China Food

Sinking market coffee War: 80 stores are opened in the fourth tier cities, which can make money, but it is more like doing public welfare


“ 
opened a shop with feelings, but finally compromised with the market.
 ”
How big waves can a small cup of coffee make?
With the upgrading of national consumption, coffee shops representing the paradigm of exquisite life have also accelerated into the sinking market – dozens of coffee shops have been opened in many fourth and fifth tier small cities. It is not difficult to observe that the unit price of a coffee shop in a city that can sink below 40 yuan on holidays is not lower than that of one line.
Most cafe owners plunge in because of their love. Others take making money as a clear purpose and plan to occupy the market in advance before the upcoming tuyere.
However, many small town residents do not have the habit of drinking coffee, and the blooming milk tea shops and dessert shops are also grabbing a few young users. In order to survive, many bosses positioned as “boutique coffee” have to compromise with the market and add dessert, wine, bubble water and other categories.
Is it a good business to open a coffee shop in the sinking market? How will coffee shop owners choose between feelings and survival?
open coffee shop in sunken market
13 years ago, when Lao Jia’s “back window coffee” opened, there were only two cafes in Mudanjiang City, Heilongjiang Province. Today, at least 80 cafes have been opened here, including independent cafes and chain stores such as Ruixing and Starbucks.
Deyang City, Sichuan Province, a third and fourth tier city 50 kilometers away from Chengdu and with a permanent resident population of about 800000, also has five Starbucks, eight Ruixing coffees and more than a dozen independent cafes.
Who opened the coffee shop in the sinking market? According to the observation of “the forefront of entrepreneurship”, most of these coffee shop owners plunge in because they love coffee. Before opening the store, they didn’t carefully investigate the market, and some even didn’t think about profitability.
Lao Jia is a post-80s generation. He was about 278 years old when he opened a coffee shop. At that time, there was only one “island coffee” in Mudanjiang. When residents went out to socialize, they had no place to go. He had a plan to open a cafe. “I like coffee very much. I opened it without thinking too much.”
Photo / Lao Jia’s back window Cafe
Lao Jia’s coffee shop belongs to a couple’s shop, covering an area of more than 70 square meters. It invested 120000 yuan in the early stage, because it was in the blank period of the market when it opened, and it returned to its capital in more than a year. At present, the monthly flow is about 10000-20000 yuan.
After having children, the expenses of Lao Jia’s family increased, and the income from opening a cafe seemed a little meager. He also found other ways to increase his income, such as training students, cooperating in opening stores in other places, etc.
In June 2021, in Rizhao City, Shandong Province, more than 1500 kilometers southwest of Mudanjiang, the cafe TAS cafe of post-90s tars finally opened after more than half a year of preparation.
In the previous year, tars originally opened a shared study room with good business. But there is a bottleneck in this business, that is, the seats in the study room are limited, and the income is gradually reaching the ceiling. In order to generate revenue, tars thought of combining cafes with study rooms.
After the coffee shop opened, tars realized that he might have caught up with a small outlet of coffee. During the epidemic, many foreign students were unable to go abroad. Having developed the habit of drinking coffee, they turned to local boutique cafes and became regular visitors.
This brings good business to TAS cafe. Before opening the store, a friend gave tars a preventive injection. “At that time, I thought it would be good to sell 20 cups of coffee a day.”. But the actual situation is beyond his imagination. “Under normal circumstances, about 30 cups are sold every day, and 50 to 60 cups can be sold in good times.” Tars told the “front line of entrepreneurship”.
Among the people who opened a coffee shop with feelings, Yoko had a clear understanding from the beginning. “I am a businessman.” “I think making coffee should not only have feelings, but also want to make money,” she said
In the ten years before starting his business, Yoko engaged in data analysis in traditional media in Chengdu and had his own sideline. Not satisfied with a stable life, she chose to resign and return to Deyang’s hometown to open a cafe. With the advantages accumulated from her work and the operational thinking of the first and second tier cities, she believes that she should have a greater chance of success in opening a store.
In June 2020, Yoko’s Cafe rockinola opened. Now, she has opened three stores in Deyang and two in Chengdu.
Figure / rockinola Cafe
Yoko’s coffee shop is divided into two types. One is a space store, which has a large area to meet the social and clock in needs of consumers; One is a fast-moving store, similar to Ruixing and manner. If the operation is ideal, the latter can return to the capital in about 4 to 6 months.
Opening a coffee shop in the sinking market is only the first and simplest step. After taking this step, when the coffee shop was actually running, the coffee shop owners suddenly found that it was not so easy.
In many people’s imagination, opening a cafe is a pleasant thing. Everyday is drinking coffee, reading newspapers and watering flowers. However, the chicken feathers in the process of opening the store quickly made them recognize the reality. They cleaned, prepared desserts, repaired items, cleaned cups, etc. all kinds of trivial things filled their daily life.
