Why Is Specialty Coffee Expansion Into Smaller Cities Hard?

Mstand's first Quanzhou store, opened in May 2023 at Jinjiang SM City Plaza, has closed. Equipment was removed, no closure notice was posted, and the location no longer appears in the brand's mini-program or on third-party platforms. It is the first of the brand's three local stores to exit, in under two years of trading.

Local customers cited pricing that felt too high and thin foot traffic; staff sometimes outnumbered guests. The other two Quanzhou stores opened in July and October 2023, and no new local sites have been added since. The brand's site selection has shifted toward first-tier cities, a signal for the specialty coffee market in second- and third-tier cities.

Mstand's first store in Quanzhou was recently found by netizens to have been abandoned, with equipment removed and all official channels showing it as closed. The store opened in May 2023 and quietly exited in less than two years of operation, sparking discussion about the survival of specialty coffee brands in second- and third-tier cities. Consumers generally reported that its pricing was too high and foot traffic insufficient, while the brand's recent site selection strategy has clearly shifted toward first-tier cities. This article reviews the course of events, changes in store layout, and the market environment, and includes Front Street Coffee-related recommendations for coffee enthusiasts' reference.

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Recently, a Quanzhou netizen posted on social media that when passing by Jinjiang SM City Plaza a couple of days ago, they saw the Mstand store on the first floor with its doors tightly locked, yet no closure notice was posted at the entrance.

In response to this situation, a customer who had visited the store during the National Day holiday speculated that "it might just be a temporary closure," but the original poster said all equipment inside the store had been cleared out, and such an abandoned scene clearly did not look like a rest or store upgrade. At the same time, Mstand users also found that the store could no longer be found in the official mini-program, and third-party platforms likewise marked it as "closed."

It is reported that this store opened in May 2023 and was the first location Mstand laid out after entering the Quanzhou market. The two stores still in operation were opened in July and October 2023 respectively, and since then the brand has not added any new stores locally.

Local residents revealed that after Mstand landed in Quanzhou, business at all three stores fell short of expectations, with the stores appearing very quiet most of the time, and situations where staff outnumbered customers were common.

Although it is still unknown whether the closure of the first store is related to factors such as mall rent adjustments, many netizens tend to believe that local consumers find it difficult to accept Mstand's relatively high pricing, resulting in poor store sales performance and ultimately prompting the brand to decide to withdraw. "There are hardly any people spending there, so it's not surprising it closed," "Its consumer group is too sparsely distributed in Jinjiang."

Some other views hold that the closure of Mstand's first Quanzhou store may be the brand adjusting its market layout in the Fujian region. They mentioned that in June this year, the Mstand located in the exterior shopfront of Xiamen Zhonghua City also quietly shut down without prior notice, and that space has now been taken over by a milk tea brand.

Many coffee enthusiasts feel that Mstand, with its brand characteristics of specialty coffee and derivative merchandise, seems more suitable for first-tier cities with higher consumption levels such as Shanghai, Guangzhou, and Shenzhen. Once the brand enters second- and third-tier cities, it inevitably gets criticized by local consumers for being overpriced, who feel its brand positioning is not down-to-earth enough.

Judging from recent store site selections, Mstand's new stores are basically concentrated in first-tier cities with a larger user base. Moreover, according to Narrow Door Catering Eye data, the brand has not entered any provinces or cities it had not previously covered for more than half a year.

Against the current backdrop of a broader economic downturn and overall consumption downgrading, chain brands have had to adapt to users' demand for high cost-effectiveness, rolling out group-buying discounts, livestream promotions, and other price-cutting measures to attract customers to place orders. By contrast, although Mstand occasionally has discount activities, the discounts are relatively small, and in the eyes of some users its drinks still lack value for money.

This situation is even more so for consumers in second- and third-tier cities, who say outright that they cannot afford Mstand's 20 to 30 yuan coffee in the long term, joking that their relationship with Mstand is just a one-time transaction. Netizens speculate that perhaps after this, those Mstand stores in second- and third-tier cities with few visitors will be closed one after another by the brand when their lease contracts expire, or due to poor performance and other reasons.

Image source: Internet

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