Is T97 Coffee Franchise a Scam? T97 Coffee Franchise Business Operation Status

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As you may have noticed, the coffee "rush challenge" that once went viral with over 600 million views has gradually faded into obscurity.

The once-thriving live broadcast room, which featured full-day interactive sessions with peak viewership reaching 8.09 million, has now been reduced to evening-only 4-hour streams with only dozens of viewers at most. Meanwhile, the comment section of T97's franchise recruitment account is filled with criticism.

Why has T97 suddenly fallen silent?

Regarding its previous high traffic, T97 Coffee founder Li Xiao once boldly claimed that he would open 1,001 stores within a year, with the goal of defeating Luckin Coffee. However, the reality was quite different: as of October last year, there were only 48 physical stores. By February this year, the number had grown to just 87 stores, and by April, it had actually decreased to 85 stores (according to official data). With more closures than openings, Li Xiao didn't see this as problematic. In February, he posted a short video explaining T97's actual situation. The video content was roughly as follows:

"Two stores closed in Fuzhou, one in Nanning, one in Shijiazhuang, one in Anhui, one in Hefei, and one in Zhejiang - that's six closures total. Do you want to ask why these six closed? We opened over 80 stores and only 6 closed - is that considered a high failure rate? We (T97) have been operating for half a year and only 6 closed - is that considered high? These people (the failed franchisees) lack the most basic common sense about this industry. So with over 80 stores and only 6 closures, you think the brand is poor, but I (Li Xiao myself) don't agree. There are several reasons for the closures, which I'll discuss later. When T97 becomes truly strong, I (Li Xiao myself) will share the reasons with everyone."

He also mentioned that the beverage market in Changsha is very difficult, yet they managed to open 5 stores there. If the closures were entirely my (Li Xiao's) fault, then I (Li Xiao) wouldn't accept that. Actually, it has a lot to do with our partners, and most closures were due to their personal reasons." And that's where the video ended. Afterward, no more videos were released discussing T97's current situation, and T97 never became truly strong. The video data from February 21st was not the most current.

This is because as early as the beginning of February, netizens had already reported that a Shanghai store had closed. The statement in the video "Over 80 stores with only 6 closures - is that considered a high failure rate?" might seem reasonable mathematically, but when store growth stagnates while closures continue, the rate is definitely high! Additionally, netizens pointed out that while the failure rate was mentioned, nothing was said about the current situation of franchisees still operating - they might be struggling to survive. Most franchise stores operated for about 2 months on average, with none lasting more than half a year. After the video was posted in February, almost no one paid attention to subsequent videos. Even though Li Xiao still insisted on hosting live streams daily to answer phone calls from the audience, the participation was minimal. People became increasingly cautious about Li Xiao's previous bold claims and subsequent explanations.

Furthermore, the product quality across various stores couldn't retain customers. Many netizens reported significant variations in product quality between different locations - even people without high standards for coffee found it unpalatable. When coupons expired without being used, refunds were issued, so there was no motivation to redeem them for beverages. Additionally, after "Big Mouth Sister" stopped appearing in the live streams, other hosts performing the same rap lacked soul and emotion, completely devoid of vitality, which caused consumers to lose interest in the broadcasts.

Why is T97's store closure rate so high?

Many franchisees joined after witnessing the brief period of high popularity. However, after signing the franchise agreement, the brand barely fulfilled its management responsibilities for the stores. Most franchisees had little understanding of coffee preparation or store management, which directly lowered the entire brand's reputation and consumer trust. Ultimately, many stores closed at a loss due to high costs and low profitability, as well as the fading of the initial hype.

The inability to generate profits is primarily a brand issue. Lack of diligent management, absence of product innovation, and insufficient product strength make it extremely difficult to compete with rivals. Yet Li Xiao maintained that this was due to his partners' personal issues and had little to do with him.

As the old saying goes: when franchising with a brand that hasn't established stable operations, you must be extremely cautious!!! Setting aside whether franchisees can immediately earn money after opening stores, opening a brand to franchising before its foundation is solid requires careful consideration of the brand's reputation.

Image source: Internet

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