Located in the Santang Scenic Area of West Lake in Hangzhou, Shihan Jingshe is a historic building first constructed in 1936. Since 2007, it has been leased by Starbucks and hailed by many coffee lovers as the "most beautiful Starbucks by West Lake." Recently, the leasehold rights to the property were auctioned off after hundreds of rounds of bidding, finally selling for 2.521 million yuan per year, nearly 700,000 yuan above the starting price. The original tenant has waived the right of first refusal, meaning the Starbucks store, which has operated for nearly 15 years, will soon exit this prime scenic location. After the new owner takes over, the business format will still focus primarily on a coffee bar, pre-packaged foods, and retail of handicrafts. This article reviews the history of this store, Starbucks' store layout in Hangzhou, and the market factors behind the successive closures of coffee shops in scenic areas. [more…]

A quaint shop on Gushan Road by West Lake recently put up a Starbucks sign, though the location was originally the COSTA Xiling store. After COSTA moved out in August this year, Starbucks quickly took over this prime spot, incorporating Chinese elements into the store design, drawing tourists and locals to check in. Meanwhile, COSTA has been closing stores across many parts of the country, with only 393 stores remaining, far more closures than openings. What netizens once joked about—"Starbucks replacing COSTA"—has ironically come true, which is quite lamentable. Front Street Coffee reminds us that behind the brand turnover is a microcosm of rising rents in the West Lake commercial area and intensifying competition in the coffee market. [more…]