What's the prospect of opening a coffee shop? Is it difficult to start a coffee shop?

In recent years, with the flowering of cafes everywhere, the cafe war has broken out, and the intervention of capital has pushed it to a climax. Compared with the international chain giants with strong capital background, the domestic chain brands with broad development prospects such as carving time attract PE/VC to help. Admittedly, due to lack of profitability and lack of linkage genes, domestic coffee shops with investment value are rare.

Cafe Wars

Since the end of last year, people have suddenly discovered that Carving Time Cafe, which has always been known for its slow business and slow to open new stores, has suddenly accelerated. Before this, Carving Time also opened one or two new stores a year. Since November 2002, the company has only opened 15 stores since its official establishment, but only in December last year, Carving Time opened three new stores at one go. Ten years after it was founded, the carving time of grinding a sword for ten years finally ushered in an explosive period.

"We have 50 to 60 new stores to open in 2013." Carving time CEO Zhao Ke Tong in an interview with China Securities News reporter said. According to her introduction, carving time passed the quiet period in the early stage of entrepreneurship, began to build the structure from 2005 to 2007, began to temper from 2007 to 2009, began to exert force at the end of 2009, until now ushered in the outbreak.

Of course, after all, it is difficult for a clever woman to cook without rice. The power of carving time until it breaks out is precisely with the help of capital. In 2010, Zhixin Capital made the first round of investment in carving time. In 2012, on the basis of continuing to be optimistic about carving time, Zhixin Capital made the second round of financing. According to Zhao Ke Tong introduced, In addition to Zhixin capital, Many VC/PE also have extended olive branch,"Now there are three or four are negotiating with us."

A glimpse of the leopard in a tube can be seen. PE/VC are optimistic about carving time, reflecting the current hot cafe market and its attractive prospects. The number of cafes in China has doubled in the past five years, jumping from 15,000 to more than 30,000, with one in five urban consumers saying they have visited a cafe at least five times in the past year, according to research firm Mintel. The "China Coffee Market Analysis (2012 Analysis)" predicts that the annual growth rate of coffee consumption in China will reach 15%, much higher than the global average growth rate of 2%, compared with the current total consumption of 70 billion yuan, this figure will reach 1 trillion yuan in 10 years. 85% of coffee consumption will come from instant coffee, but in terms of growth rate, it will be coffee consumed in cafes.

Correspondingly, coffee shops have blossomed everywhere in China in the past two years, and coffee shop wars have broken out. It is undeniable that Starbucks still maintains the most powerful brand and scale strength in China's coffee shop market, but in recent years, Costa and Pacific have emerged as a challenge to Starbucks, while the 2012 night burst of coffee has become a "phenomenon-level event", and the power of coffee chain brands represented by carving time represents the rise of a new local force in China.

Coffee wars naturally require capital to help out. Starbucks goes without saying, and Pacific Coffee finally got a big tree after it was acquired by China Resources Enterprise for US $326 million in 2010. Costa is backed by Hualian. In contrast, the local coffee chain brands that are still in the growth stage rely on the power of PE/VC. In addition to carving time, Senna Left Bank Coffee, which is deeply cultivated in the second and third tier cities, also frequently contacts PE/VC. At present, it has signed a memorandum of cooperation with Freeland Investment Company of the United States.

Investment targets are scarce

"At present, most coffee chain brands in our country are foreign, and there are not many successful local coffee chain brands." Zheng Qingsheng, chairman of Zhixin Capital, who has made two rounds of investment in carving time, told China Securities News that "Shangdao coffee and cross-strait coffee are exactly catering enterprises, while coffee chain brands focusing on making coffee and having investment value like carving time in China can be said to be rare."

Zheng Qingsheng said that the reason why Zhixin Capital has a special liking for carving time is that, on the one hand, carving time creates a unique atmosphere, attracts enough passenger flow and ensures continuous profit; on the other hand, the goal of carving time is to do national chain, with broad development prospects. This is in line with the PE investment logic of "profitability + replication", and with these two coordinates demarcated, there are not many cafes in China that can meet this standard.

In fact, compared with the current hot coffee shop market, the profitability of domestic coffee shops is really worrying. Bai Fang, secretary general of the China Coffee Industry Association, told China Securities News: "Half of the domestic cafes are in a state of loss, and a few years ago the loss was even greater." Some industry insiders even joked,"How many cafes pop up, how many cafes fall down." For this reason, many cafes no longer simply sell coffee, movies, western food, fried dishes, drinks have become the main profit points, coffee has become a gimmick instead. "To be exact, many cafes are more like Western restaurants." Zhao Ke Tong bluntly said.

In Bai Fang's view, at present, many cafes lose money or even close down for many reasons, including weak brand influence, few repeat customers, prominent partner contradictions and other reasons, and high rent has become a domestic cafe "unbearable weight." On June 21 this year, even Starbucks, located on the first floor of Beijing World Trade Center, was forced to close due to excessive rents.

However, it has to be said that compared with domestic cafes, foreign coffee chain giants have inherent advantages in terms of rent. Starbucks has strong negotiation ability in rent, Hualian backed by Costa and China Resources backed by Pacific Ocean have strong real estate resources, and the rapid expansion of Man Coffee is also based on cooperation with real estate developers. Bai Fang said that in order to avoid this disadvantage, many domestic cafes are "their own houses open their own shops", which also determines that domestic cafes are difficult to expand externally.

In addition, domestic coffee shops lack the gene of chain operation, and coffee lovers are more likely to operate coffee shops, which is very different from the international collectivized operation mode. Bai Fang believes that personalized cafes with single-store nature are the development trend of domestic cafes in the future, and few of them can develop into chain brands like Carving Time and Seine Left Bank Coffee.