Where does coffee come from in Chagee's expansion story?

Two Chagee flagship stores in Qingdao, on Taidong Pedestrian Street and in Yinyu Alley, have closed. The Taidong store opened in June 2023 and shut without warning; a rent increase is cited as a possible cause. The Yinyu Alley site can no longer take orders and its signage is gone.

Domestic openings continue and overseas expansion is accelerating, with stores reported in Los Angeles and Seoul, while a first Ho Chi Minh City store was scrapped after a promotional image controversy. Much as questions of where does coffee come from trace a global supply chain, tea brands now chase customers across borders, and the path is not smooth.

Recently, two flagship stores of Chagee on Taidong Pedestrian Street and Yinyu Alley in Qingdao were successively boarded up, drawing attention from local consumers. The Taidong store had been open for less than two years and had previously done brisk business, closing without any warning; some sources say it was related to a rent increase. The Yinyu Alley store is likewise in a state where orders cannot be placed, and its signage has been removed. Despite the contraction in the Qingdao market, Chagee's pace of store expansion has not slowed; new domestic stores are still opening, and its overseas layout is also accelerating, with store openings reported in Los Angeles, USA, and Seoul, South Korea. However, its first store in Ho Chi Minh City, Vietnam, was forced to be scrapped due to a promotional image controversy, showing that its path overseas is not smooth.

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Recently, when Qingdao residents passed by Taidong Pedestrian Street, they were surprised to find that the Chagee Taidong flagship store, which had been operating normally, had been covered by hoarding overnight.

According to nearby residents, this flagship store opened in June 2023, right next to a Starbucks. On opening day, it attracted many young people to come and check in, and afterward, thanks to the high foot traffic of the pedestrian street, business remained good. During limited-time events or holidays, customers could often be seen lining up at the store entrance to pick up their orders.

Many regular customers posted their purchase records, saying they had visited the store to buy drinks just a few days before it closed, and the staff did not mention that the store was about to close when they picked up their orders. Therefore, when they passed by and saw the familiar tea shop suddenly covered with advertising banners for other brands, they were all very surprised, saying, "It can't be, I passed by yesterday and it was still operating normally."

Amid the surprise, a well-informed netizen revealed that Chagee's sudden closure of this flagship store may have been related to the landlord raising the rent. However, after the brand decided to end operations, the speed with which a new tenant took over was truly surprising.

However, this was not an isolated case. The Chagee Yinyu Alley flagship store, about 5 kilometers from the Taidong flagship store, was also found by users to have ceased operations.

According to the official mini-program and other ordering channels, this store, which opened in May last year, currently cannot accept orders. Its signboard logo light box has been removed, the store is surrounded by advertising banners, and no trace of Chagee can be found.

The successive closure of two flagship stores has made some Qingdao residents worried about Chagee's development in the local area, asking, "Is Chagee in Qingdao starting to fade?" But some people believe that when a store's profits cannot cover high operating costs such as rent, labor, and materials, it is normal business behavior for the merchant to choose to withdraw and cut losses, and netizens need not worry excessively.

In addition, some netizens pointed out that although Chagee suddenly closed two flagship stores in Qingdao, its expansion speed has not been affected, and new stores are still successively entering the city.

Moreover, in addition to rapid expansion in China, the brand is also accelerating its layout in overseas markets. Recently, US netizens discovered that hoarding for Chagee has appeared in a mall in Los Angeles, speculating that the brand's first US store may soon meet local consumers.

South Korean netizens found that an account named "CHAGEE Korea" had appeared on IG, regarded as an official promotional account registered by the brand to enter South Korea. After learning about it, some local fans left comments expressing their love for Chagee and their expectations for a store opening in South Korea.

However, Chagee's path overseas has not been smooth sailing. The brand originally planned to open its first store in Ho Chi Minh City, Vietnam, but due to a promotional image involving the South China Sea sovereignty issue, it was boycotted by local consumers. The store was scrapped before its renovation was even completed, and it remains uncertain whether new stores can continue to be opened in the Vietnamese market.

Image source: Xiaohongshu

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