Exploding the three factions of Chinese cafes

At present, China's per capita annual coffee consumption is 5 cups, which is far lower than the annual per capita level of about 300 cups in Japan and South Korea, and the world average is about 240 cups. However, China's coffee consumption continues to grow at an annual rate of 15% to 20%, and is becoming the most potential coffee consumer in the world. At present, there are three active forces in the Chinese market: local, European, American and Korean. In different ways, what preparations have they made for the coming market war re-opened by the Internet?

China's coffee market is entering a white-hot stage.

Usually, the period of economic slowdown after a period of rapid economic growth is a period of explosion in restaurants, cinemas and cafes. Economic development will lead to the improvement of general living standards, while the slowdown in the speed of development will give people more time and impulse to think and enjoy life. And China is entering this stage.

In 2012, coffee consumption in the Chinese market was about 130000 tons, and China's coffee consumption continued to grow at an annual rate of 15% to 20%, making it the most potential coffee consumer in the world. At present, China's per capita annual coffee consumption is 5 cups, which is far lower than the annual per capita level of about 300 cups in Japan and South Korea, and the world average is about 240 cups.

Starbucks praised the Chinese market as the "second home market", which shows the great potential of the Chinese market. In 2104, China's coffee consumption reached more than 500000 tons, and the market retail sales were close to 60 billion yuan. The growth rate of the Beijing market alone has reached 18%. There are 13600 cafes and 2200 coffee-related enterprises across the country, employing 500000 people.

At present, there are three active forces in the Chinese market: local, European, American and Korean. They are preparing for the coming market war in different ways.

Sculpture time: the Internet changes competitive Strategy

Starbucks, which claimed to be a coffee e-commerce platform several years ago, repeatedly delayed its launch plan and finally decided to focus its online business on "membership services". On December 15, 2014, to the surprise of the coffee chain, carving time (hereinafter referred to as "Diaoguang"), a 17-year-old local coffee chain, built a professional coffee website in just six months.

On the day Hello coffee was officially launched, we saw almost all the world's top coffee brands, raw material suppliers, coffee-making utensils, coffee peripheral products, and even competitors' Banner on the literary and artistic page. It can be seen on this site that carving time is trying to break the shackles of competition and work with coffee brands to create a focused and perfect supply chain of coffee and its surrounding formats.

Zhao Kedong, CEO of Diaoguang, told Commercial value:

"in the 17 years of operation, we have gradually found that there is no real professional and perfect platform in China to guide how to choose our own coffee taste from thousands of coffee categories. We firmly believe that those who know how to appreciate coffee will know how to taste coffee and become Bole who appreciates coffee. Our original intention is very simple: we want friends who are full of love for coffee to stop worrying about the source and safety, to select more professionally, to find a platform full of coffee feelings, to taste coffee together, and to evolve into a Bole who understands life and coffee. "

In 1997, when Chuang Tsai, a Taiwanese boy, opened the first sculpture time cafe outside Peking University, this small shop with JAZZ or Bossa Nova music became a gathering place for Chinese intellectuals and literary youth. In 17 years, carving time has opened more than 40 branches in 20 cities across the country, and completed two rounds of financing.

Under the big brand of carving time, it has formed collectivized enterprises with sub-brands such as "Shangda Public Relations Company", "Border Design Company", "Qige clothing", "Life Market", "Coffee College", "Hello coffee" and so on. Founder Zhuang Yueli does not deny that they are making adequate preparations for the "listing". Zhao Kedong added:

"if it were Taiwan or the new third board, we would have been on it years ago, but we don't want to go public for the sake of listing."

The goal of Zhao Kedong and Zhuang Yuli is to turn the carving time into a "century-old shop", but under the main theme of "slow style", Internet practice is achieving their "fast pace" in business. The idea of "building a website" came into being in June 2014.

"many of my friends are in the Internet circle, and communicating with them makes me feel that 'change' in traditional industries is imperative. Many of our colleagues think that having a shop in 'Tmall' and 'JD.com' is the Internet. I think if we want to do it, we should do it in place. "

Hello coffee's team was only built in July and was officially launched on December 15th. Zhao Xin, head of the Hello coffee team, stressed that this is China's first coffee B2C website, and there will be no competitors for content in the coming year.

"the coffee industry is not mainstream enough in China. There will be no more than 100 good coffee merchants in Beijing. Now 60 have signed up to Hello coffee. We want to be a professional coffee vertical e-commerce. Except for large-scale chain stores like Starbucks, those coffee shops with characteristics will become our merchants."

