Why Cotti Coffee Chose Hongqiao for Its Shanghai Debut

Cotti Coffee, the new brand from Luckin founder Lu Zhengyao and his original core team, has opened its first Shanghai store at Tianhui HQ in Hongqiao, formerly Lingkong SOHO. It runs a directly-managed joint operation model, has entered more than 40 cities, and targets 10,000 stores in three years.

The site puts Cotti on the same street coffee battleground as Starbucks, Luckin, Manner, and Sanlifang Coffee. Drinks such as the yerba mate series are priced from 9.9 to 18.9 yuan, undercutting Luckin's hit products. Reports say the 10,000-store goal was moved up to June 2023, with staff recruited at roughly double Luckin salaries.

After leaving Luckin Coffee, Lu Zhengyao and his original core team have officially unveiled their new brand Cotti Coffee in Shanghai, with the first store located at Tianhui HQ (formerly Lingkong SOHO), competing alongside brands such as Starbucks, Luckin, and Manner. Cotti Coffee is expanding rapidly through a fully directly-managed joint operation model, and has already entered more than 40 cities, setting a goal of 10,000 stores in three years, or even completing 10,000 stores as early as June 2023. On the product front, in addition to regular coffee, it has also launched limited-edition drinks such as the yerba mate series, priced between 9.9 and 18.9 yuan, directly targeting Luckin's hit products. Specialty coffee brands such as Front Street Coffee are also paying attention to changes in this track. Competition in the coffee industry is accelerating as pandemic controls fade, and what kind of pressure Lu Zhengyao's bold layout will bring to Starbucks and Luckin is worth continued attention.

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When it comes to Luckin Coffee, Lu Zhengyao is a key figure who cannot be avoided and can never be bypassed. These two names, once closely connected and eventually parted ways, have met again on the same track after two years.

Recently, Cotti Coffee, a new coffee brand created by Luckin founder Lu Zhengyao and his original core team, opened its first Shanghai store at Tianhui HQ (formerly Lingkong SOHO). This building gathers almost all mainstream chain coffee brands in Shanghai, with more than one store each for Starbucks, Luckin, and Manner, and earlier Sanlifang Coffee also opened its first Shanghai store here.

According to public reports, last month Cotti Coffee completed registration in Beijing, Changsha, Zhengzhou, Hainan, and many other places. Previously, a Cotti insider told the media that Cotti had moved its 10,000-store goal forward to before June 30, 2023, and had even poached a large number of people from the old team with salaries twice as high as Luckin's. As pandemic controls gradually loosen, competition in the coffee industry may heat up faster.

When asked by the media "why choose to open a store here," a Cotti Coffee staff member responded: "Office scenarios are currently the largest application scenario for coffee products. Tianhui HQ has a dense office population and a concentration of coffee brands, which is conducive to brand promotion." Indeed, facing such a location with market potential, major chain brands all want to stake their claim first.

It is understood that at this store, consumers can not only buy coffee, but also taste some limited-edition drinks, such as the yerba mate series "Lemon Yerba Mate" and "Yerba Mate Cold Brew Coffee" favored by Messi, and of course the Argentine series "Pampas Blue Raw Cheese Dirty" and others available at other stores.

It is worth noting that Luckin's hit products such as Coconut Latte are also sold at Cotti Coffee, and all products are currently priced between 9.9 yuan and 18.9 yuan. Cotti Coffee's positioning has never been "another" coffee shop; its business scope covers coffee, baking, light meals, bars, and more.

Following the opening of its first store in Fuzhou on October 22 this year, according to a rough count from Cotti Coffee's current ordering mini-program, the brand has quietly entered more than 40 cities. Between November 15 and 25, Cotti Coffee also opened 12 stores at a pace of "ten days, ten cities," rapidly rolling out a nationwide layout.

After opening its first store in October this year, Cotti Coffee boldly proposed a plan to open 10,000 stores in three years. Just as the "10,000 stores in three years" goal was shocking people, there was also news that "Cotti internally had adjusted the 10,000-store goal to before June 30 next year."

Returning to his old trade, Lu Zhengyao is running Cotti Coffee by "throwing money" at it, and his bold moves are not only reflected in a store-opening speed surpassing Luckin's early stage. Cotti Coffee completed brand naming, supply chain operations, and organizational structuring in less than two months. Among its core personnel are many veterans who once fought side by side, while it also continues to poach people with high salaries and expand its team.

Unlike Luckin Coffee, Lu Zhengyao's Cotti Coffee did not say it was opening a franchise model during recruitment, but instead called it a "fully directly-managed joint operation model," and partners are also called "joint operators." However, according to Times Finance, some professionals analyze that its joint operation model is essentially no different from a franchise model. Many chain brands avoid the word "franchise" mainly to avoid legal and regulatory risks.

Cotti has been established for less than two months, and Lu Zhengyao's rapid comeback after Luckin's financial fraud case shows that the coffee industry is enormously attractive to him. So, in the face of such a bold layout being pushed forward, who feels the coldest chill this winter, Starbucks or Luckin?

The above content is compiled by CoffeeHunters, a coffee news website.