What does coffee in Europe have to do with Nayuki's closures?

Nayuki closed a net 89 directly operated stores in the third quarter of 2024, even though it opened 23 new directly operated stores and 56 franchise stores in the same period, leaving its overall store count down by 10. The company says it will take a more prudent approach to expansion and focus on improving existing directly operated stores.

Consumers in Taizhou, Zhejiang and other cities reported closures at locations such as Luqiao Wuyue, Wenling Yintai, and Hangzhou in77, and complaints about product quality control and pre-made baked goods have added to concerns. By comparison, Heytea has reached 4,417 stores, so the gap in expansion pace is clear.

Recently, a netizen on social media claimed that Nayuki is about to face a wave of store closures in Taizhou, Zhejiang, and the news quickly sparked widespread discussion. According to Nayuki's official 2024 third-quarter operations report, the brand closed a total of 89 directly operated stores in that quarter. Although it opened 23 new directly operated stores and 56 franchise stores during the same period, its overall store count still shrank by 10. Compared with Heytea, which has already reached 4,417 stores, Nayuki's pace of expansion has clearly slowed. The company said it will adopt a more prudent store expansion strategy and optimize the performance of existing directly operated stores, but many consumers have reported issues such as declining product quality control and baked bread being changed from freshly baked to pre-made products, raising concerns about the brand's prospects. This article will sort through the operational challenges Nayuki currently faces from the two dimensions of data and consumer feedback.

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Recently, a netizen posted on social media claiming that, according to Nayuki internal staff, Nayuki stores in the Taizhou area of Zhejiang are about to face a concentrated wave of closures.

The post mentioned that Nayuki's Luqiao Wuyue store in Taizhou will cease operation at the end of the month, while the Baolong City store is planned to shut down at the end of next month. In the comments section, many local consumers said the actual number of closed stores far exceeded these two. One person commented, "The Nayuki at Wenling Yintai has also been withdrawn and replaced by another brand," while another said, "That one at Yuhuan Wuyue has closed too."

Not only in Taizhou. Netizens in other provinces and cities also reported one after another that Nayuki stores around them seemed to be gradually disappearing. One comment read, "The Nayuki stores in Hefei are almost all closed," another said, "The one at Hangzhou in77 has closed too," and another said, "The one on Ziyang Street was gone in less than half a year." These successive comments made many Nayuki fans feel anxious about the brand's future, believing that its business condition did not look ideal.

Consumers' concerns did not come out of nowhere. Nayuki's official "2024 Third Quarter Operations Report," released on October 18, showed that the brand closed 89 directly operated stores in that quarter. Although it opened 23 new directly operated stores and 56 franchise stores during the same period, the total number of stores still decreased by a net 10.

Combined with relevant data previously announced by Nayuki, in the first three quarters of this year the brand reduced 72 franchise stores cumulatively while adding 272 franchise stores. As of the end of September, Nayuki had a total of 1,531 directly operated stores and 353 franchise stores, bringing the total number of stores to 1,884.

Looking at this set of numbers alone, it seems fairly stable. But when compared with Heytea, whose store count has already reached 4,417, the scale gap between Nayuki and this old rival is obvious at a glance, and it also makes people even more puzzled as to why Nayuki frequently has news of store closures.

In response, the brand explained in its latest announcement that in the third quarter it adopted a more cautious strategy in store expansion and also optimized and adjusted existing directly operated stores, closing some stores whose performance did not meet expectations in order to improve the operating performance of the remaining directly operated stores. In terms of franchise business, the company said it will pay more attention to screening franchisees and hopes to establish cooperation with more mature franchisees who identify with Nayuki's brand values.

However, the official explanation cannot completely dispel consumers' concerns.

Many users have reported that, in the increasingly competitive market environment, Nayuki's product quality control has declined noticeably and that, compared with similar brands, it lacks distinctive recognition. On the other hand, its baked bread products, which once won over a large number of customers, have also changed from being freshly baked on the same day to pre-made products. This business adjustment has disappointed many consumers, who said that ever since there were no longer freshly baked European-style breads, the frequency with which they visit Nayuki stores has gradually decreased.

As a representative player occupying a place in the new tea beverage industry and competing alongside brands such as Heytea and LELECHA, Nayuki has continuously made adjustments in recent years to respond to market changes, launching new products and carrying out co-branded collaborations. It has also received fairly good market responses and achieved its first profitable fiscal year last year.

But judging from consumers' real feedback and the data in the official report, Nayuki, which is currently experiencing a wave of store closures, is not in an easy position. Whether the brand's store closure adjustment strategy can bring Nayuki a better development outlook as expected may only be answered by time.

Image source: Internet

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