At present, Hello coffee has a three-dimensional warehouse of 1000 square meters and has signed contracts with four logistics companies. In the coming month, APP clients will also be launched. Zhao Kedong said that when Dioguang opened its first coffee shop, Starbucks had not yet entered China. Today, Dioguang's competitors throughout the country, the increasingly mature coffee consumer market, attracting different styles of coffee brands to join this enclosure war. Local cafes should not only play a good cultural card, but also continue to cultivate the market.

Fortunately, they have learned to use the power of capital and the advantages of the Internet to provide a greater stage and influence for brands. Competition cannot be confined to one dimension.

Starbucks: marketing Strategy under Fast consumption

The American coffee chain led by Starbucks has sprung up everywhere in China's major shopping malls and office buildings. it is undeniable that no one is second to none in the chain coffee brand. Although COSTA tries its best to imitate and follow, it is also eating away at Starbucks' market, but it has never been able to form a competitive force against it.

Born in 1971 at Starbucks Cafe in Seattle, USA, it was formerly a coffee bean supplier. After running a small green cafe, founder Schultz unexpectedly achieved commercial success and dominated the coffee chain market 20 years later, becoming a global enterprise.

Like all American fast food restaurants, Starbucks has found in market practice that Americans are not willing to spend a long time in a cafe with a cup of coffee like the French and Italians. Thinkers and writers such as Hemingway, Balzac and Freud prefer to spend their time in the "God of Flowers" cafe on the left bank. Americans in the 1970s are in a period of struggle, their pace of life is very fast, believing in the value of "time is money".

For operators, the long stay of customers means that sales slow down, and sales can continue to increase only when customers are mobile. The process of making coffee has also been greatly simplified. Starbucks uses a fully automatic coffee machine that takes only two minutes to make a cup of coffee. The new products of each season are blended through "fruit paste". From receiving a guest to producing a cup of coffee and handing it over to the guest, the time is precisely controlled.

There are not many seats in Starbucks cafes, and the seats and environment are not comfortable, because Starbucks encourages guests to "take out". Implement the strategy of using takeout cups, and constantly improve the design and functionality of takeout cups, so that guests are more willing to walk out of the cafe with paper cups. This model also contributes to Starbucks' most effective takeout marketing tool-star effect. In fashion magazines, Britney Spears? Spears, Baker-Ham, Anne Hathaway, Rihanna.

Well, you have to admit that all the stars you know like to have a Starbucks in hand when shooting on the street. Starbucks paper cups are the best ornaments, it makes them look more casual, and Starbucks seems to mean taste. Indeed, in the coffee industry, only Starbucks has fully integrated with fashion, and even become a measure of whether a person is fashionable or not.

Apart from the US, China has become Starbucks' largest consumer market, and Schultz mentioned the Chinese market three times at shareholder meetings. "Starbucks plans to open 1500 stores in 75 Chinese cities in 2015," he said.

Seeing the huge market capacity of China, Starbucks is also constantly adjusting its strategy. Now, Starbucks has taken back almost all its franchise stores, with the exception of individual partner stores in Shanghai, all of which are direct stores. Starbucks Asia Pacific Director told Business value, "operating direct stores can better control the quality of services and products, as well as the pulse of the entire Chinese market."

Only standardized management can protect Starbucks' ambition and expansion.

Korean chain: tighten up the enclosure, it looks beautiful

Standardization has always been a nightmare for coffee shop chains, especially in the Chinese market. It is precisely because Starbucks saw the disadvantages of the early franchise stores that it will take back the global franchise rights and create global standard products and services. However, the Korean coffee shop chain is still immersed in the profit model of joining, unable to foresee the future crisis.

As a country where coffee beans are not grown, South Korea is the 13th largest coffee consumer in the world. Ten years ago, South Korea imported 1.5 million bags of coffee beans, or about 80, 000 tons, with a per capita consumption of 1.6kg of coffee. In South Korea, the sales performance of local coffee chains makes it hard for even Starbucks to match.

Korean coffee chain has a similar business model: coffee taste close to Asian eating habits, quick and simple waffles, toast, sandwiches, loose and comfortable space. Korean brands such as "Caffebene", "MAAN COFFEE" and "ZOO COFFEE" are growing in South Korea at the fastest speed, while entering Japan, Taiwan, China, Vietnam and other countries to share the local market.

