Cotti Coffee, a low-price coffee chain started by executives ousted from Luckin Coffee, has opened a store in Dubai, making it the first Chinese coffee chain to enter the Middle Eastern market.
Last week, Cotti reached the milestone of 7,000 stores across China – a number that puts it at third place among all coffee brands in the country, by number of stores. Starbucks also passed that milestone in January, so the two are neck-in-neck, a mind-bending feat given that Cotti first opened in 2022 – more than 20 years after the first Starbucks store opened in China.
In this short time, it has not only expanded rapidly across China but also made a significant footprint on the international stage, with outlets in 10 countries throughout East and Southeast Asia, as well as in Canada and Australia. The chain is also set to make a US debut in Hawaii this summer, to be followed by openings on the mainland.
Instead of the traditional franchise model of charging upfront fees, Cotti employs a profit-sharing agreement with franchisees, a strategy it says “shares risks and maximises each party’s strengths”. However, it has recently faced backlash from franchisees for pushing them to sell expensive liquor products on top of existing supply chain issues leading to inconsistent product availability.
According to Beijing-based news outlet Jiemian, Cotti’s current expansion rate is high-risk as it could soon outpace the brand’s supply chain development. Franchisees are suffering delayed payments and effectively subsidising the brand’s breakneck expansion, which could ultimately jeopardise the brand if it doesn’t adopt a more sustainable strategy soon.
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