Last Thursday, Chinese coffee brand Coffee Box published an article titled After Over 100 Days of Disappearance, We’re Back, explaining why it stayed silent despite the market rumors and how its future business models will be deployed.
In the article, the company announced to shut down all of its stores and move its business entirely online.
Shanghai Lianxiang Business Consulting Co., Ltd., the parent company of Coffee Box, was established in May 2014 with registered capital of approximately 41.49 million yuan.
Coffee Box started out by providing buy-and-deliver services for leading coffee chains like Starbucks and Costa Coffee.
The company is recognized as a capital market darling with 8 rounds of financing. The angel investment that Coffee Box harvested only 4 months after its establishment saw the brand’s rapid growth and huge potential.
In August 2015, Coffee Box stripped away its third party brand delivery services and launched its own brand and coffee products.
As a coffee brand startup, Coffee Box experimented with operation models and developed a series of activities to build its online community, including inviting friends to share coupons, the “coffee warehouse”, group-buying, time-limited discounts, etc.
Brands like Coffee Box follow the same pattern to combine traditional coffeehouses and online coffee order-and-delivery, which matches the habits of Chinese consumers in first and second tier cities.
In 2018, a year after Luckin Coffee entered the market, the investment track of O2O coffee shops grew increasingly popular. Luckin Coffee utilized a subsidized customer acquisition pipeline to grab market share and draw foreign investment.
The quick rise of Luckin cast unprecedented pressure on its rivals like coffee chain giant Starbucks, and even more so on Coffee Box.
At the beginning of 2019, Coffee Box closed some of its stores, explaining that the company was running a deficit while also upgrading some of the stores that didn’t meet the company’s standards.
Despite the challenges, Coffee Box was still actively adjusting to the new market environment.
On one hand, in September 2019, it joined Sinopec, Chinese biggest petroleum enterprise, to launch a subsidiary brand named Easy Coffee and run the business in Sinopec gas stations across the country.
On the other hand, however, Coffee Box continues to close coffeehouses.
Even though the Nasdaq-delisted and embattled Luckin shocked the industry with its inflated revenue and fraudulent activities, Coffee Box was still trapped in business stagnation.
After over 100 days of silence, Coffee Box published an article and confronted the rumors. “We have closed all of our stores and don’t intend to reopen,” Coffee Box said, putting out the slogan “hard restart” to represent its commitment to remain in the market.
Due to the bursting of O2O coffee bubbles and the percussion of Covid-19, coffee shops across the country have struggled.
Amidst the pandemic, renowned British coffee chain Costa Coffee recently decided to close about 10% of its stores in China and all shops in the city of Qingdao have ceased operation.
The transition to online shops should be a silver lining for Coffee Box. Products like drip bag coffee, coffee capsules and freeze-dried coffee powder available online are Coffee Box’s attempt to ease the pressure on the capital chain.
Coffee Box is also offering a 50% discount to all of its existing customers and will release a new series of products this week.