Low-cost coffee franchise Compose Coffee will introduce a tteokbokki (spicy rice cake) menu starting next month. This move is seen as a response to the intensifying price competition in the low-cost coffee market, which has made it difficult to generate profits from coffee sales alone. It is also interpreted as a sign that low-cost coffee franchises are experimenting with 'menu diversification' as a survival strategy.

According to industry sources on January 23, Compose Coffee franchise owners are preparing to introduce a tteokbokki menu. While the menu composition and sales methods may vary by store, it is widely expected that the main offering will be cup tteokbokki using glass noodles. A representative from Compose Coffee stated, "It is true that we plan to launch the tteokbokki menu starting in February."

Interior view of Compose Coffee store

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The launch of tteokbokki by Compose Coffee carries significance beyond simply adding a new menu item. It is a strategic decision by a low-cost coffee franchise to expand beyond the boundaries of being a 'coffee specialty shop' and enter the street food segment. Analysts say this reflects the growing recognition that it has become difficult to maintain profitability with the existing business structure alone.

In fact, the environment surrounding the low-cost coffee market is rapidly deteriorating. International coffee bean prices have been on the rise for an extended period, and high exchange rates have further pushed up import costs. The prices of key ingredients such as milk, cups, and syrups are also generally increasing. On top of this, rising minimum wages and higher rents have combined to significantly erode franchise owners' perceived profitability.

Intensifying competition for new store openings is another burden. Major brands such as Mega MGC Coffee, Compose Coffee, and Paik's Coffee are aggressively increasing their number of stores, pushing market competition to near-saturation levels. With a business model based on low average spending per customer, simply increasing the number of stores makes it inevitable to expand the range of products sold in order to achieve a certain level of sales.

According to Statistics Korea, the number of coffee shops in the country surpassed 100,000 at the end of 2022, reaching 100,729, a 4.5% increase (4,292 stores) from the previous year (96,437). The number of coffee shops has nearly doubled in six years, from 51,551 in 2016.

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In this situation, tteokbokki is considered a relatively practical alternative. This is because the cooking process is simple, cost control is possible, and it can meet both snack and meal demand. Since it is a menu item that customers who come for coffee can additionally order, it is also expected to help raise the average spending per customer.

Mega MGC Coffee has already offered cup tteokbokki on a limited basis in 2024, and Gongcha also drew attention by introducing 'Pearl Tteokbokki,' a dish that uses its signature tapioca pearls.

In front of a Mega MGC Coffee store in Seoul. Photo by Yonhap News Agency

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Shin Ramyeon Tumba Pearl Stir-fry. Provided by Gongcha Korea

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An industry insider said, "With growing cost and labor burdens, it has become difficult for store owners to maintain profits through coffee sales alone," adding, "There is a growing trend of trying to raise the daily sales floor by introducing menu items that do not require a significant additional cooking workload."