How to Run a Coffee Shop? Why Can Coffee Shops in Shanghai Keep Proliferating?

The Reality Behind Shanghai's Booming Coffee Scene

Everyone knows the pace at which coffee shops open in Shanghai outstrips even a Lamborghini. In a city where the coffee industry has reached "white-water rapids," cafés keep multiplying. Is it really because running a coffee shop is easy?

According to the "Shanghai 2021 Specialty Coffee Consumption Observation" report released by the Coffee Professional Committee of the Shanghai Food Industry Association last November, Shanghai's café boom kicked off in 2018. By November 2021, the city had roughly 7,200 registered coffee shops. Between January and November 2021 alone, about 951 new shops opened—an annual increase of 41.5%. On those figures, the number of coffee shops in Shanghai now stands at roughly 7,500.

Beyond the rapid growth driven by international and domestic brands fighting for market share, countless independent cafés specializing in specialty coffee, pour-over, and creative drinks have also mushroomed over the past two to three years. Rising above this "forest of bamboo shoots" has become a question every new shoot must answer before breaking ground.

Finding Your Place in a Competitive Market

If you want into this fiercely competitive market, a strong first step is everything. Competing on price puts you at an immediate disadvantage against the chains... So a new coffee shop must find its own character and positioning to stand any chance of taking root.

Shanghai's coffee market has grown fast for two reasons. First, the city's development and identity have gradually cultivated a coffee-drinking habit (note: a habit, not a necessity—for most consumers coffee is just a beverage; it needs to taste good and feel special, and only a small minority chase flavor nuances). Second, the pandemic changed how people consume, making coffee shops one of the preferred offline social venues for the younger generation. Where there's demand, supply follows.

Shanghai's core coffee consumers are 20–40 years old, and women make up 60% of them. As the city develops, its coffee drinkers come from ever more diverse backgrounds with ever more varied tastes. Add a love of novelty, and you get a peculiar ritual: people don't take their first sip right after buying. Instead, they snap photos while the drink still looks presentable and upload them to social media to share their lives.

Fueled by the internet, going to a coffee shop is no longer just about drinking coffee—photographing and "checking in" has become the real purpose. Many shops accordingly invest less in product quality and more in a distinctive interior and photogenic drinks, letting their brand pop in the colorful online world.

The Business Model Behind the Photos

Among Shanghai's 7,000-plus coffee shops, you'll find more than 1,000 different decorative styles—Japanese, Korean, industrial, cave, retro... Whatever the style, the goal is the same: a highly photogenic space. Money spent on aesthetics brings visitors who take beautiful photos and post them, which draws the next wave of netizens. Once the shop has made its money, it closes. Then, with the same equipment, the owners open a new shop in a different style and run the same playbook. This cycle has created an illusion for many: the coffee market looks brutally competitive, yet shops keep proliferating—so running one must be easy.

It has also led many industry newcomers to believe that high-end equipment and unique decor are all it takes to attract a steady stream of customers and live out their dream "coffee shop life." In reality, only after the market has chewed them up do they discover that ideals and actual business operations are two different things. And once reality defeats them, they don't reflect on whether their approach was flawed—they blame the chain coffee shops for stealing their business...

The Two Approaches: Business vs. Passion

The difference between the two camps is this: one is playing the market; the other is opening a shop on passion. Can passion feed you? Obviously not. Let's do the math.

Many people believe equipment is the heart of a coffee shop, so they spend heavily on it... and then pour more into renovation to realize their ideal design. Add rent, utilities, and labor, and the initial investment easily reaches 100,000–200,000 yuan—and that's just the beginning.

A coffee shop doesn't generate business from day one—consumers rarely choose unfamiliar establishments. At this stage, significant additional spending goes into promotion, while the daily costs of materials, utilities, and labor keep piling up... In the best case, you might break even in six months; in reality, the road to profitability takes far longer than expected. Along the way you burn through more than money—you burn patience too. You lose your personal time and work yourself ragged daily. When you're earning only 10,000–20,000 yuan a month, you have to ask yourself: where's the passion now?

Don't assume that in a city where coffee competition has reached such extremes, the endless proliferation of shops means the business is easy. The people opening shops in Shanghai operate with business thinking, responding to market demand. Survival on passion alone is impossible—let alone profit.

The Reality of Coffee Shop Business

But what if it's not a big city? Wouldn't it work in a smaller one...? Running a coffee shop is a business—wherever you open it, it's still a business. Don't talk yourself into "I'm not trying to make money from the coffee shop," even if you're wealthy! A business that doesn't make money will quickly make you feel that running a coffee shop is pointless.

Drop the idealism about opening coffee shops. Keep passion for your memories—building the business around market demand is the fundamental survival strategy for any coffee shop.

Note: Images are sourced from the internet and do not specifically refer to the coffee shops pictured.

For professional coffee knowledge exchange and more coffee bean information, follow Coffee Workshop (WeChat public account: cafe_style).

For more specialty coffee beans, add FrontStreet Coffee on WeChat: kaixinguoguo0925

FrontStreet Coffee Recommendation

For anyone planning a café menu, the beans behind the bar matter more than the wallpaper. A reliable house espresso starts with a forgiving blend: the FrontStreet Classic Blend, built on the old Mamba formula of Mandheling and Brazil with a touch of robusta, pours thick golden crema with butter, toasted bread, and caramel cookie notes—stable extraction, strong flavor, and friendly to beginners on modest machines.

For shops chasing nut-forward, chocolatey profiles, the FrontStreet Signature Blend pairs washed Colombian beans with pulped-natural Brazil, delivering nuts, dark chocolate, and caramel in lattes and Americanos alike—cream, almond, and cocoa aromas with crema that rivals café-quality output. Owners watching costs should consider the FrontStreet Commercial Blend, a long-standing favorite for opening a shop: priced below premium blends yet optimized for both taste and stability, it suits virtually every commercial scenario.

And for the pour-over menu that sets an independent shop apart, Ethiopia is the perennial crowd-pleaser: the FrontStreet washed Worka Gedeb brings jasmine, citrus, and berry clarity, while the natural Huakui offers strawberry, passion fruit, and jackfruit sweetness—distinctive single-origin options that give customers a reason to keep coming back.