Because the actual opening of the store was inconsistent with the imagination, about 30% of the students led by Lao Jia gave up directly. “These repetitive things can last for three days and a week, but if they keep repeating, many people shrink back.” Lao Jia said to “the forefront of entrepreneurship”.
difficult business
When coffee is popular in the sinking market, most people are concerned about: is it a good business to open a coffee shop in the sinking market?
“It also makes money, but it’s hard to do.” The chief executive of “luomei coffee” in Guangyuan City, Sichuan Province said to “the forefront of entrepreneurship”.
One reason is that the age structure of small town residents is too large, there are few young people, and the coffee atmosphere is not so strong. Consumers don’t care much about the quality and taste of coffee, and even don’t understand coffee.
In the early stage of Lome coffee, hand brewed coffee was mainly promoted. The flavor of hand brewed coffee is diverse, including flower and fruit aroma, sour taste, sweet taste, etc. However, in the concept of many small town residents, only bitter coffee is authentic. Therefore, when they make coffee with different tastes, some guests question whether the coffee has gone bad.
Guests who don’t know about coffee want to add sugar to hand brewed coffee. At first, Dajun will explain to the guests what hand brewed coffee should be like. Adding sugar will affect the taste of coffee. Later, he becomes a guide – he will still introduce the drinking method of hand brewed coffee to the guests, but respect their choice.
As the coffee wind blows into the sinking market, it also becomes rolled up here. A direct manifestation is the increasing number of coffee shops.
During May Day last year, ah Jiu, the manager of “several grams of coffee” in Zhangzhou, Fujian, went to Shanghai. When he returned to Zhangzhou, he found that five new cafes had been opened in this small town. When he looked again in the second half of the year, some stores had closed.
Imitation and plagiarism also permeate the sinking market. After a coffee shop opens, more than a dozen similar stores may open. A few grams of coffee was originally mainly coffee with cream cut cake, but at present, there are no less than 20 stores of this type in Zhangzhou.
In the sinking market, consumers go to coffee shops not only for coffee, but also for social needs. Therefore, tea shops and dessert shops with the same functions have become competitors of coffee shops. The owners of these coffee shops have observed that in recent years, the number of young people in the shops has decreased significantly, and those who steal customers are the newly opened coffee shops and tea shops.
In order to attract customers, some coffee shops are also combined with different formats. Lao Jia saw that some cafes in Mudanjiang were combined with script killing, cinemas, desserts and other formats, attracting many young users to punch in.
Even in the sinking market with relatively unsaturated market, the survival of coffee shops is still not easy. Ah Jiu observed that the elimination rate of local cafes in Zhangzhou is also very high. “After opening and closing, they open again and again, wave after wave, and they are not afraid of death.”
Even for coffee shops with good business, it usually takes a year or two or even longer to return to the current cycle.
Da Jun’s LOM é Cafe invested about 700000 in the early stage, and it took more than two years to get back. In his opinion, this cycle is too long. “Put aside feelings, from a commercial point of view, this is a failed project investment.” Said the great gentleman.
Figure / LOM é Cafe
When he was young, Dajun always felt that he could make a lot of changes, but later he realized that what he could change was his own business model and products, not the environment.
In the future, Dajun plans to change another location and reduce the store area to reduce costs. In terms of products, he will also make some cuts. “We are now more like a comprehensive coffee shop.” After changing to a small shop, Dajun will return to his original goal and mainly promote coffee.
He plans to stay in Chengdu for 6 years, but he doesn’t want to open a local coffee shop this year. “This is a commercial project after all. I can’t buy too many orders for my feelings. The first consideration should be profitability.”
compromise to the market
In order to survive, many coffee shop owners who are positioned as “boutique coffee” have to make a compromise and add bubble water, dessert, wine and other categories to the coffee.
At first, Dajun’s coffee shop mainly promoted coffee. But one month before the store opened, guests often asked if there was a choice other than coffee. At first, the great gentleman didn’t feel affected, but the guests asked more times, and he began to waver.
Do you want to add other categories? After a week of ideological struggle, Da Jun finally decided to add.
Lom é Cafe covers an area of more than 300 square meters, and the relatively high operating cost also requires him to make such adjustments. After a month of wine, tea, fruit, etc.
For these coffee shop owners with feelings, this should be a compromise. “But just having feelings and not adjusting according to the local market may face the risk of closing the store for up to half a year.” Dajun said, “first of all, you have to survive before you are qualified to talk about feelings, and then affect more customers.”
The great king has seen the consequences of intransigence. His friend opened a coffee shop with a simple product structure, mainly coffee and several drinks. In addition, the location is not ideal. The store closed after opening for four months.
