From Starbucks to The Coffee Bean...
Operating profit at companies that made their name as first-generation coffee franchises fell across the board last year. In contrast, coffee franchises that competed with desserts or used premium beans saw profitability improve. The retail industry interprets this to mean that simply offering decent coffee and a cozy space can no longer guarantee growth.
According to the Financial Supervisory Service's electronic disclosure system on the 17th, Starbucks Korea's sales last year totaled 3.238 trillion won, up 4.5% from a year earlier. Operating profit, however, fell 9.3% to 173 billion won. During the same period, sales at Coffee Bean Korea, which had rivaled Starbucks, fell 6.1%, and its operating loss widened. Coffee Bean Korea posted sales of 143.4 billion won and an operating loss of 3.3 billion won.
The mood was similar in the mid- to low-priced coffee market. EDIYA COFFEE, which once rose alongside Starbucks on strong growth, posted operating profit of 9.6 billion won last year, flat from the previous year. Sales fell 1.3% to 238.7 billion won. The Venti Coffee saw sales rise 4.8%, but operating profit swung to a loss.
Others, however, kept growing. A TWOSOME PLACE, which leaned into desserts, is a prime example. After CEO Moon Young-joo took office in July 2023, a dessert-focused strategy became the growth engine. The signature cake "Seucho-saeng" (strawberry chocolate fresh cream cake) gained popularity, and "Gwa-il-saeng" (fresh cream fruit cake) and the scoopable "Abak" (icebox cake) followed with success.
An A TWOSOME PLACE official said, "After taking office, CEO Moon examined the cost structure and concluded coffee alone wouldn't be enough to win, so we should compete with desserts," adding, "That judgment was right."
Specialty coffee franchises also appeared to maintain growth. Specialty coffee is high-quality coffee with clearly identified origin, variety, and processing method, and a score of 80 or higher from the Specialty Coffee Association (SCA). It features distinct aroma, acidity, and a clean finish. Consumers can see origin and production information.
TENPERCENT SPECIALTY COFFEE is representative. The brand is a takeout coffee franchise that began in Busan in 2017. While takeout cafés have typically focused on low-priced coffee, TENPERCENT SPECIALTY COFFEE competed with relatively higher-quality beans. Last year, its sales rose 61.8% year over year to 67.3 billion won. Operating profit also increased 47.7% to 6.5 billion won.
Blue Bottle Korea, which serves specialty coffee, also recorded growth for the first time in a while. Last year's sales reached 38.6 billion won, up about 24% from a year earlier, and operating profit climbed about 67% to 400 million won. Still, it falls short of 2021, when Blue Bottle Korea posted its highest operating profit. At that time, sales were 20.1 billion won and operating profit was 2.6 billion won.
A retail industry official said, "Blue Bottle was once so popular it was called 'the sanctuary of MZ,' but turnover wasn't high enough to cover fixed costs such as specialty bean expenses or rent," adding, "You could say it hit bottom and is climbing back." Blue Bottle Korea's lowest operating profit was in 2023, when it recorded 190 million won.
Amid this, first-generation coffee franchises are working to find new growth engines. Ediya Inc. is seeking growth opportunities by expanding overseas. Ediya Inc. is focusing on Southeast Asia and North America. It opened its first store in Guam in 2023 and has expanded to Malaysia and Laos.
Starbucks Korea is moving to strengthen bakery items and products such as tumblers and mugs. Although such product sales account for around 10% of total Starbucks Korea sales, they are effective in drawing traffic. Limited-edition tumblers or mugs released by Starbucks often sell out on the day of release, and many visit specifically to buy them.
A retail industry official said, "There are now many cafés that offer so-so coffee and a better-than-average comfortable atmosphere," adding, "It has become a time when consumers seek places where the coffee tastes exceptionally fresh and good or where the desserts to eat with the coffee are particularly delicious."