South Korean chain brand "Coffee accompany you" overexpanded and caught in a "confidence crisis"

Korean chain brand "Coffee accompanies you"

Excessive expansion is caught in a "crisis of trust"

The first store in Hangzhou was closed several months ago.

Our reporter Zhu Yao

After being publicly protested by franchisees and many domestic stores closing one after another, the Korean coffee chain brand "Coffee to accompany you", which is plagued by "bad news", has become a hot topic recently.

"Coffee accompany you", which was caught in frequent shop closures at the end of last year and faced with rumors of operational difficulties, has attracted the attention of the industry even though its official website continues to clarify.

Fall into the quagmire of joining in chaos

"Coffee accompany you" was protested by Chongqing franchisees.

At the end of last year, there was a lot of talk about a series of problems such as "coffee accompany you", such as crazy closure of shops, arrears of wages, arrears of goods payments to suppliers, deception of franchisees, and so on.

At the forefront of the storm, Coffee accompany you published a letter to Coffee to accompany your partner and said: "some industry competitors have taken some improper measures to slander coffee to accompany you in the media, and we will face the challenge with a positive attitude."

However, this statement did not restore the franchisee's trust in the brand. On April 16 this year, "Coffee with you" suddenly made a sound again and posted a statement on the official website about the false information about "coffee without sugar" (netizens) in moments.

In this statement, the Coffee with you team directly approved the message that "Coffee with you has filed for bankruptcy protection" reposted by "Coffee No Sugar" on Wechat moments, which is purely rumor-mongering and an act of malicious slander. "this has seriously undermined the trust and cooperation among investors, franchisees, suppliers, consumers and coffee companions."

However, the incident did not move in the direction expected by "Coffee with you". Over the next 10 days, the media reported again that many domestic franchisees, desperate to withdraw their shares and stop their losses, had to come to the local "Coffee with you" management company to ask for an explanation.

In the Chongqing area, some fierce franchisees put up banners in stores, pointing out that the seemingly lively coffee brand was a "fraud company".

According to media reports, taking a store of about 200square meters as an example, according to the calculation of "Coffee accompany you", the total cost is about 3 million yuan. This includes 350000 yuan for entrusted operation and management fees, 100000 yuan for staff training, 600000 yuan for interior design and decoration (3000 yuan per square meter), 100000 yuan for on-site supervision, 800000 yuan for equipment and furniture, 100000 yuan for signboards and images, 100000 yuan for MD goods and consumables, 100000 yuan for POP advertising and event planning, 100000 yuan for logistics deposit, 90,000 yuan for initial materials, Fees such as 100000 yuan for license processing and 350000 yuan for entrusted business deposit.

Franchisees later discovered that, in fact, at normal market prices, the actual cost of opening a coffee shop of this size was about 800000 yuan, while they spent 1.47 million yuan and took only 49 per cent of the shares. What is even more outrageous is that the franchisees in Chongqing have not yet seen the capital contribution certificate of the other 51% of the "Coffee with you" company.

"Coffee with you" has 19 stores in Hangzhou.

The first store was closed several months ago.

The embarrassing protest of the franchisee in Chongqing and the brand's non-committal explanation and handling of the management problems have made the whole incident continue to ferment.

However, according to incomplete statistics, Hangzhou market, thousands of miles away from Chongqing, most of the "coffee accompany you" stores operate normally, and the franchisees are calm for the time being.

According to reports, at the end of December last year, according to the data shown on the official website, Coffee with you had a total of 13 stores in Hangzhou at that time. In the business model, most of the stores in Hangzhou are franchisees, which is the "franchise model of entrusted entrepreneurship" that "coffee accompanies you".

Similar to other cities in China, except for a few "coffee with you" direct stores, more than 95% of the stores in the country are franchisees, and the franchise stores are mainly based on about half of the shares.

The reporter learned that it opened two years ago and created the myth of queuing by the West Lake. the "Coffee accompany you" Xiebaihua store, which once had many Korean fans "crushing their heads", has now changed its doors.

