Leading Chinese coffee chain expands rapidly, opening over 5,000 new locations in the first half of the year, while other domestic competitors continue to shrink. The company added a net of 2,548 outlets in the first quarter and 2,714 in the second quarter, reaching a total of 36,310 stores globally.
Meanwhile, other coffee brands have slowed their expansion efforts in China, with the total number of coffee shops decreasing from 243,000 in January to 227,000 in June. The company’s CEO emphasized the importance of maintaining the current pace of growth to increase market share, noting that China’s coffee market still offers significant room for new outlets. The market is in a vigorous growth phase, characterized by rising penetration and increasing consumption frequency.
Internationally, the company operated 89 stores in Singapore, 20 in the United States, and 114 franchised shops in Malaysia as of June 30. The management team highlighted their cautious approach to overseas expansion, prioritizing improving profitability per location and gaining operational experience.
In the second quarter, revenue jumped 29% year-over-year to approximately $2.4 billion, fueled by store growth and a record 112.7 million monthly customers, a 23% increase. Revenue from company-operated stores rose 27% to about $1.8 billion, and franchised store revenue increased 28% to roughly $543 million. Operating profit at self-managed shops grew 26% to CNY 2.5 billion, with a profit margin of 21%.
Despite strong growth in prior periods, same-store sales at company-operated locations declined by 5.3% last quarter, mainly due to high comparison figures from intense delivery platform promotions last year. However, operating profit remained strong at CNY 2.5 billion, a 26% increase, with margins unchanged from the previous year.
The decrease in same-store sales was anticipated, with the CEO noting that last year’s July and August featured some of the most aggressive delivery subsidies in China, which set a high benchmark for this quarter’s performance.