Emart24, Creating a New Trend with 'PyeonCafe'

Introducing 'Convenience Store + Franchise Cafe' Stores
Differentiation from Industry Focused on PB Products
Offering Cost-Effective Specialty Coffee
Three Stores Renewed in Two Months

The Emart24 Jung-gu Sogong branch located in Jung-gu, Seoul. At the Jung-gu Sogong branch, combined with the franchise cafe 'Fave,' customers can purchase coffee drinks and snacks sold by Fave.

[Asia Economy Reporters Choi Sunghye, Lee Seungjin] Emart24 is embarking on a new attempt to combine convenience stores and cafes. Instead of private brand (PB) coffee products, franchise cafes are operated directly by franchisees. If this model is established as an official franchise model after testing, it is expected to bring a fresh breeze to the intensifying 'coffee war' in the convenience store industry.

According to the industry on the 22nd, Emart24 renewed its Jung-gu Sogong branch last March by combining it with the franchise cafe 'Fave'. Fave is a famous cafe known on social networking services (SNS) for its specialty coffee and premium bakery.

Starting with the Bangbae-dong branch in Seoul, it operates eight stores in Seoul. Among them, four stores are combined with Emart24. Emart24 states that it is still in the testing phase, but within two months, it has renewed three stores by combining Fave at Dongjakdaegyo Cloud branch, Noeul branch, and COEX Mall branch No. 1.

◆ Following the success of Smoothie King's 'shop-in-shop', continuing with Fave = Emart24 has previously succeeded with the 'Emart24×Smoothie King' franchise model. It is a 'shop-in-shop' type where Emart24 franchisees additionally sign franchise contracts with Smoothie King, utilizing the counter space within the store to manufacture and sell 13 popular Smoothie King menu items. Currently, the Fave combined stores operate in the same way.

Smoothie King debuted in 2003 and was acquired by Shinsegae Food for 18 billion KRW in 2015. Since then, various beverage brands including coffee specialty stores have emerged, and the deficit has increased every year. Last year's sales were 15 billion KRW, down 10.6% from the previous year.

However, it is gaining popularity by combining with convenience stores. By reducing store size and saving maintenance costs, the structure allows profitability by selling an average of 5 to 10 cups per day. The number of stores has also increased significantly. From 113 stores between 2017 and the following year, it expanded to 132 stores in 2019 when the shop-in-shop test began, and currently 162 stores in 2020.

◆ Emart24 enters the coffee war = If the combination with Fave is successfully established, the convenience store coffee market landscape is expected to change significantly. Until now, the convenience store industry has focused on developing PB products. GS25's 'Cafe25', CU's 'Get Coffee', and 7-Eleven's 'Seven Cafe' are all PB brands.

Initially, PB coffee was sold in containers and pouches, but the market has grown to the extent that coffee bean machines are installed in each store. In 2019, the total coffee bean coffee sold at GS25 and CU exceeded 200 million cups. Sales also rose sharply. CU Get Coffee's sales growth rate reached 40.1% last year.

Emart24 also previously introduced its PB coffee product 'Ifresso'. However, as a latecomer in the convenience store market, Emart24 plans to differentiate itself with a shop-in-shop strategy featuring famous coffee specialty stores. If this franchise model is established, it is anticipated that alliances between convenience stores and coffee franchise industries could become a new trend.

In the case of Americano, priced at 2,000 KRW, the price difference compared to other convenience stores' PB coffee products is around 500 KRW, which is not significant. The advantage is that it offers coffee at the level of a specialty coffee shop without a big difference in cost-effectiveness.

An Emart24 official said, "Currently, the stores combined with Fave are in the testing phase," and added, "After confirming market response, we are also considering a shop-in-shop type franchise model like Smoothie King."

This content was produced with the assistance of AI translation services.