Showing posts with label coffee shop business. Show all posts
Showing posts with label coffee shop business. Show all posts

Wednesday, March 25, 2026

Why Cafés in China Close So Fast: A Global Perspective on Coffee Shop Lifespans

 I’ve been traveling the world visiting cafés since 2010, and I’ve lost count of how many times I’ve asked myself the question in the title. It’s something I feel deeply about—sometimes even a little awkward to admit: the speed at which I “check in” to cafés simply can’t keep up with the speed at which they close.

In many ways, the lifespan of a café reflects some of the core differences between coffee markets at home and abroad. While China does have a handful of long-standing establishments—such as old Western-style restaurants with coffee bars, or historic cafés in Shanghai dating back to the Republican era—these are rare exceptions. The undeniable reality is that “short lifespans” have become a defining characteristic of today’s domestic coffee scene.

From my personal experience, I do extensive research before visiting cafés in any given city, carefully curating a list of places to explore. What I’ve noticed is striking: some cafés overseas that I bookmarked years ago are still thriving today, while many cafés in regions like Shanghai and Zhejiang seem almost “flash-in-the-pan” in comparison—their rise and fall can feel abrupt, even brutal.

According to industry data, the average lifespan of a café in China is just 8 to 14 months. This alone speaks volumes about the intensity of competition and the speed of market turnover.

Of course, we should distinguish between independent cafés and capital-backed chain stores. Their business models, positioning, and operations differ significantly, and so do their lifespans. Independent cafés often face what many call the “three-year curse,” with an average lifespan of around 26 months—sometimes even less. In first-tier cities, where the pace is relentless and competition is fierce, turnover happens even faster. In contrast, cafés in smaller cities may last slightly longer due to slower consumption patterns and stronger customer loyalty, averaging around 4.5 years. Even so, if a new café in China can survive beyond two years, it’s already outperforming many of its peers.

What’s more concerning is the stark contrast between these short lifespans and the explosive growth in the number of cafés.

Looking abroad, let’s take South Korea and Australia as examples. South Korea, one of Asia’s more developed coffee cultures, still faces market saturation and intense competition. Chain cafés there have an average lifespan of about 27 months, while independent cafés fare slightly better at around 3.6 years. In Australia, the average café lifespan ranges from 3 to 5 years. However, only about half of independent cafés survive beyond five years, and just 33% make it past the ten-year mark. Even so, in such a mature market, these figures are considered relatively strong.

These observations are based on places I’ve personally visited and researched. Compared to mature markets like South Korea and Australia, China’s 8–14 month average lifespan is significantly shorter. This reinforces a core insight I’ve heard repeatedly from café owners themselves: in a rapidly growing yet highly competitive emerging market, the cost of trial and error is extremely high.

So why is opening a café often the first choice for aspiring entrepreneurs? It’s not just about passion or romantic ideals. The reality is that cafés are widely perceived as having a low barrier to entry. What many overlook, however, is a harsher truth: they are incredibly difficult to run successfully. Low profit margins, high labor and rental costs, and intense homogenized competition are challenges every café owner must face. In short, it’s easy to open a café—but very hard to keep it alive.

China’s specialty coffee scene—and its broader coffee culture—has really only developed over the past two or three decades. It’s still relatively “young,” currently deepening its consumer education phase. This means the market is in a period of rapid growth and constant change. Consumer perceptions of coffee are evolving quickly—from a functional “pick-me-up,” to a symbol of lifestyle and sophistication, to today’s mix of daily necessity and flavor exploration.

This rapid shift in consumer psychology forces cafés to continuously adapt their style and positioning. Those that fail to keep up are quickly left behind.

When I research cafés before visiting a city, I often notice something puzzling: some newly opened cafés feel like they belong to a decade ago—both in ambiance and in product quality. It makes me wonder whether the owners are paying attention to what others in the industry are doing. How can a brand-new café still present itself in such an outdated and unrefined way? It raises real concerns about its chances of survival. Understanding market trends—rather than relying solely on personal sentiment—is, in my view, the true starting point of any serious business.

Then there’s the phenomenon of “check-in culture.” For many consumers, cafés are no longer just places to drink coffee—they’re social spaces, photo spots, and lifestyle showcases. If a café relies solely on becoming an “Instagrammable” hotspot, it’s inherently fragile. Once the novelty fades and the next trendy location emerges, foot traffic can drop sharply. Without strong product quality and repeat purchase appeal, such cafés often disappear as quickly as they appeared.

