Why 'Clothing + Coffee' Shops Are Trending in China

In shopping malls across China—especially in cities like Hangzhou—it’s now common to find three to five coffee shops in a single complex. With rapid growth in the sector, even non-coffee brands like Häagen-Dazs, KFC, McDonald’s, and even the traditional Chinese steamed bun chain Goubuli have entered the coffee business. But is this boom sustainable? And why are fashion retailers suddenly adding cafes to their stores?

The short answer: the coffee industry in China is growing fast, but profitability varies. Many retailers add coffee services not to make money, but to attract more foot traffic and keep shoppers in-store longer. The 'clothing + coffee' model is spreading, especially in women’s fashion stores, and struggling coffee chains like 'Coffee You' are being rescued by investors such as Cat Poop Coffee.

Coffee Shop Saturation and New Entrants

Malls in China, including those in Hangzhou, now routinely host 3–5 coffee shops per location. This reflects the overall rapid expansion of coffee consumption in the country. The market’s potential has drawn in major non-coffee players—brands like Häagen-Dazs, KFC, McDonald’s, and Goubuli have all launched coffee offerings to tap into the trend.

The 'Clothing + Coffee' Hybrid Model

One emerging trend is the combination of fashion retail with in-store cafes. For example, in May 2024, the fashion brand TW opened a lifestyle experience store in Chengdu, featuring a 14-table, 56-seat coffee area alongside its clothing lines. This marked TW’s first attempt at a mixed 'clothing + coffee' business model in that city.

The coffee section offers drinks (coffee, tea, juice, milkshakes), baked goods (cakes, cookies), and is priced similarly to Starbucks. Eight staff members are dedicated to running the coffee service. Observations show that on weekdays, around 400–500 visitors enter the store daily, doubling on weekends—with women aged 18–35 making up over half the clientele. During peak weekend hours (1 PM–8 PM), the coffee zone is often fully occupied, with male shoppers waiting for companions becoming the main coffee customers.

Industry insiders suggest that the primary goal of this hybrid model is to boost overall foot traffic and extend customer dwell time in-store. Even if the coffee operation isn’t profitable, it can enhance the shopping experience enough to justify its presence—especially when the clothing sales volume is high. Some believe this could become a broader trend, though not one that will dominate the market.

The 'Coffee You' Rescue by Cat Poop Coffee

Meanwhile, the once-popular coffee chain 'Coffee You' faced a major downturn due to franchise mismanagement, financial trouble, and allegations of misleading investors. In Hangzhou, about half of its 19 locations closed. However, recent reports indicate that Guangzhou-based Cat Poop Coffee is stepping in to help revive the brand.

According to a WeChat message from 'Coffee You,' Cat Poop Coffee, along with several strategic investors, is negotiating a takeover. An official audit and evaluation process is expected to last over a month. The plan includes taking on confirmed debts and working to rebuild the 'Coffee You' brand image. Cat Poop Coffee’s vice general manager, Liao Kui, confirmed the talks are ongoing, though no further details have been released. Cat Poop Coffee has been operating in China since 2010 and currently has over 100 locations.

Frequently Asked Questions

Why are fashion brands adding coffee shops inside their stores?

Fashion retailers are adding coffee areas primarily to increase foot traffic and encourage customers to spend more time in-store. Even if the coffee service isn’t highly profitable, it enhances the overall shopping experience and can lead to more clothing sales, especially when targeting young female demographics.

How many coffee shops are typically in a Chinese mall now?

It’s now common for a single Chinese shopping mall, particularly in cities like Hangzhou, to host between 3 and 5 coffee shops on-site, reflecting the high density and competition in the market.

What is the 'clothing + coffee' business model?

The 'clothing + coffee' model combines fashion retail with an in-store café. Stores like TW in Chengdu have introduced dedicated coffee zones with seating, drinks, and snacks to attract customers and extend their visit duration, even if the coffee side doesn’t turn a major profit.

Is 'Coffee You' still in business?

Yes, despite closing nearly half of its stores in Hangzhou, 'Coffee You' is being supported by an investment from Cat Poop Coffee. The brand is undergoing a strategic restructuring, including audits and debt management, to stabilize operations and revive its market presence.

What role is Cat Poop Coffee playing in the coffee industry?

Cat Poop Coffee, a well-established Chinese coffee chain founded in 2010 with over 100 locations, is investing in the struggling 'Coffee You' brand. They are leading a group of strategic investors to help restructure its operations and finances.

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