Coffee majors rewriting playbook in China

Investors paying less attention to how many outlets open, increasingly focused on whether stores generate healthy profits.

For much of the past decade, success in China's coffee market was measured by two numbers: how many stores a company could open and how cheaply it could sell a cup of joe.

That formula helped transform China into one of the world's fastest-growing coffee markets. Chains rushed to blanket cities with outlets, expanded into counties and townships and conditioned consumers to expect coffee for as little as 9.9 yuan ($1.47) a cup.

Now, the industry's biggest players are rewriting the playbook.

Rather than chasing store counts at all costs, companies from Starbucks China to Luckin Coffee are increasingly emphasizing store productivity, premium experiences and sustainable returns, reflecting a broader shift as China's coffee market enters a more mature stage of development.

The transition marks an important inflection point for an industry that has spent years prioritizing scale over efficiency. As store networks become denser and competition intensifies, investors are paying less attention to how many outlets companies open and more attention to whether those stores generate healthy profits.

No company better illustrates the shift than Starbucks China. In September, Starbucks opened its new-generation flagship Starbucks Reserve inside Beijing SKP, one of China's most prestigious luxury shopping malls.

Far more than another coffee shop, the location serves as a showcase for Starbucks' evolving strategy. The store combines Reserve coffee, Italian desserts and the national debut of its "Global Inspiration" gifting collection, aiming to create a destination where coffee, luxury retail and lifestyle experiences converge.

The concept represents Starbucks' "thousands of stores, thousands of faces" strategy. Stores are increasingly customized according to local neighborhoods, shopping districts and customer occasions, instead of following a standardized global format.

"Starbucks Reserve is an innovative practice in which we respond to customer needs and the character of the trade area, using creativity, professional capability and global resources to create a distinctive experience," said Molly Liu, CEO of Starbucks China.

"It is also an important exploration under our 'thousands of stores, thousands of faces' strategy — co-creating a destination space with a landmark retail partner."