Is T97 Coffee Franchise a Scam? The Brutal Reality of Physical Store Operations!

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The Rapid Rise and Fall of T97 Coffee

Yesterday, according to posts from netizens, T97's first store on Yongkang Road in Shanghai is currently closed, not even lasting six months...

In addition to the Shanghai flagship store, people from other regions also reported that T97 came in a rush and left in a hurry. Based on everyone's posts, it's clear that most T97 stores closed within less than three months of opening.

The Viral Sensation

Starting from June last year, T97's completely new hype-style livestreaming and its magically catchy rapper "Coffee, rush, rush, rush" suddenly made their livestream room, which previously had at most 190,000 viewers, go viral overnight. At that time, according to Sina Finance reports, in the 30 days after going viral, T97 Coffee broadcasted 34 times, with total viewership reaching 72.2754 million and peak viewership reaching 8.09 million.

Grand Promises vs. Reality

Regarding such traffic, T97 Coffee founder Li Xiao once boldly claimed that he would open 1,001 stores within a year and defeating Luckin Coffee was his goal. However, in reality, by October last year, there were only 48 offline stores, and by January this year, the number of stores still hadn't exceeded 100. Most operated for around 2 months.

Declining Interest

Despite this, there are still many users consulting about how to franchise T97 stores, seemingly still immersed in that "Coffee, rush, rush, rush" viral era. However, when people opened T97's livestream room again, the coffee livestream that once had millions of viewers now only has a dozen or so viewers.

Reasons for the Decline

With such a huge disparity, one reason is that Dazui, the host who initially made T97 viral, rarely appears now, eliminating even the reason for people to enter the livestream room "to join the excitement"... Consumers get fatigued after seeing too much "rush, rush, rush." Another reason is that after netizens impulsively purchased and redeemed vouchers for a taste, they had no intention of repurchasing or redeeming again.

Many netizens have expressed that there's a huge difference in the quality from each store, and even those without high standards for coffee find it unpalatable... When purchased vouchers go unused, they get refunded upon expiration, so there's no motivation to redeem them for drinks.

Franchise Issues

After T97 went viral, founder Li Xiao immediately rushed to expand franchises, an attitude that raised doubts among netizens at the time. Many believed that Li Xiao was simply trying to take advantage of franchise investors, with individual consumers not being his target.

Despite this, many people still have a strong obsession with the dream of opening a coffee shop and also saw the brief period of high popularity, so they joined in.

However, after signing franchise agreements, the brand barely fulfilled its management responsibilities for each store. Most franchisees didn't understand coffee preparation or store management, which directly lowered the entire brand's reputation and consumer trust. Finally, many stores ended up closing at a loss due to high costs, low profits, and fading popularity.

The Coffee Market Reality

In the coffee industry, there's an undisputed fact: without strong product quality, it's not easy to steal business from competitors. However, after T97 went viral, their first priority wasn't developing blockbuster products that could compete in the market, but constantly "brainwashing" everyone: "Franchising with us is the right choice! Look how popular we are, the franchise fee is only 20,000 a year, what a bargain!"

But upon closer inspection, besides the franchise fee, you also need to prepare nearly 140,000 for equipment, 20,000 for security deposit, 20,000 for raw materials and utensils, another 20,000 for security deposit, 10,000 for operations, 10,000 for design, and 2,000 per square meter for renovation... among other miscellaneous expenses.

Cautionary Advice

When it costs nearly 300,000 to open a coffee shop, everyone should be cautious. Moreover, when franchising a brand that hasn't found its footing yet, everyone must be extremely careful!!! Let's not even discuss whether franchisees can immediately make money after opening stores. When a brand opens up for franchising before its foundation is solid, the brand's reputation is worth contemplating.

The chain coffee shops that survive in today's coffee market share several common characteristics: excellent brand reputation, stable products, innovative offerings, and sufficient investors to maintain brand operations. T97, however, opened for franchising while lacking in all these aspects.

Consumer Perspectives

Quoting a netizen's comment:

Brand reputation truly requires the support and recognition of the general consumer base. Spending 300,000 to open a franchised coffee shop is不如不如 creating your own independent coffee brand. The cost wouldn't be as high, and you wouldn't need to worry about other franchise brands' declining reputations affecting your store's operations.

Keys to Success

Successfully operating a coffee shop requires sufficient professional expertise. Both management and quality control determine customer retention. Only by gaining recognition from more and more consumers can you firmly establish yourself in the coffee market.

When opening an independent coffee shop, remember not to compare or compete with chain stores, as their business models are completely different. As long as you focus on doing your own work well, maintain stable products, and work hard to build customer relationships, you'll naturally develop your own loyal followers.

Image source: Internet

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