Analysis of China's Coffee Industry Status and Investment Prospects in 2023: Is Opening a Coffee Shop Profitable?

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The Post-Holiday Coffee Shop Boom

After this year's Spring Festival, topics suggesting "coffee shop demand will keep growing" have been everywhere.

"Coffee shop daily revenue of 20,000," "Young people returning home for Spring Festival crowd coffee shops," "Coffee takeout orders soaring," "Meituan sells 1.2 million cups in a day"...

From after Spring Festival until now, whether in backend search messages or in daily conversation, I have noticed that amid these enticing numbers, more and more friends want to venture into coffee shop entrepreneurship.

Many of them did not just develop the idea recently; many had the thought during the pandemic. Various unstable factors caused concern and hesitation, so execution was delayed. Then, after seeing things gradually stabilize and demand rise after Spring Festival, they revisited the idea, believing opening a coffee shop now should be much easier.

Is Coffee Shop Business Really That Promising?

Is today's coffee shop business really as impressive as it looks?

Undeniably, many coffee shops saw significant improvement after Spring Festival, and takeout demand did increase. But note one thing: these shops all went through the downturn during the pandemic, so their volume looks markedly better by comparison.

Many friends, however, see only the "good business" numbers without paying attention to the actual market situation and regional customer groups. Before they have clear goals and plans, they rush in, and reality hits as soon as the shop opens.

High-volume coffee shops also come with prerequisites: locations with very high foot traffic, or occasional periods with extremely high customer numbers, or rare extreme cases. Most coffee shops rarely reach such extremes. For a newly opened shop without a stable customer base and reputation yet, it is almost impossible. Generally, for a shop that has been open for some time with a certain customer base, 2k in daily regular revenue is already impressive, while 4k-5k can be considered the ceiling.

So those social media promotions claiming 8k or 20k daily revenue... take them as entertainment. We really should not assume that simply opening a shop will earn that much.

Is Now the Right Time to Open a Coffee Shop?

Regardless of timing, the prerequisite for a good opportunity is meeting your own objective conditions. The most important things for opening a coffee shop are clear positioning, a defined target customer group and sufficient operating funds — besides essential costs like decoration and equipment, you also need funds for the operational period, for materials, rent and labor.

At the same time, do not join a price war simply because you see many coffee shops doing so. Entering a price war without strong financial backing behind you is invisibly pushing yourself toward an abyss.

A newly opened shop will inevitably go through an awkward period. Only by making clear plans before opening can you shorten that period and reach the profit-making stage.

If your shop's style and positioning cannot attract the main customer groups around the area from the start, forcing it to continue will only lead to bigger losses. For example, opening a very fashionable coffee shop with cutting-edge products in an area surrounded by residential buildings, or opening a low-key, simply decorated shop that only sells pour-over coffee on a bustling main street.

Things to Understand Before Opening a Coffee Shop

Nowadays, whatever business we start, we cannot let passion come before all practical considerations.

If you yourself know nothing about coffee, it is best to learn through a reliable coffee training institution before considering opening a shop. If you only hope to hire someone to manage after opening, or invest funds as a partner without taking part in management, you will be the only one at a loss — like pouring your hard-earned money straight into the ocean.

Only when you understand the true current situation of the coffee market, grasp what coffee shop operation requires and know how to make coffee products can you determine your target users, product positioning and shop positioning, and set your promotional direction. Note that this order of determination cannot be scrambled.

FrontStreet Coffee Recommendation

Whatever the market does, the beans on the bar decide whether customers come back, and for a new shop the smartest move is to build a menu from affordable, easy-to-love single origins. Ethiopia is the place to start. FrontStreet Coffee's Washed Gordin Cooperative is the typical Yirgacheffe representative, grown in the Worka area and carrying jasmine florals, lemon acidity and berry tones, while FrontStreet Coffee's Sidamo Flower Champion uses a traditional natural process and shows generous berry, floral, jackfruit, melon and honey notes — both made by smallholder cooperatives whose traceability and quality control hold up batch after batch, which matters when you need consistency across hundreds of cups a week.

Round the menu out with origins that suit espresso and milk drinks as well as pour-over. FrontStreet Coffee's Brazil beans are the workhorse of the list: Cerrado Red Bourbon is an affordable single origin with typical cream, peanut and cocoa notes, while FrontStreet Coffee's Queen Estate grows at higher altitude and is a rare Yellow Bourbon, adding butter, sunflower seed, macadamia and almond nut aroma to sugarcane-like sweetness and a thick, smooth texture whether served black or with milk. From Indonesia come FrontStreet Coffee's Lintong Mandheling and PWN Golden Mandheling, both wet-hulled — a process invented for the country's frequent rain, removing the parchment while the beans are still half wet to speed drying — which produces a heavier, smoother cup than Blue Mountain with herbal and spice notes, ideal for customers who dislike acidity. FrontStreet Coffee's PWN Golden Mandheling undergoes three rounds of hand sorting and one machine sort, driving the defect rate to its lowest for a cleaner, smoother cup with clearer woody and caramel tones.

For the lighter, trendier end of the menu, FrontStreet Coffee's Colombia Huila is a good base, where floral notes meet soft fruit acidity, and the Colombia Sidra and Bellota lots bring more complexity. FrontStreet Coffee's Costa Rica Mozart, a raisin honey process, and FrontStreet Coffee's Blackberry, a black honey process, deliver grape, blueberry, osmanthus and rose sweetness that works across pour-over, cold brew, Americano and latte. Add FrontStreet Coffee's Yunnan Small Bean from Baoshan, washed and medium roasted with traditional nut and chocolate notes, or FrontStreet Coffee's 2013 Yunnan Typica at 1,300 meters with its cleaner hazelnut, dried apricot, black tea, caramel and ripe plum character, and you have a lineup that covers every taste and every budget a new shop will meet.