By contrast, when you visit cafés abroad, you can often sense from the customers themselves a kind of calm familiarity—coffee as an ordinary part of daily life. In many countries, coffee has long moved beyond being a “trendy item.” People visit cafés as naturally as they go to a market or a bakery. A morning Americano to start the day, an espresso after lunch to aid digestion, an afternoon chat with friends at a neighborhood café—even in Canada, I’ve seen elderly women knitting in cafés.

This kind of stable, high-frequency demand provides cafés with consistent customer flow. In such markets, while unique designs and concepts can attract attention, what ultimately sustains a café for decades is the quality of its coffee, the warmth of its service, and its emotional connection with the community.

In China, cafés tend to lean more toward “experience-driven consumption,” operating on a “space + content” model. A significant portion of revenue comes from the experiential aspect of the space itself, which requires continuous investment in design and novelty. Of course, many people enter the industry driven by the dream of owning their own café—but without systematic business training or long-term planning, they often exit quickly once the initial passion fades or challenges arise.

Meanwhile, many long-standing cafés abroad are family-run businesses passed down through generations. Their core strength lies in consistency—a signature coffee that tastes the same decade after decade—and relationships with regular customers that feel almost familial. This community-based model is highly stable and resilient.

Another major pressure on Chinese cafés is the combination of high rent, high labor costs, and intense competition. Rent alone can be overwhelming for brick-and-mortar businesses. On top of that, chain brands like Luckin and Cotti, with their low prices and extreme convenience, have significantly squeezed the survival space of independent cafés.

In contrast, the cost structure of cafés abroad tends to be more stable, with clearer market segmentation. Outside of prime commercial areas, rent fluctuations are relatively moderate in many countries. Although labor costs are higher, employment relationships are more stable, and many baristas treat it as a long-term career. After over a century of development, these markets have formed well-defined tiers. Whether it’s high-quality specialty cafés or affordable commercial chains, each serves its own customer base—competing in different lanes rather than fighting for survival in the same crowded space.

Ultimately, whether it’s a community-focused café in a smaller Chinese city or an independent café in Australia creating a unique customer experience, all businesses that survive over time share one common trait: they break away from homogenized competition and establish irreplaceable value. That, more than anything, is the “survival code” of a café.

So rather than saying cafés abroad simply “last longer,” it’s more accurate to say that those that survive in mature markets have found a stable niche within their ecosystem. China’s coffee market, on the other hand, is still in a phase of intense natural selection—rapid growth, fierce competition, and constant experimentation. High costs, fast pace, and strong competition act as a powerful filter, continuously eliminating cafés with unclear positioning, inconsistent products, or weak operations.

Perhaps this is the darkest hour before dawn. But as the market continues to mature and differentiate, we may begin to see more local café brands with lasting vitality emerge. And perhaps, in another decade or two, we’ll see cafés on the streets of China that stand the test of time—places that accompany not just one generation, but many.

Thursday, December 18, 2025

Why Piccolo and Cortado Rarely Appear on Café Menus in China | Coffee Culture Explained

 This question came up because not long ago, a café-owner friend of mine asked me for advice. He was considering adding a specific coffee bean to his menu specifically for making Piccolo, and wanted to know whether consumers today are interested in Piccolo coffee, and whether many cafés are actually serving it.

My response at the time more or less touched on the core issue behind why certain coffee drinks struggle to make it onto café menus.

That conversation got me thinking—it perfectly captures the fundamental pain point behind why drinks like Piccolo and Cortado are so rarely seen on menus in China. Before we dive into the deeper market dynamics, it’s worth clarifying what these drinks actually are. Piccolo and Cortado are simply two classic examples I’m using here, but what truly defines them is a shared characteristic: a much smaller cup size than most mainstream milk-based coffees, with a stronger emphasis on flavor clarity and technical execution.

A Piccolo typically uses a ristretto as its espresso base—a shorter extraction using less water, resulting in a sweeter, more concentrated shot with lower perceived acidity and bitterness. It’s then paired with finely textured milk and served in a small glass, usually around 100 ml. The coffee flavor remains prominent, while the milk enhances smoothness and sweetness.

