SEOUL, South Korea, Oct 17 (Korea Bizwire) — Amid a situation where all food and beverage service businesses are struggling mightily owing to the ongoing recession and the rising food ingredient costs, there is one segment in the industry defying the overall slump: specialty coffee stores.
According to a consulting firm specializing in franchise store, out of all 2,956 inquiries it has received for the years to date as many as 73.4 percent were about how to open a coffee store. Numbers tell how successful coffee stores have been for the past several years. The average percentage of businesses going bankrupt within one year of opening is 27 percent while that for coffee franchises only 13 percent.
Coffee stores are subject to a new regulation introduced by the Fair Trade Committee last year prohibiting new establishments within 500 meters of existing ones. Nonetheless, the number of new Java stations is rising fast this year.
For example, Caffe Bene, the homegrown brand, has broken the 1,000 milestone in franchisee numbers this year 540 in 2011 and 840 last year. Hollys Coffee increased its store numbers to 396 in 2012 from 321 in 2011. Angel-in-us Coffee raised its store locations to 700 in 2012 from 540 in 2011. Other franchisers such as Tom’n Toms and Twosome Place have done well to increase locations while ringing up higher sales numbers in their existing stores.
Franchise experts said this is proof enough that the specialty coffee market has a lot more room for growth as opposed to the general observation that the market has reached a saturation point.
Kim Jin-ho, senior manager at Changup Mall, a consultancy dispensing advice on those wishing to open franchise stores, said, “The reason coffee stores are doing very well may have to do with the fact that their operating profit is higher than any other similar business types.”
“Despite the fact that the coffee market has grown by leaps and bounds, there is still so much room for growth because per-capita coffee consumption is not so high compared to any other western countries. Anyone thinking about a new espresso bar should consider opening one outside the Seoul metropolitan area in which the demand is rising quickly.”