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S.Korean coffee chain eyes expansion in SEA, China

Publication Date : 20-11-2013

 

One of the first chains to introduce the gourmet coffee culture to South Koreans now has aspirations to take on the rest of Asia.

Hollys Coffee - which opened its first outlet a year before American chain Starbucks set up shop in the country - will focus on expanding in Southeast Asia and China, said Koo Hong Kyo, its international business development manager.

The chain, established in 1998, has 400 outlets in South Korea and 15 overseas, in Thailand, the Philippines, China and Peru.

The company directly owns 10 per cent of its stores in South Korea, with the rest run by franchisees. All of its international outlets are run by franchisees.

The South Korean market is still growing but increasingly saturated with competitors, he said.

Hollys is the fifth largest coffee chain there - The Coffee Bean & Tea Leaf with an estimated 900 outlets is the leader while Starbucks has about 500.

The South Korean government has imposed restrictions, which stipulate a minimum distance between stores from the same chain to limit monopoly power.

"To grow, we plan to have more stores overseas," added Koo.

The chain is searching for potential franchisees in Indonesia and Vietnam, and is also keen on Singapore and Hong Kong.

The company eventually hopes to have stores in more than 10 Asian countries as well as the United States and Europe.

Its franchisee in China plans to open more than 500 stores in the country over the next seven years.

Maintaining quality across an international franchise can be challenging - especially when outlets are located halfway across the world.

The chain used to have a franchisee in the US but it was "difficult to support the store because of distance and time differences", said Koo. The outlet has since closed.

"For that reason, we want to focus mainly on growing in Asia for now... so that we can provide support to franchisees more easily," he added.

Amid global enthusiasm for all things Korean, most companies from the country are eager to advertise their origins but for Hollys Coffee, "it's a bit of (a) dilemma".

"We don't want to advertise as a Korean company overseas, because we believe that enjoying coffee is a universal experience accompanied by a social context... We are selling coffee products but also a social space," said Koo.

"On the other hand, we also want to ride the Korean wave."

 

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