A Cortado, on the other hand, is made with a standard double espresso and served in a slightly larger glass or ceramic cup, usually around 150 ml. The goal is a near-perfect balance between coffee and milk, producing a rich yet silky texture.

Both drinks are classic examples of small-volume, bold-flavored milk coffees. Their rarity in Chinese cafés can largely be traced back to one core reason: the powerful combination of consumer perception inertia and commercial efficiency. When a product deviates from the established mainstream framework, it immediately incurs a higher “explanation cost” in marketing and service.

From a cognitive standpoint, “latte” has effectively become synonymous with milk coffee for most consumers. Many customers have little desire to explore or differentiate between milk-based coffee styles. Ordering a latte requires zero mental effort. In contrast, unfamiliar terms like Piccolo and Cortado are harder to remember and don’t immediately convey what the drink is. Baristas must spend extra time explaining that it’s a smaller cup, stronger in coffee flavor, and more intense than a latte—raising both communication costs and decision-making friction at the counter.

In response, many cafés intentionally simplify their menus, often dividing offerings into just “black coffee” and “white coffee.” While this reduces cognitive load for customers, it also blurs the distinctions between different milk-based drinks. Terms like Piccolo and Cortado then feel obscure and academic, requiring additional learning and memory—something that runs counter to fast-paced consumer behavior.

From a business perspective, every additional SKU increases costs related to inventory, preparation, and quality control. Maintaining a simplified black-and-white coffee framework lowers customer barriers and maximizes operational efficiency. Another critical factor is perceived value. For many customers, whether a coffee feels “worth it” is less about how good it tastes and more about cup size versus price. A larger cup at a lower price creates a stronger sense of value—a deeply ingrained mindset in offline retail—which puts small, concentrated drinks like Piccolo and Cortado at a disadvantage.

There’s also the matter of taste preference. Beyond caffeine consumption for alertness, many Chinese coffee drinkers are not accustomed to intensely coffee-forward flavors. This is precisely why lattes enjoy such broad appeal—they’re smooth, approachable, and easy to drink. Piccolos and Cortados, by design, emphasize coffee flavor while retaining milk texture. For latte drinkers, these drinks can feel “too strong” or heavy.

Lastly, the technical difficulty should not be underestimated. Achieving proper milk-to-espresso balance in such a small volume is challenging. Creating a harmonious texture—and even latte art—in a tiny cup requires a high level of skill. On top of that, cafés need to invest in specialized small cups for a category that may not sell frequently, adding cost and storage pressure.

Ultimately, today’s café menus in China are shaped by strong mainstream demand and highly efficient commercial logic.

It’s not that Piccolos and Cortados aren’t good drinks—they’re simply at a disadvantage in the current market because they require explanation, take slightly longer to execute, and appear small in volume. For most cafés right now, promoting and selling lattes is far more efficient than educating customers about Piccolos or Cortados.

That said, both industry professionals and consumers can grow together. As coffee culture continues to mature and palates become more refined, these once-niche espresso-based milk drinks may one day follow a similar path to pour-over coffee—gradually moving from the margins to a much broader stage.

Wednesday, December 17, 2025

Why Some Coffee Shops Never Get Busy (Even When Everything Seems Fine)

 

I didn’t originally plan to write about this coffee shop.

It just so happened that I had some time today,
so I walked in and sat there for a while—
about forty minutes in total.

When I left, I suddenly realized something:

I already knew why it never gets busy.

The shop itself was actually very quiet.
Not noisy. Not chaotic.
The coffee wasn’t bad,
and the space was fairly comfortable.

If you were just passing by and took a quick look,
you’d probably think there was nothing wrong with it.

The first ten minutes felt completely ordinary.
The barista was doing their own thing.
Some people came in to order,
and some left almost immediately.
Everything sat in that vague middle ground—
not good, not bad.

At that point,
I didn’t feel there was any obvious problem with the place.

But slowly, I started to notice one small detail—

Almost no one actually sat down.

Over the next twenty minutes or so,
I wasn’t deliberately counting foot traffic.
I was just unconsciously watching time pass.

Someone paused at the entrance,
glanced at the menu, and left.
Someone else ordered a drink to go
and walked out as soon as they had it.

No one seemed impatient.
And the shop itself didn’t make any mistakes.

