[Why&Next] Losing Ground to Starbucks and Hit by 'Mecomback'... Ediya Losing Its Place

Direct Hit from Polarized Consumer Trends
Lost Price Competitiveness and Shrinking Store Count
Rebranding Efforts Also Stalled

Celebrating its 25th year of operation, 'Original Cost-Effectiveness' Ediya Coffee is facing a crisis as its sales have declined for two consecutive years. Although it has grown into a domestic mega brand with the largest number of franchise stores, its position is narrowing as recent consumer trends polarize between premium and cost-effective options. It has long lost its top spot as the number one domestic coffee franchise in terms of store count. Industry insiders assess that Ediya Coffee has lost competitiveness in the overheated cafe market. The company is working on repositioning the brand, but progress is slow due to sluggish negotiations with franchisees.

Ediya Coffee

According to the Financial Supervisory Service's electronic disclosure system on the 18th, Ediya recorded sales of 242 billion KRW last year, a 12.2% decrease from the previous year. Through cost reductions in sales and administrative expenses, operating profit increased by 17.7% to 9.7 billion KRW compared to the previous year.

Sales Shrunk for Two Consecutive Years... Lost 'Cost-Effectiveness' Position

Ediya has been experiencing negative growth for two consecutive years since peaking at 277.8 billion KRW in sales in 2022. With sales of 275.5 billion KRW in 2023, it is the first time since the company began disclosing audit reports in 2012 that sales have declined. Operating profit in the same year fell below 10 billion KRW for the first time since 2013, dropping 18.1% to 8.2 billion KRW. Net profit also halved to 3.4 billion KRW.

The biggest reason for the poor performance is cited as ambiguous positioning. In a coffee market divided between premium and low-priced coffee, Ediya established itself as a mid-priced coffee brand, which led to consumer neglect.

Ediya's greatest strength was its price. It attracted customers by offering coffee at lower prices compared to competitors. In fact, in 2013, when Ediya rose to the top of the coffee market, the price of an Americano at Starbucks, Coffee Bean, Twosome Place, and Hollys Coffee was around 4,000 KRW, while Ediya maintained a price of 2,500 KRW, about 60% of theirs.

However, the current price of an Americano at Ediya is 3,200 KRW. Although still cheaper than premium brands like Starbucks, it is about twice as expensive compared to ultra-low-priced brands such as Mega MGC Coffee, Compose Coffee, and Paik’s Coffee, which emphasize 'real cost-effectiveness.' These brands offer large-sized Americanos for under 2,000 KRW, making Ediya's pricing appear ambiguous.

'Lost No.1 Store Count Position... Completely Outpaced by Mega MGC, Compose, and Paik’s Coffee'

Ediya has lost not only the 'cost-effectiveness' position to ultra-low-priced brands but also its long-held top spot in the number of domestic coffee specialty stores.

Since opening its first store in 2001, Ediya rapidly expanded its number of stores each year, surpassing 1,000 franchise stores in 2013 and becoming the number one in the domestic coffee market. In December last year, it also became the first domestic coffee franchise to exceed 4,000 stores.

However, the actual number of operating stores is much lower due to closures outpacing new openings. According to the Fair Trade Commission's franchise business transaction disclosure, the number of Ediya Coffee stores (franchise + directly operated) steadily increased from 2,885 in 2020 to 3,018 in 2021 and 3,019 in 2022, but decreased by 6.6% to 2,821 in 2023. The number of stores for last year has not yet been disclosed.

Meanwhile, Mega MGC Coffee operated 2,709 stores in 2023, increasing by more than 500 stores annually from 1,603 in 2021 and 2,173 in 2022. Compose Coffee also increased its store count to 2,361 in 2023, up 460 from 1,901 the previous year, and Paik’s Coffee operated 1,452 stores, more than 200 more than the 1,231 stores in the previous year. It is reported that over 1,000 new stores of 'Mega MGC, Compose, and Paik’s Coffee' opened nationwide last year.

Additionally, expensive overseas premium coffee brands have emerged in large numbers, joining the cutthroat competition among cafe franchises. Examples include Morocco’s Basha Coffee and the United States’ Intelligentsia Coffee. An industry insider explained, "Ediya’s biggest feature and strength was its large number of stores, but with increasing closures, it has lost its footing. As the market polarizes more and more, Ediya will have to completely overhaul its brand strategy, which will deepen its concerns."

'Rebranding' Stalled for a Year... Slow Negotiations with Franchisees

Ediya has also pulled out a card for structural improvement. It aims to find competitiveness between premium coffee brands offering differentiated customer experiences through continuous new product development and sophisticated interiors, and low-priced coffee brands armed with cost-effectiveness. In fact, Moon Chang-gi, CEO (Chairman) of Ediya, stated in last year’s New Year’s address, "We will conduct a comprehensive brand renewal while contemplating the fundamental value provided to consumers," adding, "We will secure brand competitiveness that can lead trends beyond mere changes in interior or design."

Accordingly, last summer, Ediya applied for the 'ODO' trademark with the Korean Intellectual Property Office to change its corporate image (CI) and launched its first-ever star marketing campaign featuring actor Byun Woo-seok, marking the start of full-scale rebranding. The headquarters also decided to fully cover marketing costs related to the model's appointment.

However, the comprehensive rebranding plan and direction have been stalled for over a year due to slow negotiations between the headquarters and franchisees. While franchisees are expected to bear burdens such as interior renovations and marketing enhancements, the economic downturn and weakened consumer sentiment have made the business environment difficult, hampering rebranding efforts.

An Ediya representative explained, "As Ediya Coffee has entered a mature phase after a period of rapid growth, we are pursuing a management strategy focused on internal stability, such as streamlining supply chain management systems like logistics and purchasing, and improving the profit structure of existing businesses, rather than external expansion." They added, "We are seeking an effective rebranding direction while maintaining a strategic stance to minimize the financial burden on franchisees and enhance the brand’s long-term value."