Selling Iced Americanos for 2,000 Won, Annual Sales Reach 400 Million Won... As the "Lifeblood of Office Workers," Coffee Shops Surpass 100,000 Locations

The Era of 100,000 Coffee Shops
MegaMGC Coffee Leads Low-Cost Franchise Sales
Average Annual Sales Per Franchise Near 388 Million Won

As the number of coffee shops in South Korea has surpassed 100,000, MegaMGC Coffee has emerged as the coffee franchise with the highest annual sales per franchise location. The average annual sales per franchise store approached 400 million won, thanks to the strong price competitiveness of low-cost coffee, which has become a staple in the daily lives of ordinary people struggling with prolonged high inflation.

Coffee is the lifeblood of office workers. As soon as they arrive at work, an iced Americano order is waiting for its owner. Photo by Dongju Yoon

According to franchise business disclosure data from the Fair Trade Commission on January 14, the average sales per MegaMGC Coffee franchisee amounted to 388.44 million won. This is the highest among low-cost coffee franchises included in the survey. With nearly 4,000 locations, MegaMGC Coffee maintains its leading position both in terms of store expansion and franchise sales volume.

Paik's Coffee ranked second in franchise sales. The brand has around 1,850 franchise locations, with average sales per store reaching 324.48 million won, the second-highest among low-cost coffee brands. Compose Coffee recorded 2,900 franchise stores and an average sales figure of 271.88 million won per store. Despite aggressive expansion, Compose Coffee has managed to maintain mid-to-high-level franchise sales.

Mammoth Express recorded 750 franchise stores with average sales of 230.73 million won per store. The Venti had 1,311 stores and average sales of 221.44 million won. In contrast, Ediya Coffee, with nearly 2,500 stores, posted the lowest average franchise sales among the brands surveyed at 194.81 million won. While Ediya Coffee has a large number of stores, its sales per store lag behind competitors.

Industry experts attribute these sales differences to variations in store operation methods and store formats. Brands like MegaMGC Coffee, Paik's Coffee, and Compose Coffee have focused on small, takeout-oriented stores to boost turnover rates. In contrast, Ediya Coffee has maintained relatively larger stores with a higher proportion of seating.

The gap becomes even more pronounced when looking at sales per 3.3 square meters (approximately one pyeong). MegaMGC Coffee posted average sales of 22.41 million won per 3.3 square meters. Paik's Coffee followed with 20.51 million won, Mammoth Express with 18.41 million won, Compose Coffee with 18.03 million won, and The Venti with 17.40 million won. Ediya Coffee lagged far behind at just 6.33 million won per 3.3 square meters.

Recently, as rent and labor costs have risen in the coffee franchise market, sales efficiency has become a more important metric than store size. A franchise industry insider commented, "Even within the same commercial district, franchise sales can vary significantly by brand," adding, "Among prospective entrepreneurs, there is a growing trend to prioritize per-store and per-area sales over the sheer number of franchise locations."

The growth of low-cost coffee franchises can be attributed to their competitive pricing, typically in the 1,000 to 2,000 won range. While coffee consumption has remained steady despite ongoing high inflation, consumer sensitivity to price has increased. Major low-cost coffee brands have attracted demand from office workers and students by offering Americanos at prices ranging from the high 1,000 won to the low 2,000 won range. With takeout demand concentrated during morning commutes and lunchtime, low-cost coffee shops with short stay times and high turnover rates have firmly established themselves as everyday consumption channels.

Riding this growth trend, low-cost coffee franchises have also become major investment targets for private equity funds (PEFs). In 2021, Premier Partners, together with a strategic investor, acquired MegaMGC Coffee for about 140 billion won and later exited with more than double their initial investment. In July of last year, Philippine food service company Jollibee signed a deal to acquire Compose Coffee through its subsidiary and domestic PEF operator Elevation PE. More recently, U.S.-based private equity fund Orchestra Private Equity acquired 100% of Mammoth Coffee Lab, the operator of Mammoth Coffee, and coffee bean roaster Seojin Roasters for over 10 billion won.

Meanwhile, according to Statistics Korea, as of the end of 2022, the number of coffee shops in South Korea stood at 100,729, up 4.5% (4,292 stores) from the previous year (96,437 stores), surpassing the 100,000 mark. The number of coffee shops nearly doubled in six years, from 51,551 in 2016.