Emerging Chinese Coffee Powerhouse Koti Stumbles... Plagued by Internal Competition and Low-Price Trap?

Prices at Half... Fierce Competition Between Stores
Closer to 'Competitor' Luixing, More Cup Subsidies

Kodi Coffee (庫迪·Kodi), emerging as a new powerhouse in the Chinese coffee market, seems to be hampered by its 'low-price strategy.' Although it has focused on expanding market share by offering higher subsidies to stores located closer to the industry leader Luckin Coffee, many stores are failing to generate proper profits due to internal competition and low-price sales.

On the 3rd, China's Pengpai News reported, "Making money by opening a Kodi Coffee store is no longer easy," adding, "Sales and profits are rapidly declining, and many franchisees are considering whether to change their store signs." Unlike typical franchise brands, Kodi Coffee does not charge franchise fees to store owners but imposes a commission based on operating profits. The company was established last year by the founders of Luckin Coffee.

As of the end of last month, Koty Coffee had over 6,000 stores across China. Based on the reporter's place of residence, two stores can be found within 1 km. (Photo by Kim Hyunjung)

Pengpai News cited the case of Li Lin (pseudonym), a franchisee who opened a store in Fujian Province, stating, "In the early days of opening, we sold over 900 cups of coffee per day, with an average daily sales revenue of 10,000 yuan (approximately 1.82 million KRW)." They explained, "At that time, the daily net profit after various expenses exceeded 3,000 yuan." However, "the good times did not last long, and now daily sales are only about 200 cups." He added, "As more stores open, the brand's uniqueness diminishes, and competition among stores of the same brand intensifies." Zhao Xiao (pseudonym), who operates a Kodi store in Hangzhou, told Pengpai News, "Within a month, three Kodi stores opened within a 500-meter radius near my home."

According to Kodi Coffee, as of the end of October, the brand has over 6,000 stores nationwide, opening more than 500 stores monthly since its first launch. Kodi Coffee has announced plans to open 20,000 stores worldwide by 2025. Pengpai News reported that the average initial investment cost is relatively low at 385,000 yuan per store.

The cost of key products such as Americano and Latte at Kodi Coffee ranges from 26 to 35 yuan, but they are sold uniformly at 9.9 yuan through various coupons. This price is less than half of that of the main competitor Luckin Coffee's products.

The headquarters is also implementing a subsidy policy to secure market dominance. Stores located within 100 meters of a Luckin store receive a subsidy of 1.5 yuan per cup; those within 150 meters receive 1 yuan per cup. Stores 200 meters away can receive a subsidy of 0.5 yuan per cup. If the store rent exceeds 15,000 yuan, an additional subsidy of 0.5 yuan per cup is provided. Pengpai explained, "Ultimately, it is a battle over rent and foot traffic," adding, "In major commercial streets, there are cases where two Kodi Coffee stores are clustered within a 500-meter radius alongside competitors such as Luckin and Manner."

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