What Does the Coffee Industry Shakeout Mean for Stores?
Data from Canbaodian puts the coffee closure rate at 13.3%, below the restaurant average of 22.6%, but more than 43,000 coffee stores closed in the past year and the closure rate passed 50%. China had 244,000 coffee beverage stores as of August, 68,000 of them specialty shops, or 27.9% of the total.
Competition has shifted from products, prices and store counts to franchising, channels, labor costs and online marketing. Leading brands keep expanding and squeezing small and medium outlets, and transfer listings have become a traffic hotspot for owners. Guangdong, Zhejiang and Jiangsu lead in store numbers, while independent coffee store operators face the hardest fight.
The coffee track's competition has entered a white-hot stage, from products and prices to franchising and channels, involution is everywhere. Data from Canbaodian shows that the coffee closure rate is 13.3%, lower than the restaurant industry average of 22.6%, but behind this seemingly optimistic figure is the harsh reality of more than 43,000 stores closed in the past year and a closure rate exceeding 50%. Leading brands are expanding frantically, the survival space of small and medium-sized stores is being severely squeezed, and even transferring stores has become the last traffic hotspot for shop owners. This article sorts through the latest industry data and real cases, revealing the truth of the coffee market's "battle royale" and exploring the tough battles that chain and independent stores will face in the future.
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From earlier competition over products, prices, and store numbers to the current jostling over franchising, channels, labor costs, and online marketing... competition in the coffee market has entered a new white-hot stage, and the single word "involution" no longer seems enough to accurately describe how crowded this track has become.
Recently, Canbaodian released statistics on the closure rates of 81 restaurant subcategories. The data sample was all restaurant-related enterprises registered in 2023, with statistics current through the end of June 2024. The results show that among these 81 categories, the closure rates for tea drinks and coffee were 19.6% and 13.3%, respectively, with coffee clearly lower than the restaurant industry's overall average closure rate of 22.6%.
However, if we focus only on the coffee beverage market to observe store survival, we find that behind the rapid growth of leading brands is a true picture of large numbers of physical stores opening and closing repeatedly, with outsiders coming and going.
According to Hongcan.com data, as of August this year, the total number of coffee beverage stores nationwide had reached 244,000, including 68,000 specialty coffee stores, accounting for 27.9% of the total number of coffee beverage stores. From a regional distribution perspective, provinces such as Guangdong, Zhejiang, and Jiangsu rank at the forefront in the number of coffee stores.
According to Zhaimen Canyan data, as of August 5, 83,171 coffee stores had opened in the past year, with a net increase of 39,982 (the increase basically coming from leading enterprises), which means the number of closures in the past year reached 43,189, with a closure rate exceeding 50%. In other words, while chain brands spare no effort in close-quarters combat, nearly a hundred coffee shops are quietly disappearing every day across cities and towns nationwide.
Taking Coffee Workshop's reports over the past month as an example, since August, there have been nearly ten pieces of news about coffee brands closing stores or temporarily withdrawing from commercial districts. By store type, these include Starbucks, %Arabica, and Seesaw, priced at thirty to forty yuan, as well as Manner, which focuses on extreme value for money, and long-established entrepreneurial cafes that have been operating for more than ten years. It can be seen that in the face of such fierce mar ket competition, the intensifying squeeze on profits has greatly accelerated the renewal and iteration speed of physical coffee shops , and the entire industry's "battle roy ale" is playing out intensely .
In fact, even setting aside these cold statistics, many clues can be detected from those shop owners who are happy to share their experiences online.
For example, some people noticed that their stores were deserted, and takeout orders also plummeted without warning; some habitually posted their daily revenue, only for a flood of "zeroes" to appear in the comments; others, after repeated deliberation, decided to temporarily put aside their obsession with opening a store, leaving behind farewell letters filled with memories and reluctance... There were also "former shop owners" who mocked themselves: "The store closed down, and the hottest thing turned out to be that store-transfer post."
As the "hegemonic war" among brands intensifies, leading chains such as Luckin, Cotti, and Starbucks continue to expand, and the survival space of small and medium-sized brands as well as single stores and small shops is constantly being squeezed. In the future, the entire coffee track will remain bloody and stormy, and the elimination round is far from over . Next, whether for chain brands or independent stores, it will still be a tough battle.
Image source: Internet
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The above content is compiled by CoffeeHunters, a coffee news website.
