Beijing is an anomaly for any type of business, observes Johnny Zhang, manager at Sikastone Coffee.
The city is big enough for any business to establish itself, but it takes spectacular talent to withstand time. “The city washes away startups with the tide,” he says. For the past two years, Korean franchises such as Coffee Bene aggressively pursued the market and eventually died out.
That has not dampened investors. Seesaw and Manner, two high-end specialty coffee franchises from Shanghai, are rumored to soon open cafés in Wangfujing, near the heart of Beijing’s in one of the more densely populated business districts.
San Francisco-based Blue Bottle chose to open its first Chinese location in Shanghai.
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“I myself am curious where they will put their money into,” observes Yang at Me & Temple of Earth cafe. “There aren’t many areas for newcomers to splurge extravagantly [in building a café]. With a decent budget, you could buy expensive espresso machines and hire award-winning coffee experts to train your staff, but cash flow is highly unlikely to justify the investment anytime soon. Also, baristas don’t yet have the experience to justify the investment,” she says.
Rent is a concern for specialty coffee stores in Beijing. Commercial real estate is very expensive. Managers at both Sikastone and Me & Temple of Earth enjoy less stress on the rent because they are co-located with established businesses. Sikastone is better established and more lucrative. Yang said that of the first round of independent cafes, which were established around 2014, all but one lost money.
It will take time for the general public to appreciate specialty coffee, providing the financial rewards that will motivate coffee shop owners.
Sikastone invested heavily in equipment to position themselves as the most professional coffee training center in China. But at both Me & Temple of Earth and Sikastone, customers are only willing to pay a little more for a cup or a lesson. Their ability to taste the subtle differences in origin and brewing methods simply hasn’t developed to the highest levels of sophistication.
- Si Chen