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Cotti Coffee Celebrates Two Years with Ambitious Expansion Plans

by Jessica

Cotti Coffee, China’s second-largest coffee chain by store count, marked its second anniversary last week with the inauguration of its 10,000th store in Doha, Qatar. The milestone reflects the company’s rapid expansion, primarily through franchises, into 28 countries and territories worldwide. Cotti now positions itself as the fourth-largest coffee chain globally, trailing only behind Starbucks, Luckin Coffee, and Dunkin’.

In conjunction with this achievement, Cotti Coffee unveiled an ambitious initiative aimed at increasing its store count to 50,000 by the end of 2025. The company plans to achieve this goal by embedding Cotti outlets within convenience stores, food and beverage retailers, and large retail spaces with high consumer traffic. To support this initiative, Cotti has already secured partnerships with over 50 retail and convenience brands.

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Competitive Landscape: Luckin Coffee’s Challenge

Luckin Coffee, China’s leading coffee chain with over 20,000 locations, has been actively targeting Cotti as a competitor. Founded by Luckin’s original team—who were removed amid an accounting scandal—Cotti poses a unique challenge to its former parent company. The knowledge and expertise of Cotti’s founders make them formidable rivals.

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While Luckin operates publicly, albeit on the over-the-counter market, Cotti faces difficulties attracting institutional investors due to its founders’ controversial background. As a result, Cotti must continually build confidence among its franchise partners and suppliers to support its expansion efforts.

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Luckin has attempted to undermine Cotti’s position by offering incentives, such as RMB9.9 vouchers to customers near Cotti locations, aimed at pressuring franchisees and potentially driving them out of business. However, Cotti appears to have withstood these challenges thus far.

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Cotti’s Key Achievements

In a letter to employees celebrating its anniversary, Cotti CEO Qian Zhiya highlighted five significant accomplishments:

Cotti’s store count has surpassed 10,000, ranking fourth globally and spanning 28 countries and regions.

The company has seen improved store profitability, with 97% of locations reporting positive cash flow over the past five months and a closure rate of only 3.6% in two years.

Cotti has established a fully operational global supply chain base in Anhui province, allowing for cost reduction while maintaining product quality and stability.

The brand has undergone a refresh, introducing the slogan “Good coffee comes from quality ingredients” and a new logo aimed at a younger demographic.

Focused product campaigns, such as “Fruit Coffee Season” and “Million Coffee Masters,” have enhanced product reputation and customer recognition.

The competitive landscape in China’s coffee sector continues to evolve, prompting speculation about when the fierce rivalry among chains will subside. Starbucks is set to release its financial results soon, and analysts anticipate that new CEO Brian Niccol will implement strategies to address recent double-digit revenue declines in China.

Other players in the market, including Peet’s Coffee—which entered China in 2017 and has expanded to over 150 stores—and venture-funded domestic brands like Manner and M Stand, are also gaining traction. Meanwhile, both Luckin and KCoffee, a venture by KFC, remain significant players in the ongoing price wars.

As the dynamics of China’s coffee market remain fluid, it is clear that more than one major player will be necessary to shift the industry toward a more stable phase.

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