Coffee shops that added new categories successfully overcame the difficulties. When opening the second store, ah Jiu added cakes in the store, which directly brought fire to a few grams of coffee shops. “In my analysis, cake is very important. If there is no cake, our revenue will be cut in half.”
“Of course, we hope to only make coffee, but the Zhangzhou market can never support such a store. We are not a compromise, we can only say that we use the market rules to support the coffee business.” Ah Jiu said to “the forefront of entrepreneurship”.
“In my understanding, the cafe is more important than coffee.” Ah Jiu said. Only when the shop is alive can coffee have the carrier of survival and they have the opportunity to stick to their feelings. Although to some extent, coffee shop owners have compromised with the market, their feelings can also be reflected in their adherence to the quality of coffee.
In order to reduce operating costs, coffee shop practitioners in the sinking market have explored a set of operation modes.
Yoko believes that the taste of coffee is not the most critical factor for the success of coffee shops in the sinking market. “On the premise that coffee is not difficult to drink, operation is the key.”
“To be exact, operational ideas, such as site selection, are the decisive factor in determining any catering business.” Yoko said.
When choosing a coffee shop location, you don’t have to go where there is a lot of traffic. Yoko is good at using big data analysis. For example, according to Baidu thermal map, meituan takeout data and other tools, Yoko selects first-class business districts and second-class locations.
No more than milk tea, coffee shop is a small thing. Consumers are willing to spend a few minutes looking for it, so just control the core position. In the case of cost saving, the operating pressure of coffee shops will also be reduced.
Ah Jiu suffered from improper site selection.
When he opened his first store, ah Jiu didn’t dare to rent a place too expensive, so he opened the store in an alley. The monthly rent was very low, about 2000 yuan. Even so, the investment of the store was 300000 yuan.
Because of the poor location and low passenger flow, the daily running water in the store is only seven or eight hundred yuan. “At that time, it was also more idealistic and wouldn’t pay too much attention to income.” In the three years since its opening, although the store has accumulated many guests, it has always maintained a balance of payments or a slight loss.
“Three years is enough to study. It’s meaningless to spend any more time.” Unable to return to their capital for a long time, ah Jiu and his partners are entangled. There are two ways in front of them, one is to change their position and continue to open, the other is to give up directly.
But they didn’t give up. “I’ve always thought that coffee shops can still make money, and we have gained popularity. It’s a pity to give up.”
Ah Jiu simply gave it a go and chose a location where Zhangzhou is close to the ancient city business district and has a large passenger flow. The running water of the new store has directly doubled three or four times, and it has returned to its capital in more than a year. Moreover, during the epidemic period, the new store has maintained considerable profits.
Figure / KIK Cafe
Whether it has characteristics is also the key factor for the survival of coffee shops in the sinking market.
Tars opened the cafe on the 29th floor of the office building. The security of the office building is strict and it is inconvenient to go upstairs, but its coffee shop has a small terrace where you can see the sunset landscape. Because of this feature, many people are attracted to punch in.
Figure / sunshine sunset landscape
Perhaps, for many people, opening a coffee shop in the sinking market is not a good business, but some unexpected gains can still make practitioners feel a sense of achievement.
Practitioners also clearly feel that after the edification of market education and coffee culture, consumers’ awareness of coffee has improved and have higher requirements for quality. Some guests will take the initiative to exchange raw materials and production technology with baristas.
Tars believes that at this stage, coffee shops in small cities play a role in guiding consumers to understand coffee. “I especially hope that more and more people will open coffee shops so that our city can form its own coffee culture.”
But at the same time, he also admitted that “opening a coffee shop in the sinking market is like doing something of a public welfare nature. In fact, it is paving the way for others.” The first batch of people who opened coffee shops played a role in educating consumers, but when a new store opened, users would be robbed. “But someone has to do it.”
To a certain extent, the first batch of people who opened cafes in the sinking market played such a role of semi public welfare and semi education. Although it was hard along the way, someone had to go first.
Today, the coffee war in the sinking market is becoming more and more intense. Based on the coffee market education and users accumulated by predecessors, it remains to be tested by time who can win a good reputation and greater profit space by comprehensive site selection, operation and characteristics. For coffee shop owners, this is a business accompanied by joys and hardships. “Isn’t it like drinking a cup of coffee?”
Author: Li Xiaofan; Source: Entrepreneurship frontline (ID: chuangyezuiqianxian), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] in line with the original intention of providing the whole value chain and one-stop industrial innovation services for the industry, foodaily Expo 2022 (2022.05.31-06.02, Shanghai) is further upgraded. In addition to the upstream and downstream of the food industry, it also covers and gathers multiple resources such as e-commerce, social media, traffic, channels and capital, aiming to bring you an annual innovation feast. Here, products, content, technology, marketing and other aspects related to food & brand innovation will be presented in the form of “professional exhibition + innovative content + interactive experience”, breaking through and differentiating in the consistent form of industry exhibition.

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