Why did Flash Coffee shut its Singapore coffee industry stores?

Flash Coffee closed all 11 of its Singapore outlets and became entangled in unpaid wage disputes and provisional liquidation. The Singapore-based grab-and-go chain had just raised $50 million from investors including White Star Capital and Delivery Hero, saying the funds would lift profitability and speed Asia-Pacific expansion. Less than six months later, voluntary creditor liquidation followed.

Unions stepped in over unpaid salaries, CPF contributions and unused leave encashment. The company said it would keep the Hong Kong market. The collapse shows the risk in a money-burning expansion model copied from Luckin once financing falters, a warning for the wider coffee industry in Singapore.

The coffee market continues to slump, and the wave of chain brand closures has spread from China to overseas markets. Flash Coffee, once called a "knockoff" of Luckin by some media outlets, recently abruptly closed all 11 of its stores in Singapore and has become entangled in disputes over unpaid employee wages and provisional liquidation. The brand had just completed a $50 million financing round, with investors including White Star Capital and Delivery Hero, claiming the funds would be used to improve profitability and accelerate Asia-Pacific expansion. However, less than six months later, news emerged of voluntary creditor liquidation, and labor unions stepped in to handle unpaid wages, CPF contributions, and unused leave encashment. Flash Coffee promised to retain the Hong Kong market, but its money-burning strategy of copying Luckin proved unsustainable when financing faltered. This article reviews the timeline and key details of the incident.

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The coffee industry is currently performing poorly, with large-scale chain store closures occurring domestically, while overseas chain coffee companies are similarly struggling to escape the fate of closures.

Recently, multiple media outlets reported that Flash Coffee, a chain brand once called a "knockoff" of Luckin by some domestic media, is "flash retreating" from the Singapore market, closing 11 local stores, with news of disputes arising from unpaid employee wages.

Flash Coffee is a homegrown Singapore chain coffee brand focused on digital operations, offering consumers a grab-and-go purchasing experience. Not long ago, the brand announced the completion of a $50 million financing round, led by White Star Capital, with participation from investors including Delivery Hero and Geschwister Oetker.

In a statement, Flash Coffee said the funds would be used to accelerate the improvement of the company's overall profitability and drive continued expansion in the Asia-Pacific region.

Meanwhile, a notice appeared on social media about employees striking due to unpaid wages, roughly stating: We are on strike. "Given multiple delays in salary payments, stores will be closed indefinitely. Flash Coffee baristas across the island (Singapore) deserve a comfortable working environment. Thank you for the wonderful memories. See you next time."

In response to the controversies in the reports, Flash Coffee officially stated that the sudden closure of all Singapore stores was "to focus on other markets with potential."

According to the labor union, company employees are owed wages, Central Provident Fund contributions, and encashment of unused leave. The union president, responding to media inquiries on October 13, said that at a meeting yesterday they were informed the company had been provisionally liquidated and their services terminated effective immediately. According to media reports, Flash Coffee will abandon its Singapore operations but has promised to retain the Hong Kong market.

Although Flash Coffee initially aspired to replicate Luckin, it is fundamentally different from Luckin Coffee. Apart from subsidies through delivery platforms, it did not further develop valuable projects to differentiate itself from competitors in a crowded market.

Additionally, according to records on the Accounting and Corporate Regulatory Authority website, Flash Coffee's status is listed as "creditor's voluntary liquidation."

This year, Flash Coffee also stated that all 92 of its stores in Indonesia were profitable. Yet with news of liquidation emerging less than six months after the financing announcement, it inevitably leads one to speculate whether the company decided to close stores when facing financial problems.

If Flash Coffee chooses to emulate Luckin's operating model, it undeniably amounts to burning money. When financing encounters difficulties, the money-burning model indeed becomes hard to sustain.

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