Why Does the Shanghai Coffee Industry Squeeze Independent Shops?

An independent Shanghai coffee shop that once topped a platform's latte ranking announced it will close at the end of the year, after five years in business. The owner said business conditions were not the main reason and that she had been considering quitting since the pandemic lockdown was lifted, prompting regulars to revisit before the shop shuts.

Shanghai has over nine thousand coffee shops, and its coffee culture makes the city one of the most vibrant markets in the country. That same density means intense competition, with chain brand expansion and industry infighting pressuring independent cafés. Reaching first place through word of mouth did not guarantee survival, and the closure highlights how quickly the coffee industry renews and iterates.

Shanghai has over nine thousand coffee shops, and its rich coffee culture makes the city one of the most vibrant places for coffee in the country. However, the sheer number of shops also means competition is exceptionally fierce. Recently, an independent coffee shop that once topped Shanghai's latte dish rankings suddenly announced it would close at the end of the year, drawing widespread attention from nearby customers and industry peers. The owner admitted that business conditions were not the main reason, but that she had been considering quitting since the pandemic lockdown was lifted. This incident reflects the survival difficulties facing independent coffee shops amid the expansion of chain brands and industry infighting, and also prompts a re-examination of the accelerating renewal and iteration in the coffee market.

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If we rank domestic cities by the vibrancy of their coffee culture, Shanghai, with over nine thousand shops, is undoubtedly at the very forefront. In this metropolis, residents' love for coffee needs no elaboration; their daily consumption habits have driven the prosperity of the local coffee industry, and the aroma of coffee beans can be smelled everywhere on the streets.

But from another perspective, "over nine thousand coffee shops" also shows that standing out in this market is by no means easy. For an independently run café, if it can reach the top of a platform's rankings purely through customer word of mouth, that is undoubtedly an achievement to be proud of.

However, just recently, an independent coffee shop that had once won "No. 1 on Shanghai's Latte Dish Ranking" suddenly released a closure announcement without warning, notifying regular customers that its small shop, which had been in business for five years, would officially shut down before the end of the year, and reminding those who still wanted to visit to hurry and make the most of the remaining time.

The news came too suddenly, and many regulars dug out photos of their past visits, lamenting how quickly time flies. Some also raised questions: since it had already reached No. 1 on the ranking, business should not be bad, so why would the owner so abruptly announce the end of operations?

Faced with these doubts, the owner candidly admitted that the reason for closing was indeed not that the business could no longer survive, but it was also not a decision made on a whim. She explained that, in fact, ever since the pandemic lockdown was lifted, she had already had the idea of closing the shop, but only recently did she truly put it into action—once the lease expires at the end of the year, she will not renew it.

After hearing the owner's explanation, many people felt a great deal. Some believed that the current poor economic environment was what made it so difficult for cafés to survive; others blamed the increasingly fierce infighting among chain brands, arguing that the low-priced coffees and endless new products launched one after another by major brands had more or less squeezed the business space of independent shops.

However, some also pointed out that since the pandemic restrictions were lifted, competition in the coffee track has remained intense, and quite a few shop owners, after struggling to hold on, have faced reality and bowed out sadly. What is happening now is merely another round of "the great wave washing away the sand."

Data from Narrow Door Restaurant Eye shows that as of September 15, the number of newly opened coffee shops in the past year reached 70,316, with a net increase of 27,277, meaning that in the past year 43,039 coffee shops closed down. This set of numbers seems to show little fluctuation compared with last month, but if compared with other indicators, the total number of coffee shops nationwide is actually shrinking, and the survival-of-the-fittest process across the industry is clearly accelerating.

Even setting aside these cold numbers, on social platforms where people share daily life, one can often see shop owners speaking out about dismal sales and being truly unable to keep going. There are also passersby who, when wanting a cup of coffee, only then discover that the shop they used to frequent has quietly been locked up, with a transfer notice posted on the door.

Leading brands such as Luckin, Cotti, and Starbucks have not slowed their pace of opening stores at all, and densely distributed shops are constantly eroding the survival space of small and medium-sized brands and independent cafés. This hard battle for survival has already been fought to the point of bloodshed, and as the industry's off-season arrives, more and more coffee shops are likely to fall on this "battlefield."

Image source: Internet

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