Why Zoo Coffee Is Now Cat Poop Coffee’s Takeover Target

When coffee chains collapse or flounder, other players often see an opportunity — not just to grow, but to reshape the competitive landscape. For Cat Poop Coffee, the chance to acquire a struggling rival seemed like the perfect move to expand rapidly. But what looked like a done deal quickly unraveled under the weight of hidden liabilities and brand decay.

Cat Poop Coffee walked away from acquiring Cafe Bene after discovering its debt exceeded 1 billion RMB (over $140 million). Instead, it is now targeting Zoo Coffee, a fellow Korean brand with healthier growth, as its next potential acquisition.

The Failed Cafe Bene Takeover

In June 2016, Cafe Bene — once a major player in China’s Korean-style coffee scene — sent a WeChat message to partners claiming it had secured a strategic partnership with Cat Poop Coffee. The message said Cat Poop Coffee, along with multiple investors, would conduct a month-long audit and assume confirmed liabilities to help rebrand Cafe Bene. Industry watchers buzzed, but nothing materialized.

Then, in early November, Cat Poop Coffee CEO Xu Jia Chen confirmed the deal was off. Speaking from Cat Poop’s headquarters on Guangzhou’s Shamian Island (a historic enclave known for its colonial-era charm and tree-lined streets), Xu said the decision came down to two factors: overwhelming debt and irreparable brand harm.

Why Cafe Bene Was Too Risky

First, the financials were alarming. “We knew Cafe Bene had debt, but not 10 billion RMB,” Xu told reporters. A full audit revealed liabilities surpassing 10 billion RMB (approximately $1.4 billion USD), far beyond what Cat Poop was prepared to assume.

Second, the brand itself was badly damaged. Supply chain failures forced many franchised locations to create their own menus, resulting in wildly inconsistent offerings — some stores allegedly sold local dishes like yangrou paomo (lamb and bread soup) instead of coffee. “One franchisee said they’d lost all faith,” Xu said. Industry gossip even included claims of a Xi’an location selling Shaanxi cuisine. Such inconsistencies destroyed consumer trust in what should have been a unified brand.

As a compromise, Cat Poop acquired just eight Cafe Bene outlets, rebranding them under its own name. The company may purchase more individual locations going forward, but has ruled out any further corporate-level buyouts of Cafe Bene.

Why Zoo Coffee Is the New Target

With Cafe Bene off the table, Cat Poop Coffee has turned its attention to another well-known Korean coffee chain: Zoo Coffee. Though still in the planning phase, talks have not yet begun in earnest — and Zoo Coffee itself claims it has not been formally approached.

Zoo Coffee, founded in South Korea in 2009, launched its franchise model almost immediately. Within two years, it had expanded to 100 stores. It entered China in 2013 and now operates more than 160 locations nationwide. But it has also faced issues — a Zhengzhou franchise closed abruptly, leaving customers unable to redeem stored-value cards at other locations, prompting complaints.

Unlike Cafe Bene, Zoo Coffee is seen as a brand still on the rise, with a more consistent identity and better growth trajectory — making it a more attractive acquisition target for Cat Poop.

The Strategy Behind the Acquisitions

Why is Cat Poop Coffee so focused on buying existing coffee chains? According to industry insiders and company leadership, the rationale boils down to three strategic goals: riding the market wave, attracting investment, and stabilizing its own brand.

1. The Coffee Market Wave

Experts predict the next five to seven years will be a golden era for coffee in China. By 2020, Boston Consulting Group data suggested China could become the world’s largest coffee consumer. Major players like Starbucks plan to double their store count in China, and domestic brands like Cat Poop and Quali are rushing to claim territory ahead of the curve.

2. The Race for Capital

Cat Poop is also chasing a 2017 NASDAQ listing. “Once we’re public on Nasdaq, we’ll expand to 1,500 stores quickly,” Xu said. The company held an equity placement event in Beijing on November 11. Currently, Cat Poop has 116 stores (half corporate-owned, half franchised) and is adding about 30 per year — but that’s not enough to hit its pre-IPO goal of 350 stores, nor to seize full advantage of the market boom.

Acquiring established chains like Zoo Coffee could accelerate expansion significantly.

3. Protecting the Brand

Cat Poop Coffee built its reputation around the exotic appeal of kopi luwak — civet coffee — but that narrative has backfired. In early November, a BBC documentary on Indonesian kopi luwak cast doubt on the ethics and quality of the beans. Meanwhile, viral rumors and social media posts accused the brand of animal cruelty. These issues threaten to undermine the premium positioning Cat Poop has worked to build.

Zoo Coffee, while similar in format, targets a slightly different demographic and avoids the same controversies, making it a useful hedge and diversification play.

Frequently Asked Questions

Why did Cat Poop Coffee want to buy Cafe Bene?

Cat Poop Coffee saw an opportunity to rapidly expand its footprint in China by acquiring Cafe Bene, a major struggling Korean-style coffee chain with over 400 locations at its peak. The deal was framed as a strategic investment that would include taking on confirmed debts and rebranding the chain.

How much debt did Cafe Bene have?

An internal audit revealed Cafe Bene’s liabilities totaled more than 10 billion RMB (over $1.4 billion USD), which was far higher than Cat Poop Coffee was willing or able to assume.

What problems did Cafe Bene’s franchisees face?

Due to supply chain failures, many Cafe Bene franchisees couldn’t get products from the corporate office and were forced to create their own menus. This led to inconsistent offerings across locations, with some stores even reportedly selling non-coffee items like lamb sandwiches. Brand trust eroded quickly.

Why did Cat Poop Coffee choose Zoo Coffee as its next target?

Zoo Coffee is a growing Korean coffee chain with over 160 stores in China, a more consistent brand identity, and fewer public controversies. It’s seen as a more stable and scalable acquisition compared to Cafe Bene.

Is Zoo Coffee aware of Cat Poop Coffee’s interest?

According to the report, Zoo Coffee has not officially been approached about a takeover and has stated it has not heard any related proposals, though Cat Poop has expressed interest internally.

What is Cat Poop Coffee’s long-term store expansion goal?

Cat Poop aims to operate 1,500 stores following a planned NASDAQ listing in 2017. Its current pace of 30 new stores per year is insufficient to meet that target or capitalize on emerging market opportunities.

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