But that’s when it hit me:

This wasn’t about whether the shop was busy or not.
It was that—
there was nothing here that made people want to stay a little longer.

By the time I’d been sitting there for about forty minutes,
it finally became clear.

Many coffee shops look perfectly fine on the surface.
They’re not doing anything wrong.

But they share a very common feeling:
you’ve been there,
yet you don’t really remember anything.

Not because of the coffee,
and not because of the service,
but because time moves too smoothly there.

Sometimes, the problem with a coffee shop
isn’t something you discover by analyzing it.

It’s something you realize only after you’ve truly sat down—
watching a stretch of time pass
and noticing that nothing happens at all.

Tuesday, December 9, 2025

Running a Coffee Shop? The Hidden Cost That Destroys More Cafés Than Rent

 Everyone Pays for Their Own Perception

People who run coffee shops love doing the math.
They calculate rent, labor, cup cost, gross profit—everything that can be quantified ends up in their Excel sheet.
But what truly drags a shop down is often not those “measurable” numbers.

I’ve seen countless shops where the rent isn’t high and labor is well controlled,
yet the longer they operate, the tighter and more exhausting things become.

Eventually, you realize what really drains them is another kind of invisible cost—

Being self-opinionated.

Not the arrogant kind, but the more common and subtle one:
“I think this is the right way.”

01. Many shops aren’t defeated by the market, but by the owner’s own taste

I’ve seen plenty of new shops where the moment you open the menu, you can feel it:
The owner is creating “what they like,”
not what “customers are willing to pay for.”

For example:

  • The owner doesn’t drink sweet drinks, so the menu has almost no sweet options

  • The owner is obsessed with light roasts, so the whole shop only offers bright, acidic coffees

  • The owner hates cream, so there isn’t a single smooth signature drink available

And when business is bad, they say things like:
“Customers are too conservative.”
“People don’t understand specialty coffee.”
“Everyone nowadays just likes sweet drinks.”

But often the problem isn’t the market—
Your personal preferences are simply too loud, drowning out the real needs of your customers.

No industry makes it easier to mistake “what I like” for “where the market is going” than coffee.

02. The wrong kind of ‘professionalism’ can kill a shop faster than high rent

There’s another common kind of self-assuredness:
Treating professionalism like a barrier, even when customers don’t care at all.

I’ve seen shops that:

  • Spend tens of thousands on equipment

  • Write overly complex menu descriptions

  • Talk endlessly at the bar about flavor notes, water quality, processing methods

  • Make every cup like they’re competing on stage

But what customers want is simply:
“Something that feels good to drink today.”

When your professionalism is not improving the customer’s experience
but only feeding your own sense of accomplishment,
that professionalism becomes a cost—
and a very expensive one.

03. Another form of self-deception: treating someone else’s success path as your shortcut

This is the most common type.

“That shop’s signature drinks went viral—let’s create our own.”
“Their photo aesthetics are great—let’s set up props too.”
“They launched a new cup—we should buy it.”
“Everyone is using this style—let’s follow it.”

It’s easy for the coffee community to fall into “mass imitation.”
But you don’t necessarily know why others succeed.
You only see the results—not the customer base, location, tone, or team behind it.

In the end, using someone else’s direction and forcing it onto your own situation is an expensive mistake:
It’s not that you’re not working hard—
It’s that your compass is wrong.

04. The real cost isn’t ‘trial and error,’ but ‘knowing it’s wrong and still insisting’

High rent isn’t scary.
Trying and failing isn’t scary either.
What’s scary is knowing something doesn’t work—and still forcing yourself to continue.

For example:

  • A signature drink that doesn’t sell, but you keep making it

  • Content no one responds to, but you refuse to change

  • A positioning that doesn’t fit, but you sustain it with constant promotions

  • A product customers don’t need, but you keep insisting “we’re professional”

A few months of this is fine.
One or two years of this becomes sunk cost.

Many shops aren’t destroyed by one big decision—
they’re crushed by every small refusal to admit a mistake.

05. Conclusion

In running a coffee shop, the most important skill for avoiding pitfalls is being honest about what you misjudged.

Admitting mistakes isn’t weakness—
it’s the most crucial growth skill in running a shop.
Every time you adjust direction, you’re reducing future costs.

