With the latest total number of stores exceeding 15,000, can Cotti Coffee breathe a sigh of relief?

Author | Zhong Yixuan

Editor | Qiao Qian

From in-store shops to convenience stores, Cotti has never given up the battle for scale to this day.

36Kr has learned from multiple sources that Cotti's latest total number of stores has currently exceeded 15,000, including 3,000 stores yet to open. The above number of stores includes all business formats such as existing standard stores, in-store shops, and convenience stores.

In addition, a person close to Cotti told 36Kr that Cotti's founder, Lu Zhengyao, said in a recent internal meeting that the proportion of Cotti's standard stores with a net profit of over 10,000 yuan (i.e., the green-light rate) in May "has approached 90%".

If the above figure of "90%" is true, it means that the food delivery subsidies since April have indeed been a "timely rain" for Cotti. Since the first half of this year, Cotti has been taking continuous actions. As of today in the food delivery war, Cotti's total food delivery sales on the JD platform have exceeded 100 million orders. 36Kr previously reported that due to this subsidy, the order volume of many franchise stores has even doubled, "and the gross profit remains at around 45%, which is a normal level."

Frequent co-branded campaigns have also been injecting vitality into the stores. Many franchisees told 36Kr that Cotti's co-branded campaigns have basically changed monthly since this year, and almost all of them are popular IPs, such as Nezha, Crayon Shin-chan, and the recent My Little Pony. Especially since March, the co-branded campaign with Nezha, with the strategy of giving away peripherals with each cup, has significantly increased the store's sales. In addition, 36Kr also learned from a franchisee that Cotti's contract as the global sponsor of the Argentine national football team will be extended until the 23rd FIFA World Cup in 2026.

The above-mentioned franchisee told 36Kr that at today's franchisee meeting, Cotti revealed that in May, the average operating cash flow per store of Cotti reached between 27,000 and 28,000 yuan, the highest in history, a year-on-year increase of 40% compared to last year.

Anyway, the number of stores is still growing, and the franchisees are making good money. Cotti can finally breathe a sigh of relief.

Looking back at the past year, especially after the cruel winter, Cotti's core issue can be simply summarized as "scale anxiety" - only by retaining and continuously expanding the franchisee group can this subsidy game be maintained. In addition, since 2023, Cotti has continuously invested in the upstream supply chain in Anhui and other places. It also needs the expansion of terminal stores to digest the production capacity. This is why Lu Zhengyao shouted the goal of "50,000 stores" for Cotti in 2025.

Last year, when the growth rate of standard stores slowed down, in order to expand the scale as quickly as possible, Cotti proposed a plan to open 8,000 in-store shops in half a year. However, after this plan only brought an increase of more than a thousand stores for Cotti, it was stopped within a few months due to the inability to run through the store model and the lack of a unified brand image.

At that time, a franchisee told 36Kr that Cotti's practice of sharing human resources with other stores was unreasonable. Having a clerk who had never been exposed to the coffee industry make beverages would face considerable risks in both quality control and expiration management. And the cost constraints of in-store shops did not allow the store to hire a full-time coffee professional.

But Cotti has not given up its obsession with scale. This year, the convenience store business must become a new growth point for Cotti. This business format also features a low threshold. With a 50,000-yuan deposit and a 50,000-yuan down payment, and the remaining balance paid in installments over 36 months, one can open a Cotti convenience store.

However, no matter how much it tries, according to the current total number of stores, "50,000 stores" has become an impossible task.

Cotti naturally understands this truth better than anyone else. Compared with the unattainable growth goal, it now seems that it has chosen to focus more on the existing stores for the time being.

In the first half of the year, with the surge in store sales, some store management problems of Cotti have been constantly criticized on social platforms - unstable product taste, poor hygiene conditions in the operating area, wrong food delivery orders, and even some stores forgetting to add coffee liquid. Clearly ordered coffee turned out to be a glass of juice when received.

The aforementioned person close to Cotti told 36Kr that Cotti will set up 1,100 regional managers across the country starting from the second half of this year. "Actually, Cotti wanted to do this last year, but during the off-season, the order volume of franchisees was low and the expectations were not high. If it had strictly managed the stores, on the one hand, it would have been rejected by the franchisees, and the store closure rate might also have been affected."

In other words, Cotti, with a terminal store pricing of 9.9 yuan, has long been under pressure from subsidies. The brand has been too busy to manage the stores and lacks a systematic operation and management model. But a franchisee summarized to 36Kr that after this adjustment, Cotti's future store management will be much stricter. "Previously, it was camera monitoring, now it is manual store inspections. Previously, violations were fined, but now if the red line is crossed, there may be a risk of store closure for rectification."

In addition, with 1,100 regional managers corresponding to 15,000 stores, the management radius of 1:14 is also reasonable. Previously, a former regional manager of Cotti once told 36Kr that under normal circumstances, the maximum upper limit of stores that a regional manager can cover is generally around 30. "During the craziest growth period in 2024, there was even a Cotti regional manager managing more than 90 stores. At that time, the management was very loose."

The path from extensive to standardized operation is familiar to any leading coffee brand. For franchisees, this is also a signal to return to rationality.

But the fact is that Cotti's "breathing space" may not last long. The current scale growth is partly stimulated by food delivery subsidies. According to franchisees, the food delivery subsidies so far have still been jointly maintained by JD and Cotti, and Cotti is under great pressure. Now, the price per cup of Cotti on JD's food delivery platform has approached 9.9 yuan. When the subsidies gradually decrease and the store order volume returns to normal, without the sales stimulus, the impact of the level of operational ability will soon become apparent.

After all, Cotti's scale anxiety has never disappeared, and the expansion will not stop. "In winter, there will still be a reshuffle. Coffee is no longer an easy money-making business. Survival of the fittest is the unchanging rule." a franchisee told 36Kr.