Why Manner Franchising Talk Matters for the China Coffee Market

Manner Coffee may open franchising around March, according to a rumor circulating among its baristas. Staff say the company ran an internal survey asking whether employees would join a franchise, and CEO Jin Binbin reportedly raised the topic in a partner group before disbanding it. An insider says no franchising plan is confirmed yet.

The questionnaire went out before Chinese New Year and did not disclose franchise fees, employees say, suggesting company and staff are testing each other. Manner operates as a direct-run chain and ranks among the larger players in the China coffee market by store count. A shift to franchising would raise questions about its logic and fit for lower-tier cities.

Recent news suggests that Manner Coffee may open franchising at the end of March this year, a rumor circulating among baristas. According to several employees, the brand has internally conducted a survey on franchising intentions, and CEO Jin Binbin mentioned the matter in a partner group and distributed a questionnaire. Although an official insider stated that it is currently only an internal survey with no plans to open franchising, some employees say franchising may be implemented in mid-to-late March. As the fifth-largest chain brand by number of stores in China, Manner has always adhered to direct operation. If it truly shifts to franchising, the underlying logic and its suitability for lower-tier markets are worth attention.

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Yesterday, "China Entrepreneur Magazine" reported that a recent rumor that "Manner may open franchising at the end of March this year" has been circulating among Manner baristas.

It is understood that multiple baristas said Manner recently conducted an internal survey among employees regarding opening franchising—if Manner opens franchising, would employees be willing to participate?

They revealed that the news of opening franchising came from Manner Coffee CEO Jin Binbin, "He said it in the partner group and also sent a franchising intention survey questionnaire, but after saying it, he disbanded the group." Another barista said that Manner currently has no notice saying it will open franchising, and it only asked employees previously.

A person familiar with Manner confirmed the news that Manner conducted a survey among employees about franchising intentions, but "it is only an internal survey, and there is currently no plan to open franchising."

Although Manner denied plans to open franchising, the reporter learned from multiple Manner employees that the internal survey questionnaire was distributed before the Chinese New Year. Manner indeed intends to open franchising, probably in mid-March or at the end of March, but no notice has been issued yet, and specifics need to be followed on the official WeChat account.

As for franchise fees, the company and employees seem to be testing each other. An employee revealed that Manner did not disclose the franchise fees set by the company in the questionnaire. The questionnaire only roughly asked whether employees had franchising intentions, in which city they planned to franchise, and their expected franchise fees.

"We employees are also watching. The location we want to open already has a Manner, so we can only find other places with good foot traffic to open." An employee said that Manner also asked them whether they wanted to open a store in their hometown, but employees said they were not confident about opening stores in third- and fourth-tier cities. "We also want to franchise, but so far having a store is awkward, and it still depends on the specific franchise fees."

At the end of 2023, Manner's directly operated stores had exceeded 1,200, and it once made bold claims that stores would reach 2,000 in 2024. However, at the end of 2024, when Manner officially released its annual summary, it said it had opened 666 new stores within a year and revealed that "the 2,000th Manner is coming soon."

(Left image: Manner December 2023 announcement; right image: Manner December 2024 announcement)

If the impact of store closures is not considered, according to Manner's official data, its number of stores by the end of 2024 was at most close to 1,900. Data from Narrow Door Catering Eye shows that as of February 12, Manner had 1,712 operating stores, while data from Jihai Brand Monitoring showed 1,763, both falling somewhat short of the brand's target.

(Left image: screenshot from Narrow Door Catering Eye; right image: screenshot from Jihai Brand Monitoring)

Among the many chain brands in China, Manner currently ranks fifth in store scale. The first to fourth places are Luckin, Cotti, Starbucks, and Lucky Cup, respectively. That is to say, among the top five brands, only Manner and Starbucks adopt the direct-operation model.

Last year, Starbucks intended to explore new business models, including seeking strategic partners, which was seen by the outside world as a signal that it "may switch to a franchising model." Now Manner also has plans to open franchising, which industry insiders see as not surprising.

Professionals believe that Manner's insistence on direct operation for so many years is largely related to its funding sources. The brand previously underwent multiple rounds of financing, with a single-store valuation reaching tens of millions of yuan. It can be said to be well-funded and had no need to open franchising. But if Manner changes its mind and decides to switch from direct operation to franchising, the reason may lie in changes in its development logic and funding sources.

However, this person pointed out that the franchising model is more suitable for lower-tier cities and county-level areas, while Manner's brand tone and positioning are actually more suitable for first- and second-tier cities. Therefore, in their view, Manner's shift to lower-tier markets may not necessarily be welcomed by local consumers.

Image source: online screenshot

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