Xiao Lv, a "Korean opera fan" in Hangzhou, remembers that he and his friends once stood in line for nearly 20 minutes to order a cup of coffee that was so sweet that they were bored with you at the side of the West Lake. Today, the first store, which was once popular in Hangzhou, has changed owners and has been transformed into a women's clothing store. According to the clerk of the women's clothing store, I don't know the details of the previous tenant, nor can I remember the exact closing time of the cafe, but it has been going on for months. The clerk also kindly reminded the reporter, "take a few steps forward, there is a Starbucks around the corner, you can go there for coffee."

Amid the overwhelming skepticism on the Internet, Ms. Zhu, who plans to join "coffee to accompany you", backed down in her heart. She learned from businessmen in East China that as of last week, there were 19 "coffee with you" stores in Hangzhou.

At the same time, investment promoters also revealed to Ms. Zhu that at present, the "coffee accompany you" alliance model has removed the much-criticized fiduciary joint venture alliance model (51% and 49% respectively) and financial innovation alliance model (60% and 40% respectively). Only 100% wholly-owned alliance model is retained.

At two o'clock in the afternoon on weekdays, the "Coffee accompany you" store in Block B of Yintai, Hubin, has an "attendance" of more than 40%. According to the shop assistant, "even on weekdays, our business is good, and we are even more busy on weekends." The reporter saw that in addition to coffee products, waffles, juice, ice cream products, the conspicuous part of the cashier also placed the new product official Zhuang Gao Lishen advertisement.

Facing a "crisis of trust"

The hidden worries behind the rapid expansion of cafes

Involved in the whirlpool of rapid expansion and shop closure, and faced with a "crisis of trust", the reporter called the official hotline "Coffee accompany you" and the phone has been unconnected. Another person who claimed to be related to the China Merchants Department said it was inconvenient and refused to be interviewed by the reporter.

According to the official brand "Coffee with you", as of December 31, 2014, there were more than 600 stores in more than 100 cities in China. For 2015, the Coffee accompany you team said it would continue to open 400 stores across the country to achieve the landing of the second phase of the Thousand Store Strategy. "the brand is changing from a horse-racing enclosure to a single-store profitable market strategy, and the brand strategy of 'Coffee with you' in China in 2015 will be fully optimized." In addition, its "mini coffee bar" plans to open about 1000, "buffet coffee bar" to open about 1500, the year plans to complete 3500 stores and locations.

As for the "Thousand Store Strategy", some netizens found that because the "Coffee accompany you" chain is growing like cockroaches, the brand is also jokingly known as "cockroaches with you" in South Korea. "it can be said that the shop is closed at the same time." In response, the person in charge of a Korean cafe in Hangzhou thought it was "taking too big a step".

He said that after the number of franchisees has doubled, how to standardize a cup of coffee and how to maintain the taste of the product is indeed a difficult problem for management.

However, from the industry's point of view, unlike "coffee with you", Starbucks, which has stores in 60 countries around the world, has been expanding with a more cautious direct operation model. Coffee with you officially commented on the 600 stores: "second only to Starbucks, the industry leader who has been in China for 20 years, we have become an industry leader and achieved remarkable results in just over two years."

It is worth mentioning that after repeated failed negotiations, disgruntled Chongqing franchisees also found that almost every item in the long list of fees for "coffee with you" was overpriced or falsified. According to media reports, for example, it costs 100000 yuan for industrial and commercial licenses and various licenses in the fee list; the wholesale price of Kimberly-Clark M39 double-headed semi-automatic coffee machine is about 50, 000 yuan, but the price of "coffee with you" is 120000 yuan.

"behind the rapid expansion of cafes, the industry will also face a big reshuffle in the future." According to Boeing, the training instructor of Hangzhou Coffee Dream College, the operation of a coffee shop needs to follow commercial rules. "Management, marketing, products and services, these four points will be the general criteria for testing a coffee shop."

In an interview with the media, some domestic franchise experts said that chain cafes should check their franchise system for authorization, investment, construction, logistics, supervision, and even whether there is something wrong with the whole system. "especially the act of supplying goods at a premium to franchisees seriously violates the law of franchise itself."

Author: Zhu Yao

Source: Zhejiang online-Today Morning Post