What is the average startup cost for a coffee shop like Cotti?

An open letter from a Cotti franchisee circulating on social media lists problems across supply, peripheral products, research and development, co-branded IPs, product quality, and operations. A rough calculation circulating online puts the investment to open a Cotti store at 400,000 yuan, with a payback period of four and a half years even at 500 cups sold per day.

Many stores sell fewer than 100 cups daily, so that payback estimate is optimistic for most locations. Franchisees have lost confidence, transfer posts are appearing frequently on social platforms, and management has not yet responded to the letter. Founder Lu Zhengyao's announcement that Cotti will cross over into milk tea added to the unease, with the Tea Cat venture still unproven.

The competition between Cotti and Luckin has yet to produce a winner, and now founder Lu Zhengyao has announced that Cotti will cross over into milk tea, a piece of news that has exploded among the franchisee community. Recently, a letter written by a franchisee to Cotti has been circulating on social media, detailing Cotti's various problems across six dimensions including supply, R&D, and operations. At the same time, some netizens have done the math: investing 400,000 yuan to open a store, even at 500 cups sold per day, it would take four and a half years to break even, while many stores sell fewer than 100 cups a day. With Tea Cat about to launch, some franchisees have already lost confidence, and transfer posts are frequently appearing on social platforms. Cotti's management has yet to respond to the letter, and franchisees' patience and confidence are being worn down.

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If one were to name the most closely watched event in the coffee world this year, the head-to-head confrontation between Cotti and Luckin would certainly be among them. Recently, Cotti has made new moves—founder Lu Zhengyao publicly stated that Cotti will venture into the milk tea sector, a piece of news that quickly sparked heated discussion and skepticism among netizens, and also unsettled franchisees.

Just yesterday, a letter written by a franchisee to Cotti appeared on social media. The letter frankly pointed out Cotti's current shortcomings across six dimensions—supply, peripheral products, R&D team, co-branded IPs, product quality, and operations team—and attached the writer's own insights and suggestions for improvement.

In the comments section, many netizens expressed their views, including both Cotti franchisees like the blogger and consumers who have visited Cotti stores. Judging from the feedback, the operational problems mentioned in the letter do indeed exist and have persisted for some time.

For franchisees, they urgently hope Cotti's management will respond, but the core question more people care about is: is there still profit to be made from continuing to partner with Cotti? These franchisees have already come to see Cotti stores as a business that no longer makes money.

Some netizens made a rough calculation of the financial investment required to open a Cotti coffee shop, concluding that with an upfront investment of about 400,000 yuan, and on the premise of average daily sales reaching 500 cups or more, it would take roughly 54 months—about four and a half years—to recoup the costs.

However, some store managers frankly admit that their stores' daily sales simply cannot reach 500 cups, and the payback period will only be longer. One person said: "If you sell around 100 cups a day, you probably won't break even in ten years."

As for whether partnering with Cotti can make money right now, most franchisees deeply mired in it say that even though Cotti provides certain subsidies, these subsidies are far from enough to cover the losses from store operations.

Since Lu Zhengyao announced last month that Cotti would enter the milk tea track, netizens' debates have not stopped. Some look forward to the "king of involution" Cotti pushing milk tea prices down further, while others feel the milk tea track is not suitable for Cotti. Many franchisees share similar views, with some even pessimistically believing that Cotti's switch to a new track at this point means it intends to abandon franchisees it has partnered with for so long.

As 2023 draws to a close, the official launch of the milk tea brand "Tea Cat" mentioned by Lu Zhengyao is not far away. Some franchisees are still watching to see where Cotti will go next, but others are no longer optimistic about Cotti's prospects. Because of this, a number of Cotti store transfer posts have recently appeared on social platforms, posted as recently as within a week or as long as over half a month ago. From the number of these posts, one can glimpse that some franchisees' confidence in Cotti is fading, and they just want to extricate themselves from Cotti's vortex as soon as possible and cut their losses in time.

The blogger who wrote the letter to Cotti's management originally intended to hope that management would listen to franchisees' voices, pay attention to the problems currently exposed, give franchisees a reassurance, and at the same time bring consumers a better experience.

But as of press time, this heartfelt letter has still received no response from Cotti officially.

Image source: Xiaohongshu

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