Record High Number of Cafe Bankruptcies in Japan Last Year
Break-even Point for 4100 Won Coffee Approximately 1 Hour 42 Minutes
Last year, the number of cafe bankruptcy filings in Japan reached an all-time high, with analysis suggesting that the increase was due to the rise of 'Kagongjok'?people who study in cafes. On the 24th, the Japanese media outlet Aera Dot reported that the number of cafe bankruptcies in Japan last year hit a record high. According to a survey released by Teikoku Databank around January, there were 72 cafe bankruptcies nationwide in 2023, more than double the 34 cases from the previous year, marking the highest number ever recorded.
On July 25th, a Japanese netizen using the nickname "Naomi" posted on X (formerly Twitter) a photo along with the comment, "Is this allowed at Starbucks?" The photo showed a male customer occupying a table near the store entrance, with multiple laptops, tablet PCs, and phones set up, using the space like a workspace. [Photo by X (formerly Twitter)]
Aera Dot analyzed that the increase in cafe bankruptcies was due to a combination of low prices and insufficient turnover rates. Above all, the number of people studying or working in cafes has increased recently in Japan, leading to more customers staying for long periods with just one drink. Traditionally, Japan's cafe culture relied on low prices compensated by high turnover rates?a low-margin, high-volume business model. However, as more customers spend extended time in cafes, turnover rates have declined. This decrease in turnover threatens the survival of small cafes. This trend is especially pronounced in urban areas.
Given this situation, Japanese cafe owners are deeply concerned. They face a crossroads: whether to raise coffee prices or impose time limits to increase turnover. Some cafes have implemented usage time limits of about 90 to 120 minutes. In such cafes, staff approach customers when their time is up to inform them, saying, "Your time is up." The dilemma is that this has led some customers to reduce their cafe visits. A bigger problem is the vicious cycle where the increase in customers working in cafes eventually drives away regular patrons.
Then, what is the 'maximum usage time' that does not harm the turnover rate and profits of a cafe? According to a survey by the Korea Foodservice Industry Research Institute in August 2019, the breakeven point for a customer who purchased a 4,100 won cup of coffee was 1 hour and 42 minutes. [Photo by Online Community]
Meanwhile, in South Korea, the so-called 'Kagongjok'?people who work or study in cafes?has also become a major issue. Around April, an online community captured a customer occupying two seats with a monitor and laptop set up. This customer installed a monitor large enough to cover their face on one table and placed a laptop on a stand on the adjacent table. Additionally, chargers, cables, and other items were scattered messily on the table, along with a power strip and keyboard.
Similar cases were reported last year as well. An image circulated online showing a man working with dual monitors set up on a Starbucks table. Also, in a cafe in Eunpyeong-gu, Seoul, a story emerged about two middle-aged men who brought a printer and worked on personal tasks for about two hours. Opinions among netizens regarding Kagongjok in South Korea are divided. While some cafes have created environments conducive to studying, others have declared 'No Study Zones' or introduced rules such as requiring additional orders every 2 to 3 hours.
So, what is the 'maximum usage time' that does not harm cafe turnover and profits? According to a 2019 survey by the Korea Foodservice Industry Research Institute, the break-even point for a customer who buys a 4,100 won coffee is 1 hour and 42 minutes. This figure is based on the average sales of independent cafes (not franchises), assuming ▲8 tables ▲29% takeout ratio ▲12 hours of daily operation. In other words, customers who stay for more than 2 hours after ordering a single drink cause losses to the cafe's revenue.
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