China's First Costa Drive-Thru Store Opens in Shanghai!

The Expanding Chinese Coffee Market

As China's coffee market has grown steadily in recent years, brands such as Starbucks, Luckin Coffee, Costa, KFC, and Pacific Coffee have been racing to capture share by staking out every kind of consumer scenario.

Costa Opens China's First Drive-Thru

Recently, according to Coffee Finance, the coffee chain Costa Coffee opened China's first "Drive-Thru" store on Tainan West Road in Shanghai's Pudong New Area. Costa's Chinese name is "Ka Shi Jia," meaning Coffee House. The brand was founded in London in 1978 by the Costa brothers, who came from Italy. In 2006, Costa Coffee formally entered the Chinese market and opened its first store in China on Nanjing East Road Pedestrian Street in Shanghai.

Public information shows that Costa's Drive-Thru stores were established abroad long ago. By around mid-2019, Costa operated a total of more than 40 Drive-Thru locations in the United Kingdom. With the outbreak of the COVID-19 pandemic, that number rose rapidly to over 300 within a few months, all offering Drive-Thru or similar takeout services.

Understanding the Drive-Thru Concept

"Drive-Thru" may be relatively unfamiliar to Chinese consumers. The model was first pioneered in the United States in 1921, meaning customers can pick up meals or beverages packaged to go without leaving their cars. It mostly calls to mind fast-food restaurants. As fast food grew rapidly through the 21st century, the Drive-Thru market kept expanding along with it.

In 1975, McDonald's opened its first Drive-Thru restaurant in the United States. Today there are thousands of such restaurants worldwide. Coffee chains including Starbucks, Tim Hortons, and Peet's also run some stores with Drive-Thru capability or dedicated Drive-Thru service. Over the decades, Drive-Thru coffee has gradually become an important part of the wider coffee industry.

Innovative Business Models: Meeting Room Rentals

According to reports, beyond its traditional coffee sales, Costa's Drive-Thru store also rents out meeting rooms. The entire store is approximately 500 square meters and holds a total of 4 meeting rooms available for hire. The shared office spaces come equipped with traditional office equipment such as projectors and conference tables, and can accommodate 12 to 18 people for meetings. Meeting room rentals? It seems Starbucks offers this kind of business too.

Indeed it does. Starbucks China launched its "Shared Space" concept store last November, which also serves mobile offices, small-group collaboration, business meetings, and multi-person conferences. The concept store is divided into four main functional areas: private paid meeting rooms, semi-open single-person work areas, sofa areas suited to group discussion, and leisure areas for short breaks. To protect privacy, the meeting rooms use noise-reduction design, and the large meeting rooms are fitted with projection equipment and more.

Costa vs. Starbucks: A Competitive Analysis

When Costa first entered the Chinese market, it treated Starbucks as its biggest competitor. Not only was its coffee priced close to Starbucks, but it also pursued a more aggressive expansion strategy, opening 2 to 3 new stores almost every week and following a "close follow" tactic, with almost every Costa store located next to a Starbucks. In recent years, though, its pace of development appears to have slowed.

Costa seems to have fallen far behind its target competitor. Starbucks' latest quarterly report for 2022 showed a domestic store count of 6,021, with plans to reach 9,000 stores by fiscal year 2025. Meanwhile, data from Narrow Door Restaurant Eye shows Costa currently has only 424 stores in China. In both store count and market share, it lags significantly behind Starbucks, which continues to strengthen its presence in China.

Future Prospects for Costa in China

Now that Costa's Drive-Thru pilot has proven successful, whether it will accelerate the brand's store openings in China remains to be verified by the market.

A Costa representative stated: "We are committed to providing customers with quality service and experience when they visit our stores. We are delighted to open the first Drive-Thru store in China. Showcasing great innovations here is our key to gaining competitive advantages in the market."

Image source: Internet

FrontStreet Coffee Recommendation

Big chains are opening stores at remarkable speed, but the coffee in your own cup is still a matter of choosing the right bean. For beginners, FrontStreet suggests starting with Ethiopia, the birthplace of coffee and Africa's largest producer, where beans are usually named for their region or cooperative. Yirgacheffe and Sidamo are the two most famous. Yirgacheffe is dominated by washed processing and tends to bring jasmine florals, lemon acidity, and berry notes, while Sidamo is known for natural processing and bolder tropical fruit; FrontStreet Sun-dried Huakui is a good example, with berry, floral, jackfruit, melon, and honey notes, and FrontStreet Washed Gotiti Cooperative is a classic Yirgacheffe with jasmine, lemon, and berries.

If you like a softer, sweeter cup, Brazil offers a gentle entry. Brazilian beans are typically soft-textured and low in acidity, with good sweetness and a smooth, balanced body. FrontStreet Brazil Cerrado Red Bourbon is everyday single-origin coffee with cream, peanut, and cocoa notes, while FrontStreet Queen's Estate grows at higher altitude from a rare Yellow Bourbon, adding butter, sunflower seed, macadamia, and almond aromas with a sugarcane-like sweetness.

For something bolder and less acidic, Indonesia is the classic choice. FrontStreet Lintong Mandheling and FrontStreet PWN Golden Mandheling use wet-hulled processing, a technique developed for the region's rainy, changeable climate, producing a fuller, smoother cup with herbal and spice notes. The PWN Golden Mandheling is hand-sorted three times and machine-sorted once to reduce defects, for a cleaner, silkier cup with more distinct woody and caramel notes. Colombia, Costa Rica, Yunnan, and Panama all offer strong options too: FrontStreet Huila, FrontStreet Blackberry, FrontStreet Mozart, FrontStreet Yunnan small-bean, and the entry-level FrontStreet Boquete washed Geisha are all worth exploring.