Caffebene, which started with 1 billion won of capital in South Korea, reached annual sales of 200 billion won in two years and is expected to expand to 1680 in 2015. Jin Shanquan, president of Caffebene, said:

"Caffebene focuses on young women in China. For consumers such as college students in their 20s and 30s, high-income white-collar workers and fashionable young customers, Caffebene will develop coffee and tea products and dishes that suit Chinese consumers' tastes."

Man Coffee, which is rapidly occupying the market in China, is not a native Korean brand, but a masterpiece of Korean Xin Zixiang adapted to local conditions in China. The Korean man who lives in Wangjing sees a gap in the Chinese market.

In 2007, the number of cafes in South Korea was 2800. Seven years later, the number has reached 18000 this year. For China, there is no doubt that this is the golden age for the development of cafes. "

Two years before the establishment of Man Coffee, there were more than 60 franchisees and chain stores in the Beijing market, which is an amazing performance for new brands. Xin Zixiang, founder of Man Coffee, believes that the reason why Man Coffee has won the favor of consumers is:

"in addition to its unique environment, Man Coffee has chosen some strategies that are different from its competitors. In Starbucks and other stores, coffee is the protagonist, but South Korean coffee shops, almost all with a unique decoration style as a gimmick, the consumer group here is more extensive than Starbucks and so on. "

So, in the coffee, you often see people who are focused on work, study, and talk about work. The comfortable environment makes consumers reluctant to leave, and this strategy is just the opposite of Starbucks' mobile consumption.

The business of Man Coffee, which is located in the best location of Wanliu East Road, is always very booming. The franchisee revealed that the total area of his coffee shop on the upper and lower floors is about 1000 square meters, with an initial investment of about 20 million yuan, including franchise fees, decoration fees, equipment and materials fees, and so on. The franchisee revealed to the "Commercial value":

"the threshold for the franchisee is much higher than that of the Caffebene. The franchisee requires the economic strength to open five stores. It must be the best location in the park, college, or community. It must be a two-storey property. Man Coffee is responsible for providing raw materials and training for meals and drinks, and the decoration is also designed and implemented by the head office of Man Coffee. Since its opening a year ago, the daily flow here has been between 6000 and 10,000 yuan. "

When it comes to profitability, franchisees say:

"my shop in Shunyi is better than here, and I can basically draw even there, but I don't know when this store will recover the cost. If you open a coffee shop, you still have to spell the lot. "

The profit model of Korean coffee chains is almost the same-attracting franchisees. Take Caffebene as an example. In South Korea, with the exception of a few direct stores, more than 95 per cent of caffeine stores are franchisees. Among them, the franchise store takes 50% franchise (half of the company and half of the franchisee) as the main mode. Since entering China in 2012, Caffebene has rapidly opened 400 stores, which is still dominated by joining.

But by July this year, we have seen the trend of Caffebene shop closure, which also contains the disadvantages of joining Korean cafes.

Take a 200m2 store in Caffebene Beijing as an example, the franchise fee is about 3 million yuan, which means that the franchisee's upfront investment is very large, plus the decoration cost of 3000 / sq m of Caffebene uniform standard, and the cost of equipment that the Caffebene is higher than the market price (such as Kimberly-Clark M39 double-head semi-automatic coffee machine, Taobao price is about 70,000 yuan, franchisee has to pay 120000), food and beverage raw materials, and so on. Open a Caffebene franchise store with a pre-investment of 3 million-5 million. Even if you open a store smoothly, franchisees and companies have to distribute income according to 49% and 51% of their investment, in addition to a monthly management fee of 4%.

Korean cafes usually look beautiful. The days of franchisees are usually very difficult. Although Korean cafes standardize their products with uniform purchase, the purchase fee which is higher than the market price makes franchisees start to think of other ways, such as private purchasing and group buying, resulting in different tastes of each store. But even so, franchisees may not be able to afford rent, management fees and other pressure, and finally have no choice but to close the shop in order to reduce losses.

Such a store closure effect, like dominoes, will overturn Caffebene's plans to join in China one by one. Caffebene changed from the initial slogan: "5000 chain stores in China in 2015, then listed in Hong Kong"; adjusted to "reach 1500 chain stores in China by 2015, and then list in Hong Kong"; then: "by 2015, there will be 1000 chain stores in China"; until recently: "become a world-famous coffee chain brand by 2015".

Behind the falling publicity content, it is the defect of the Korean coffee brand chain joining model.

What kind of cafe can make money? Zhao Ketang said, "Cafe is a slow business. People who want to make quick money in this business will smash the brand."