Why Is Peet's Coffee Closing Stores in China?

Peet's Coffee will close its Teemall store in Guangzhou on March 31, the brand's first location in the city after entering in late 2021 and its second in South China. The closure follows the shutdown of a popular West Lake store in Hangzhou earlier the same month, prompting discussion about the chain's prospects in China.

Regulars described the Guangzhou coffee shop as busy, with a clean interior and steady quality. Some customers noted that full tables did not equal high sales, since passersby occupied seats without ordering and others stayed all day on a single drink, keeping table turnover low. Peet's has not publicly explained the closures.

Recently, a netizen tipped off that Peet's Coffee's store on the first floor of Teemall in Guangzhou will close on March 31. This store was Peet's first store after entering Guangzhou at the end of 2021, and also its second store in South China. Surprisingly, the store had been doing well since opening, often fully occupied, and the sudden closure notice caught many fans off guard. At the same time, Peet's also closed a popular store on West Lake in Hangzhou earlier this month. With two high-traffic stores closed in one month, discussions about the brand's development prospects have been sparked. What exactly caused these stores to close? Is it a adjustment of the business district format, or is the high-end positioning facing challenges? This article will sort out the whole incident and various views.

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Recently, a netizen posted that Peet's Coffee on the first floor of Teemall in Guangzhou will close at the end of this month.

The sudden news caught many fans off guard. It is reported that this store was Peet's first store after entering Guangzhou at the end of 2021, and also Peet's second store in South China. Regulars said that since opening, this Peet's store has been welcomed by nearby residents for its bright and clean interior, comfortable and relaxing atmosphere, and consistently high-quality products. It was basically packed every day, and business had always been good.

However, the first store in a bustling business district posted a closure notice without warning, announcing that it would close next Monday, March 31, which is simply hard to believe. It also reminded some netizens of the Starbucks Reserve store next door in Parc Central that closed on the same day, making them sigh with emotion.

Beyond the lament, more people were puzzled and began discussing the reasons for the closure of Peet's first Guangzhou store.

Customers who had visited many times pointed out that although the store was often fully occupied, this did not fully mean the store was thriving. They said that among the customers filling this beautifully decorated Peet's store, some were passersby who sat down without consuming anything, and some ordered one drink and sat there all day, so the store looked lively, but in fact the table turnover rate was not high.

Moreover, a small number of customers reported that because the store was often overcrowded, it gave people a "chaotic" impression, deterring customers who prefer a quiet atmosphere. In addition, rents for storefronts in bustling commercial districts are not low, so if the store's profit cannot support the high rent and other operating costs, even a city's first store with extraordinary significance will hardly escape closure.

However, some netizens noticed that in addition to the first Guangzhou store, Peet's also closed the highly popular Hangzhou West Lake store earlier this month.

It is understood that the store was located on the crowded Hubin Pedestrian Street by West Lake. Its unique decor and the beautiful appearance of its glass house attracted a large number of fans, and it once became an internet-famous check-in spot by West Lake. Therefore, after the closure news spread, local residents whose memories were stirred rushed to the site before the store was dismantled to take photos as a memento of the coffee shop that had accompanied them for many years.

Seeing Peet's close two highly popular stores in succession within one month, loyal users cannot help but worry about the brand's future development. Compared with other chain brands, Peet's average spending per customer is not low. Since entering the Chinese market in 2017, the official pace of store expansion has not been fast. Up to now, it has more than 200 stores in total, far fewer in number than leading brands.

In the view of netizens, because of its own mid-to-high-end brand positioning, Peet's stores are mostly concentrated in commercial centers and high-end office buildings in first- and second-tier cities. But these popular stores generally have expensive rents, and current consumption places more emphasis on value for money. Therefore, some people believe that the development prospects of high-end Peet's may encounter some challenges.

But optimists say that recently Peet's has not only opened city first stores and expanded its market in Zhengzhou, Wuhan, Changsha and other places, but also launched the affordable sub-brand Ora Coffee and has already opened 3 stores. From this point of view, the closure of the first Guangzhou store may only be due to an adjustment of the business district format, and there is no need to worry too much.

Image source: Xiaohongshu

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