Why Korean-Style Cafés Collapsed in China Within a Year

In 2020, Korean-style cafés were everywhere in China—fueled by the popularity of K-dramas like "Goblin" and "My Love from the Star." But just twelve months later, they began vanishing from city centres. What caused this sudden collapse? The answer isn’t in the coffee, but in how these cafés were run.

Korean café franchises withdrew from China almost entirely within a year. By mid-2021, major players like ‘Caffebene’ had shut most outlets, and the brand’s own executives resigned amid financial chaos.

The Rise and Fall of Korean Café Franchises

At the 2020 China International Coffee Expo, Korean café franchises drew huge crowds. Booths featuring actors like Kim Soo-hyun were packed, and franchise brochures sold out quickly. Everyone wanted to open their own stylish Korean-style café. But a year later, at the 2021 expo, not a single Korean café franchise appeared.

According to event organisers, the shift happened fast: what was once the hottest trend became a near-total withdrawal in just twelve months. The boom had gone bust.

What Went Wrong with Caffebene and Others

Caffebene, once the leading Korean café brand in China, suffered mass closures. Its Beijing headquarters at Kaitai Plaza closed abruptly. Just weeks prior, then-CEO Qi Dong resigned, citing eight months of unpaid wages and a broken funding model. He warned the chain’s rapid expansion—over 600 stores—and constant push for IPO readiness had drained resources and neglected operations.

The brand’s original franchise model gave Korean headquarters 51% control, limiting local adaptability. Franchisees reported loose vetting: having a retail space often sufficed for approval. Yet post-opening support was minimal, leading to inconsistent quality. Industry insiders estimated 80% of franchisees operated at a loss.

Qi Dong’s resignation letter revealed the company’s Chinese investors stopped funding three months before his exit. With capital tied up in new openings and no operational stability, the chain collapsed under its own weight.

Why Most Korean Cafés Couldn’t Make Money from Coffee Alone

Experts say Korean café concepts didn’t resonate with Chinese consumers. Their product range was narrow, and while the model was easy to replicate, quality suffered. “Korean cafés offered little beyond coffee,” said one insider. “But most customers can’t judge coffee quality—but they can taste food.”

Kelly Kan, general manager of White Rabbit Sugar Coffee, pointed out that while coffee is hard for non-drinkers to evaluate, desserts and light meals aren’t. “Your café’s real profit doesn’t come from espresso—it comes from the food menu,” she said.

More important than menu or brand is location. “In Beijing, a 300-square-metre café in a busy area with ¥10,000 daily sales can break even in three to six months,” a market expert explained. Without strong foot traffic, even the best concept struggles.

Frequently Asked Questions

Why did Korean-style cafés suddenly close in China?

Most closed due to financial mismanagement, overexpansion, and a franchise model that gave too much control to the Korean parent company while providing little local support. Key players like Caffebene collapsed after rapid growth and funding shortages.

Were the coffee drinks themselves the problem?

No—the real issue wasn’t the coffee quality but the narrow menu, weak execution, and lack of adaptation to local tastes. Most customers couldn’t tell coffee quality apart, but could notice poor food.

Did the K-drama boom really drive café growth?

Yes, shows like 'My Love from the Star' made Korean-style cafés trendy, leading to a rush of franchise openings. But the trend faded quickly when the novelty wore off and operational flaws became clear.

How important is café location in China?

Extremely. A 300㎡ café in a high-footfall Beijing spot with ¥10,000/day sales can turn a profit in 3–6 months. Poor locations doom even well-conceptualised shops.

Did most Korean café franchisees make money?

No. Industry sources estimated around 80% of franchisees operated at a loss due to inconsistent management, poor support, and saturated markets.

What was the biggest mistake Korean café brands made in China?

Prioritising rapid expansion and IPO goals over solid operations, local adaptation, and franchisee training led to inconsistent quality and financial collapse.

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