Korean coffee increases the pace of expansion

Korean coffee shops such as Coffee Coffee, Man Coffee and Zoo Coffee, which were the first to enter China, have successfully achieved rapid expansion, but this is only the beginning of the overall expansion of Korean brands.

A few days ago, RET Ruiyide China Commercial Real Estate Research Center released the "Korean coffee shop China Development trend Research report". The report selects 12 representative coffee shop chains in the past 17 years and makes an in-depth study of their development in China.

With the help of flexible cooperation and diversified marketing advantages, especially the audience of South Korean dramas and stars in China's vast cities, the penetration of Korean coffee shops in second-and third-tier cities will be deeper, the report said. With the gradual implementation of the agency rights of the top four Korean brands in China, such as Mangosix and Hollis Coffee, more Korean brands are poised to pour into China, and the expansion of Korean coffee shops will accelerate, and a new peak in store opening is expected from 2015 to 2016.

Insight into the vacancy in China's coffee market

The report points out that European and American coffee shop brands target business people, and the consumption characteristics of this group of people are usually mainly takeout, so European and American coffee shops take the rapid consumption of coffee as their market positioning. Taiwanese coffee shop brands are positioned as leisure, providing folk entertainment such as chess and cards, and consumers usually aim at entertainment activities. On the other hand, the Korean coffee shop brand aims at friends or families who gather and chat, creating a leisure cafe atmosphere that is rare in other chain brands, filling this market gap.

From the product point of view, the European and American coffee shop brand is aimed at business people, so the product is relatively single, but intimate humanized service is one of its major advantages; Taiwan coffee shop brand is aimed at entertainment and leisure people, in order to facilitate food needs, simple meals and set meals are the main products, but coffee is not its main business. Korean coffee shop brands mainly provide afternoon tea and snacks, and the product richness is higher than that of European and American coffee shop brands and Taiwan coffee shop brands.

Among these coffee shop chains, the average number of products of Korean coffee shop brands is 76, almost double that of 41 coffee shop brands in Europe and the United States. Not only a variety of categories, but also a variety of tastes, a wide range of product choices can meet the taste needs of different customers, which is one of the keys for Korean coffee shop brands to rapidly improve their popularity and enhance customer stickiness. In addition to making a breakthrough in product richness, Korean coffee shop brands also focus their product structure on drinks other than coffee, competing differently with European and American coffee shop brands and Taiwan coffee shop brands, whose beverage structure accounts for 49%.

Flexible and diverse franchising methods

European and American coffee shop brands were jointly operated by several consortia when they were established, so they can expand rapidly with the support of strong capital flows. The average proportion of direct sales of European and American coffee shop brands is as high as 92%.

The expansion mode of Taiwan coffee shop brand is divided by several regional agents, and dozens of agents continue to divide the area to attract investment, which is even as small as 2 or 3 agents in the same city. This will not only lead to management difficulties, agency disputes, but also the mobility of agents directly affect the rights and interests of franchisees, and then lead to poor management, inconsistent food standards and after-sales service in the future. Driven by joining factors, the direct sales proportion of Taiwanese coffee shop brands is only 8%, while the proportion of joining is as high as 87%.

Different from the expansion strategy of the above two types of coffee shop brands, Korean coffee shop brands have well weighed the proportion of different modes of operation in the process of expansion, with the proportion of direct operation and franchise being 19% and 60% respectively. In addition, 21% is the proportion of cooperative operation, that is, the management and franchisee participate in the operation together, and both sides own part of the equity.

The brand expansion strategy of Korean coffee shops has the following three advantages:

A certain proportion of direct stores can not only serve as model stores, provide a good image display and reference for prospective franchisees, but also enhance their brand management confidence.

The mode of cooperative operation can also provide business opportunities for some underfunded franchisees. The minimum investment of coffee accompany you is only 500000. In addition to the cooperative stores with 49% equity, coffee accompany you also cooperate with China Merchants Bank [- 0.19% Capital Research report] to provide franchisees with credit to use franchisees as financial products. You can also join in this way. 83% of the coffee shops are joint ventures, and none of them are pure franchisees.

Korean coffee shop brand has adopted a "flat" management model, whether it is a franchise store or a directly operated store, from pre-site selection, decoration, opening to late raw material procurement, product production and staff training are under the unified supervision of the company. Enterprises can not only save expansion costs but also quickly roll out the network, but also make use of the central regulatory mechanism to transport products to the terminal to ensure that franchisees have good quality assurance.

Implement the differentiation and expansion strategy

Korean coffee shop brands have made different expansion strategies for site selection and rental cost control in first-and second-tier cities in order to maximize profits.

From the perspective of the rental cost of individual stores in first-tier cities, Korean coffee shop brands have the lowest control, with an average monthly rental cost of about 90,000 yuan, which is 10% lower than that of Taiwan coffee shop brands and 25% lower than that of European and American coffee shop brands.

This is because Korean coffee shop brands enter first-tier cities relatively late, urban resources have been seized, and high rents for Korean coffee shop brands often 500 square meters of large area demand, not only a smaller range of options, urban rental costs will also squeeze profits too much.

In addition, the commercial development of the community in first-tier cities is more mature, the lower rental costs in the suburbs and the stable flow of people in the region provide a guarantee for the entry of Korean coffee shop brands. Therefore, Korean coffee shop brands strategically choose the areas that have not been fully covered to enter first and seize the suburban market. In first-tier cities, the suburban location of Korean coffee shop brands is as high as 69%, which is much higher than that of European and American coffee shop brands and Taiwan coffee shop brands.

Korean coffee shop brands have adopted different expansion strategies in second-tier cities, and more choose to settle in urban areas. The proportion of urban location has reached 87%, which is significantly higher than that of European and American coffee shop brands and Taiwan coffee shop brands, and the rental cost is also the first of the three types of coffee shop brands. This is an expansion strategy for Korean coffee shop brands to help quickly expand the second-tier market.

With the rise of second-and third-tier cities, Korean coffee shop brands see the market potential of leisure cafes in these cities. In the urban area where the flow of people is most concentrated, excellent shop resources and open display area can help Korean coffee shop brands, which are famous for their environmental layout, attract customers with the best image display, rapidly expand their popularity, and then contribute to their rapid expansion.

A highly penetrating marketing tactic

Korean idol dramas attract audiences not only by plots and stars, but also by Korean clothing, cosmetics, home decoration and Korean way of life. Korean coffee shop brand is aware of the market potential under the influence of South Korean TV dramas, through brand implantation to improve brand exposure. Hollis Coffee is a pioneer in brand implantation and has been implanted in four South Korean dramas.

In addition to product implantation in South Korean TV dramas, Korean coffee shop brands also employ a number of stars who are popular in South Korean TV dramas at the same time as spokesmen to enhance brand promotion. At the same time, according to the popularity of endorsement stars in different countries, Korean coffee shop brands will also focus on arranging different brand promotion ambassadors to interact with customers. Star effect has played an important role in the promotion of Korean coffee shop brands.

In addition, the Korean coffee shop brand also injected O2O this trendy model, trying to inject more functional elements into the coffee shop. At present, coffee accompany you have planned to cooperate with SF to place an order through mobile phone location to achieve "home delivery" of the takeout service. The development of this new field not only caters to the O2O consumption habits of young people to enhance customer stickiness, but also covers areas where physical stores have not yet been involved with the help of logistics network.