Why Many Crowdfunded Coffee Shops Fail in China

On a gray afternoon in an office building in Zhengzhou, the remnants of a once-hopeful coffee project lay in piles of dust and disassembled equipment. The floor was covered in debris, walls still bore faded murals, and a lone pool table sat unused — all part of the shuttered 'Many People Coffee Shop'. This wasn’t just any failed café. It was born from a bold dream shared by 99 people who pooled their money to open a community-driven coffee space. But dreams alone couldn’t save it.

The key issue? Out of 99 shareholders, only a handful did any real work. The café relied on two part-time employees and a rotating door of volunteers, and despite early media buzz and monthly sales peaking at ¥20,000, it could not cover rent and salaries. In the end, it closed — like hundreds of similar small cafés across China.

The Origins: A Dream Funded by 99 Strangers

The 'Many People Coffee Shop' story began not in Zhengzhou, but online. In 2011, a Beijing-based Douban user named 'Wen Er Niu' proposed starting a coffee shop with just ¥2,000. The idea took off, leading to the first crowdfunded coffee shop operating out of a basement. Inspired, Liu Bing brought the model to Zhengzhou in 2012. She posted online and attracted 99 locals — mostly young professionals like herself: nurses, journalists, office workers — all dreaming of a place that felt like home.

Each contributed ¥2,000 (with some investing up to 10 shares), raising ¥600,000 in total. The shop opened in a trial run at China Central Place, an office complex in Zhengzhou. The space was decorated with community-contributed art, postcards, and newspaper clippings from major outlets like People’s Daily and China Youth Daily that covered the novel venture. Those artifacts were later taken down and kept as souvenirs by Liu Bing herself.

Why the Dream Collapsed: Work Ethic and Shared Control

Despite initial enthusiasm and strong media coverage, the coffee shop struggled to sustain itself. The major problem? Lack of involvement from the majority of shareholders. 'Everyone had this dry dream, but few were willing to act,' said Liu Bing. Most contributors kept their day jobs and never volunteered. The daily operations were left to Liu Bing and a couple of other dedicated individuals, alongside one manager and three servers — none of whom were shareholders.

Early on, sales hit highs of around ¥20,000/month, but that wasn’t enough. Rent and payroll devoured all revenue. As the novelty wore off, customer traffic dropped sharply. Worse, when the team offered free coffee to shareholders and friends just to fill seats, nobody came.

Market Realities: Low Coffee Culture in a High-Pressure City

Liu Bing, a Zhengzhou native, pointed to deeper issues: 'The city is under too much pressure. Young people here don’t have a coffee habit — they don’t even think about it.' With a population of nearly 11 million, Zhengzhou is densely populated and fast-growing. Most residents are migrants from other parts of Henan, working long hours in high-stress, low-paying jobs. Lunch breaks are short, overtime is common, and wages are comparatively low. 'Taking friends out for coffee might cost someone two days’ meals,' Liu explained.

The rapid rise in living costs — housing, food, transportation — left little room for discretionary spending. Meanwhile, international chains like Starbucks and Mana Coffee moved in, offering polished environments that appealed to both aspirational locals and well-off newcomers. These brands invested heavily in design and branding, leaving little space for small, independent cafés to compete, especially those without clear commercial goals.

The Fatal Flaws: Democracy Gone Wrong and Refusal to Evolve

Beyond market forces, internal dysfunction sealed the fate of 'Many People Coffee Shop'. Every decision required a group vote. 'I had to call or email everyone for approval. Those who understood my effort were supportive, but others complained non-stop,' Liu Bing recalled. With 99 equal voices, many of whom had little personal stake, consensus was impossible. Ideas clashed, action stalled, and management fractured.

The idealistic democratic model backfired. Shareholders who contributed money but not time demanded equal say, leading to endless debates and no execution. Offers to pivot toward a more commercial model — including potential franchising deals — were rejected outright to preserve the original 'non-commercial' vision. That refusal to adapt accelerated the shop’s decline.

What the Numbers Show: A Wider Trend of Café Failures

The failure of 'Many People Coffee Shop' was not unique. According to a local Henan newspaper, many cafés in Zhengzhou opened and closed within months. Some lasted a year; others folded after just a month. One report noted that in buildings like China Central Place, multiple cafés came and went, with some changing hands four or five times in a single year. Industry insiders quipped that 'anyone opening a new café now must be crazy'.

In truth, almost all small coffee shops in Zhengzhou operate at a loss. Very few break even, let alone turn a profit. 'It’s just about seeing who can hold on the longest,' Liu Bing said.

Frequently Asked Questions

How many people crowdfunded the Many People Coffee Shop in Zhengzhou?

99 people collectively funded the Many People Coffee Shop in Zhengzhou, each contributing ¥2,000, with some investing up to 10 shares. The total raised was ¥600,000.

Why did the Many People Coffee Shop ultimately close?

The café closed due to a lack of active involvement from most shareholders, unsustainable income that couldn’t cover rent and staff costs, declining customer traffic, and an inability to agree on strategic changes or adapt to market conditions.

What was the peak monthly revenue of the Many People Coffee Shop?

At its busiest, the Many People Coffee Shop reached around ¥20,000 in monthly revenue, but this was not enough to sustain operations given fixed costs like rent and salaries.

How did the management structure contribute to the café’s failure?

The café used a fully democratic model where all 99 shareholders had equal voting rights, regardless of involvement. This led to slow decision-making, conflicts, and operational paralysis, as many shareholders were uninterested in contributing effort but still demanded input.

What broader trends in China’s coffee market does this case reflect?

This case highlights how rapidly rising urban living costs, low coffee-drinking culture outside major cities, and intense competition from global chains make it extremely difficult for small, independently owned cafés — especially those without solid business models — to survive.

Did the Many People Coffee Shop ever attract media attention?

Yes, the Many People Coffee Shop received significant media attention early on, including coverage from national outlets like People’s Daily and China Youth Daily, which helped boost its early visibility but not its long-term viability.

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