeze into the market. Canadian coffee chain Tim Hortons said after receiving exclusive investment from Tencent that it will open more than 1,500 stores in China in the next few years; Arabica, an internet celebrity coffee from Japan, has also accelerated its layout and has opened more than 20 stores in the Chinese market.
Even many new tea drinks that come from milk tea, such as Hey Tea, NaiXue's Tea, CoCo, etc., have also "tasted" and tried to explore innovative coffee products.
Screenshot from Xicha's official Weibo.
"Coffee shops and milk tea shops are going in different directions, in addition to appearing more advanced, the social attributes of coffee shops are also irreplaceable." For example, if I say please have a cup of coffee and sit in the coffee shop, it seems much more formal than the milk tea shop. Mr. Wei believes that the future market is segmented, as long as you focus on this field to continue to cultivate, which road can go through.
So, would you rather have a cup of coffee, or milk tea? (End)
Source: China News Network