Why Many European-Style Cafés in Wenzhou Are Closing

In Wenzhou, once-booming European-style cafés are now struggling to stay open. After rapid growth four years ago, many are now facing closure just two or three years later—right when their leases typically expire. With slim profits, rising costs, and few new customers, owners must decide: keep going or shut down?

Only around 10% of Wenzhou’s European-style cafés are profitable. About 70% are losing money, and 20% are breaking even. That means most cafés aren’t sustainable long-term under current conditions.

The Closure Trend

European-style cafés became popular in Wenzhou around 2019, spreading quickly across the city and nearby counties like Rui’an, Yueqing, Cangnan, and Yongjia. At one point, Rui’an alone had about 20 such cafés. Today, Wenzhou city proper hosts roughly 70 to 80.

But that boom is fading. In Rui’an, five or six cafés have already closed or changed businesses in the past year. Even established chains like OPPO Café delayed planned expansions due to weak market demand. While a few new cafés have opened, most mix coffee with other themes—like the digital@wireless café in European City.

According to Xie Xiaoxian, partner at Gozo Café, “The European-style café sector is facing a shakeout. You could see it coming as early as 2012.” His estimate, based on visits to dozens of cafés, is that 70% are in the red, 20% are just surviving, and only 10% are truly profitable.

Who Keeps the Cafés Afloat

Most surviving cafés rely heavily on regulars. Owners report that 60–70% of their revenue comes from a core group of loyal customers—often professionals in finance, IT, or small business. These are typically not first-time coffee drinkers but people who’ve integrated café visits into their routines.

“Our business mainly depends on regulars,” say multiple café operators. However, most customers only buy one coffee—usually an espresso, cappuccino, or latte—which sell for around ¥30 on average, maxing out at roughly ¥40. That limits how much revenue even a full café can generate.

Repeat visitors often stay seated for hours without ordering more, reducing per-person yield. “Some just drink coffee and leave. Others sit for a long time. The latter group is more common, but brings in less money,” an owner noted.

Why It’s Hard to Grow

Customer growth hasn’t kept pace with the surge in cafés. Despite broader awareness, coffee still hasn’t reached the mass adoption seen with tea. Menu variety is limited too. Though some cafés offer over 100 items, bestsellers are usually the same three drinks: espresso, cappuccino, and latte. These make up over half of revenue at most locations.

With limited seating—most cafés have 20 to 50 seats—and an average spend of ¥50, a café needs near-full occupancy during at least two daily rushes to hit several thousand yuan in turnover. Yet even peak hours like 8–10pm rarely see full houses.

On top of that, costs are rising. Commercial rent in Wenzhou has increased at least 10% over the past year, pushing operating costs up roughly 50%. “Before, ¥2,000 a day could cover costs. Now you need closer to ¥3,000,” said Yi Donglin of an Italian-style café on Ma’anchi Road.

Cafés are hesitant to diversify menus with food or other offerings. “We don’t serve hot meals because we lack the setup, and delivery would ruin the atmosphere,” said Zhou Jianshu of OPPO Café. Most owners also avoid frequent new coffee creations, fearing they might alienate regulars. Innovation cycles are slow—new drinks typically appear only once a month, often borrowed from larger markets like Shanghai or Hangzhou.

What Is ‘Café Culture,’ Anyway?

Some café owners argue they’ve built a unique coffee culture—based on ambiance, familiar staff, or a particular vibe—that keeps people coming back. “Some customers prefer our place simply because they can chat with our staff,” said Yi Donglin. But such intangible appeal varies greatly, even among locations of the same chain.

Neighbourhood clusters—in areas like Xinhe Street, Nanmen, Ma’anchi Road, Chezhan Avenue, Xiàlǚpǔ, and Xincheng Avenue—each draw distinct clienteles. “Even the same brand, in different locations, attracts different types of customers,” an industry insider explained.

That inconsistency makes expansion risky. “We’d like to open more shops, but simply copying our model doesn’t guarantee success. The customer base might be completely different,” said one café owner planning growth.

Also, prime real estate for new cafés is scarce. “There just aren’t many suitable properties left in areas already saturated with cafés,” the insider added. And while most cafés try to stand out through décor, service and coffee offerings often feel interchangeable. “Culture is abstract. It’s what each visitor feels for themselves,” said Xie Xiaoxian.

Still, some customers do form attachments. “Some guests keep coming back just to talk with our staff,” Yi Donglin revealed—a sign of personal connection shaping a café’s identity. But that also puts pressure on staff to engage customers in meaningful ways.

One challenge: many successful cafés in Wenzhou tend to be noisy, with smoking allowed in some spaces. That clashes with the traditional image of a European café as a quiet refuge, complicating efforts to define or maintain a consistent “coffee culture.”

To Stay or Pivot?

With profits stagnant, many owners are torn. “At this rate, we won’t lose money, but we can’t earn much just selling coffee,” said Li, who runs a café in a smaller city. He’s considering adding a digital experience corner or hosting events like parties to boost income without overhauling the core model.

Such moves are effectively turning European-style cafés into themed cafés—a trend seen in cities like Hangzhou and Shanghai. However, purists argue that adding unrelated food or activities dilutes the original coffee-focused appeal and erodes any hard-won coffee culture.

Some chains have already compromised. In Rui’an, cafés taken over by new owners now serve stir-fries and other non-coffee dishes. “Some cafés here have started offering hot meals after changing hands,” Zhou Jianshu said. Yi Donglin plans to launch a new, larger location with a full menu including Chinese dishes—but insists his existing Italian café will stay true to its original style.

Yet blending coffee with full meals puts these cafés in direct competition with established restaurant chains like Lafangshe, Shede Fang, and COCO Café. “If you’re serving coffee and also offering hot dishes, you’re no different from those places,” the article notes.

Frequently Asked Questions

How many European-style cafés are in Wenzhou?

Wenzhou city proper has around 70 to 80 European-style cafés, with another 20 or so in economically strong nearby counties like Rui’an. At their peak, Rui’an alone had approximately 20 such cafés.

What percentage of these cafés are profitable?

About 10% of Wenzhou’s European-style cafés are profitable, 20% break even, and roughly 70% are operating at a loss, according to Gozo Café partner Xie Xiaoxian, who researched dozens of cafés.

Why are so many European-style cafés closing?

High commercial rents (rising at least 10% yearly), operating costs up around 50%, slow customer growth, and limited menu diversity make profitability difficult. Most cafés rely on regulars, but even they rarely spend beyond a single coffee or extended sitting.

Can cafés survive by adding food or other themes?

Some try—but adding stir-fries or digital themes risks diluting the “European coffee” identity. While theme cafés in cities like Hangzhou have worked, purists argue that straying too far from coffee undermines the original culture and turns the space into a generic restaurant.

What kinds of customers keep cafés open?

Most revenue (60–70%) comes from regulars—professionals such as those in finance, IT, and small business—who visit frequently but usually just buy one coffee or stay for long periods without additional spending.

Why don’t cafés introduce more coffee varieties?

Though some menus list over 100 items, bestsellers are usually espresso, cappuccino, and latte, which make up more than 50% of sales. Introducing new coffees too quickly can alienate regulars, so innovation is slow, typically once a month and often borrowed from other markets.

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