The business logic behind a cup of coffee

Everyone may have a coffee dream in mind.

"most of the offline cafes don't make money." Zhang Shengwu, who is experienced in the catering industry, told China Business Daily that investment in decoration costs hundreds of thousands of yuan, equipment costs 400000 to 500000 yuan, and stores in good locations have to carry tens of thousands of yuan in rent every month. Selling coffee alone does not make money, but the business opportunities derived from selling coffee have the potential to be profitable.

From the various coffee shop models that have sprung up in the market in recent years, it can be seen that a seemingly simple cup of coffee contains a variety of business models. For example, crowdfunding cafes represented by 3W and O2O cafes represented by Ai Coffee.

Theme Cafe

Beta Coffee is an Internet cafe with the theme of IT, while the theme of garage coffee is "providing an open office environment for entrepreneurs".

In June 2009, White Ravens with Internet background opened the country's first "IT-themed coffee shop" in Hangzhou. Since then, a number of cafes with similar themes have emerged in China.

The owner of Beta Coffee has experience in the Internet industry and has a full understanding of the needs of the Internet community. It is reported that Beta Coffee has organized numerous formal and informal meetings, inviting some practitioners in the Internet community to carry out exchange activities, including industry leaders. In addition, there are job advertisements from major companies on the Beta Coffee recruitment wall. At present, Beta Coffee has cafes in Hangzhou, Beijing, Guangzhou, Shenzhen and other four cities.

Garage Coffee, a cafe with the theme of entrepreneurship and investment, opened in 2011. Since its opening, Garage Coffee has enabled a number of entrepreneurial teams to obtain angel investment. It is reported that at present, there are 10 resident teams in garage coffee, and new teams continue to "move in" from time to time (every once in a while, a team has its own office to go out). In order to serve more entrepreneurs, Garage Coffee also puts forward the concept of virtual incubation and holds a series of activities such as investor shifts.

In terms of profit model, these themed cafes do not simply sell coffee, but make money through the circle effect.

"whether it's Beta Coffee or later Garage Coffee, the profit model is to subdivide the population and get an extra share of the benefits." Zhang Wusheng said that the essence of these themed cafes is to make a profit by targeting specific people in the circle and by introducing and completing some projects.

These themed cafes serve specific objects, so they have special requirements for location. For example, Beta Coffee is usually located in a gathering area of Internet practitioners. The first beta cafe landed in Hangzhou, where Alibaba, China's top Internet company, landed, while garage coffee landed in the west of Zhongguancun (000931, stock bar) in Beijing. Here brings together several well-known technology companies such as Sina, Microsoft, Innovation works and so on.

Crowdfunding cafe

In 2011, Internet analyst Xu just set up 3W Cafe in the west of Zhongguancun, Beijing. The first shareholders' meeting has more than 100 members, including entrepreneurs, investors, well-known entrepreneurs, media opinion leaders and so on. 3W coffee has both the characteristics of theme cafes and crowdfunding cafes.

In recent years, the concept of crowdfunding has become popular. Crowdfunding cafes have sprung up like bamboo shoots after a spring rain in Beijing, Guangzhou, Hangzhou, Changsha, Dongguan and other cities.

Recently, according to media reports, a year after its opening, Her Coffee, founded by 66 beautiful shareholders, known as the "sexiest cafe", is seeking financing to discuss the introduction of major shareholders. Last August, Her Coffee became famous overnight, and its opening event became a hot topic on Weibo, with people from the entertainment and business circles coming to the platform. After more than a year of market baptism, the popular crowdfunding cafe accidentally turned into a popular cafe. After a period of popularity, the crowdfunding cafe model encountered difficulties. A large number of crowdfunding cafes are either transferred or seek investors.

It is reported that the "cafe for many people" in Dongguan has been transferred.

An industry insider who has been involved in crowdfunding cafes told China Business Daily that there are many shareholders and everyone shares a small risk, but the disadvantages are also very obvious, as a fragmented equity investment. most shareholders are part-time and "do not have efficient operational and executive capabilities".

O2O Cafe

The "coffee-loving" model, which has been active in the market recently, combines a variety of business models, such as crowdfunding, O2O, Internet finance and so on.

"We are going to integrate the domestic coffee industry through the Internet." Wang Zhuhao, director of Ai Coffee, told our reporter that he used the thinking of the Internet to operate the entire coffee industry chain. Prior to this, Wang Zhuhao was mainly engaged in the home soft installation industry.

In May 2014, Xie Mingli completed super crowdfunding online within an hour. "at first, our organization was very similar to the crowdfunding model." Several shareholders of AiCoffee said that AiCoffee currently has more than 20 shareholders and 7 directors.

From the business model point of view, love coffee is mainly divided into online and offline two parts.

"We have reached a cooperation agreement with Korea Man Coffee." Mr Wang said the initial plan was to develop at least 10,000 offline alliance flagship stores.

According to the reporter's on-the-spot investigation, the alliance flagship store model of Love Coffee is to join the cafes that have already opened in various communities and cities into Ai Coffee in the form of an alliance, and there is an alliance cooperative relationship between coffee shop owners and Ai Coffee.

"online, mainly through independent research and development of APP, Wechat, websites and other platforms, the offline activities, the dynamics of offline alliance stores, and the purchase of coupons in offline alliance stores and other information and functions are displayed to attract consumers." Wang Zhuhao said that then the online and offline docking, "We through offline activities, coupons and other forms to attract consumers, and then introduce this part of consumers into offline alliance stores, bringing real benefits to alliance stores."

Many shareholders of Love Coffee said that from the current actual operation, there are many profitable points, and they can make money through offline activities (at least 100000 yuan per activity), or through sharing with alliance coffee shops. However, the ultimate place for Love Coffee to make money is Internet finance, which achieves capital precipitation in the form of online pre-sale coupons.

"make money in the form of free and preferential consumers." Wang Zhuhao said that the Internet is the method, and finance is the ultimate profit point, which is to integrate the coffee industry with the spirit of the Internet. "if 1 million fans spend 100 million yuan each, there will be a capital deposit of 100 million yuan, once the payment system is reached. Love coffee can be profitable without financing or listing."

Zhang Shengwu said that when he began to inspect the origin of domestic coffee in the second half of this year, "coffee is in great need of cultural implantation." In the future, Ai Coffee will transfer its own coffee products and culture to various alliance flagship stores by purchasing its own coffee.

In a wide variety of coffee shop operation models, there are winners and losers, and it will take time to prove whether Ai Coffee, which integrates a variety of business models, can be successful.