Smart owners aren’t the ones who are always right—
they’re the ones who can correct quickly when they’re wrong.

Rent is just a fixed cost.
But the cost of stubborn self-certainty is the most expensive thing in the business.

Thursday, December 4, 2025

Why Some Coffee Shops Get More Expensive While Others Are Stuck Discounting

 In recent years, a strange phenomenon has become more and more obvious:

Two coffee shops on the same street —
one keeps raising prices and customers still happily pay,
while the other has to keep offering discounts, giveaways, and promotions… yet business remains slow.

Most people think the difference lies in “cost” or “how good the coffee tastes.”
But the truth is usually this:

It’s not about the coffee.
It’s about which track you place yourself on.

The coffee business has an extremely low barrier to entry.
And in low-barrier industries, owners often get pushed into two opposite directions:

Either you go up and create value,
or you go down and compete on price.
The middle ground is the hardest place to survive.

01. Coffee Shops That Can Raise Prices Aren’t Selling Coffee — They’re Selling Irreplaceability

If a café can keep raising prices while customers continue to buy, it always shares one trait:

People can’t easily replace it with another shop.

This irreplaceability usually comes from three places:

① The flavor truly has a memorable identity

Not “good,” but “unique — other cafés can’t replicate it.”

For example:

  • A latte with a special cream-to-milk ratio

  • A signature house blend or seasonal special

  • A consistent roasting style the store is known for

After a while, customers aren’t craving coffee
they’re craving your coffee.

This is rarer than most owners realize.

② The space creates an emotional anchor

Many people visit a café not for the drink,
but for the feeling of “those 20 minutes inside.”

A space is psychological signaling:
comfortable, quiet, a place to linger — this is all part of the premium.

Sometimes, it makes more money than the coffee itself.

③ Your customer base is clear — and gets clearer over time

Cafés that grow upward all have one thing in common:

They know who their customers are,
and even more importantly —
they know who they aren’t serving.

They don’t chase trends or change menus for traffic.

The clearer the identity, the higher the value.

02. Coffee Shops That Can Only Compete on Discounts Fall Into One Trap: They’re Too Easily Replaceable

When customers feel,
“Eh, doesn’t matter if I skip this place,”
your pricing will only go lower and lower.

Why?

Because in their mind, your store becomes “just one of many options.”

The trap of “must discount to survive” usually comes from three common issues:

① Your products are forgettable

Standard flavors, flat profiles, generic “signature” drinks, sweetness relying on cream.

Customers won’t say it’s bad,
but they also won’t remember it.

This is the most dangerous middle zone:
Not wrong — but not valuable.

② Your shop is no different from the five cafés next door

Same décor, same iced latte, same menu structure.

The more customers compare, the more replaceable you become.

Replaceable means your price has no ceiling — only a floor.

③ Your customer base is too scattered

Everyone can come,
but no one has to come.

Your daily traffic becomes a lottery.

Without a core repeat customer group,
your only tool becomes promotions and discounts — a temporary fix that never solves the root problem.

It keeps the shop alive,
but it doesn’t keep it healthy.

03. The Harsh Truth: The Same Coffee Can Have Double the Value Based on Positioning

Maybe you’re selling a latte for 22 RMB,
while another shop charges 32 RMB and still does well.

The difference isn’t necessarily ingredients —
it’s that they make customers feel it’s worth it.

This reflects a simple rule of consumer psychology:

Value isn’t based on cost — it’s based on the cost of switching.
When customers don’t need to think before choosing you,
they willingly pay more.

But if they hesitate over every cup,
your price can only go down.

04. Every Café Must Eventually Answer One Question: Are You a “Destination Shop” or a “Convenience Shop”?

  • Destination shop: customers come specifically for you

  • Convenience shop: customers buy because they happen to pass by

Destination shops hold long-term value.
Convenience shops can only compete on price.

The most dangerous situation isn’t being a convenience shop —
it’s thinking you’re a destination shop when the market doesn’t see you that way.

05. Summary

Two cafés, two completely different outcomes:
one keeps raising prices, the other keeps discounting.

The difference isn’t ability —
it’s direction.

Go upward on value → prices rise, margins rise
Go downward on price → margins shrink, pressure increases
Stay in the middle → endless struggle

Running a café is never just “making good coffee.”
It’s about putting your business in a position no one else can take from you.