What does an old street coffee store closure say about Changsha?

A Chagee store on Taiping Street in Changsha closed after less than half a year, with signage removed and equipment hauled away. The branch opened in May and sat in a market the brand had previously exited amid fierce tea competition before returning at the end of last year. Residents reported sparse foot traffic, and other branches were doing only average business.

The closure may involve several factors, including profitability pressure, rental costs and competition from local brands, though no single cause has been confirmed. Chagee still operates more than fifty stores in Changsha, so customers can buy at other locations. The shutdown renewed speculation about the brand's market strategy and how much room remains for chain drinks on the city's old street coffee circuit.

Recently, a CHAGEE store on Taiping Street in Changsha suddenly closed, sparking widespread discussion online. The store had only opened in May this year, yet after just about half a year in operation, its signage was removed and equipment was hauled away. CHAGEE had previously withdrawn from the Changsha market due to fierce competition in the city's tea beverage industry, made a high-profile return at the end of last year, and now has closed a store again, prompting speculation about its business condition and market strategy. Some residents reported that the store saw sparse foot traffic, and other branches were also doing just average business. The closure may involve multiple factors such as profitability pressure, rental costs, and competition from local brands. CHAGEE currently still has over fifty stores in Changsha, and consumers can make purchases at other locations.

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Recently, a post about the closure of a CHAGEE store in Changsha has attracted considerable attention and discussion among netizens online.

According to the post, the closed CHAGEE store is located on Taiping Street in Changsha and opened in May this year. A few nights ago, passersby noticed that the store's signage had been removed and workers were carrying away equipment from inside. The store is now shuttered, with only the plastic installation at the entrance, not yet removed, serving as evidence that CHAGEE had been here half a year ago.

If this scene had occurred in another city, perhaps locals would have seen it as just a trivial detail of daily life and not paid much attention. But when CHAGEE's sudden closure happens in the city of Changsha, it inevitably gives some netizens food for thought.

It is said that in its earlier years, CHAGEE had opened directly operated stores in Changsha, but later, due to fierce competition in the local tea beverage industry, the brand chose to close all its Changsha stores and exit the market. It was not until December last year that CHAGEE announced the opening of a new store on Guojin Street in Changsha, which many netizens jokingly described as "CHAGEE making a comeback."

At the time, when local netizens saw CHAGEE enter the Changsha market for the second time, most believed the brand must have made thorough preparations and intended to redeem itself, and that it would not quietly withdraw as it had before. And from its repeated invitations to popular celebrities to promote its stores, it was not hard to see that the company was leveraging the traffic celebrities bring to increase brand exposure and attract people to come and spend.

However, although the brand kept rolling out various promotional offers, local consumers reported that CHAGEE's stores actually had mediocre sales, with some stores being downright deserted.

Take this recently closed Taiping Street store as an example. Nearby residents say that Taiping Street is a crowded snack street and a well-known tourist gathering spot, with foot traffic that is by no means low on ordinary days. Moreover, the store's location was excellent, situated at the entrance of Taiping Old Street, where passersby could see the giant decorative installation at the entrance at a glance.

But residents revealed that when they passed by in June this year, they saw only a few employees at the entrance of this newly opened milk tea shop, with just a handful of drinks sitting at the pickup counter. "Every time I pass this store, no one is drinking there." Apart from the Taiping Street branch, Changsha netizens say that CHAGEE's other stores are not doing particularly well either.

Based on this, many people speculate that the reason the Taiping Street store closed may be poor profitability, compounded by high store rent and operating costs, which led the brand to give up a well-located store and cut its losses in time.

Beyond the above reasons, some believe that competition in Changsha's tea beverage industry remains fierce. CHAGEE not only has to face old rivals such as Heytea and Nayuki, but also compete with local brands like Sexy Tea. With product features that are not distinctive enough, CHAGEE may find it difficult to secure a foothold in the Changsha market through marketing alone.

Although local residents have different views on CHAGEE's closure of its Changsha store, as one netizen put it, the brand's sudden closure may be a consideration of market layout. After all, CHAGEE, which has already opened over fifty stores in Changsha, has only closed one of them, and consumers can simply choose to buy drinks at its other stores.

Image source: Xiaohongshu

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