New cafes advised to target niche audiences to boost sales
Finding a new spot in which to open a cafe is not easy in Shanghai. Cutthroat competition from multinational chains and local coffee startups means independent stores need to find a niche segment to lure new customers.
Delivery services have become essential for food and beverage chains to cater for emerging demands from shoppers and various scenarios at home and during leisure hours.
Daydreaming by Monos sits on Yongjia Road and seeks to stay close to the nearby community.
Daydreaming by Monos is not a typical coffee shop set in the fanciest or most populous destinations of the city.
Owner Yang Lupeng said he chose the quiet Yongjia Road instead of a downtown business district because he wants to stay close to the neighborhood community, and become a part of everyday life.
As foot traffic and leisure activities pick up, both delivery and dine-in consumption have shown signs of recovery.
Shanghai is home to about 7,000 cafes of various size and target customers, and new businesses have tried different means to stay relevant to local shoppers and the community.
Reaching out to those who prefer online delivery is an important factor for cafes nowadays.
Yang said he also tried new packages, and formulas with different kinds of coffee beans that are more suitable for delivery orders.
In February, the cafe in Xuhui District more than doubled its business from a year earlier thanks to repeated visitors from neighboring communities and rising delivery orders.
Preparing delivery orders is also part of a barista's job at the cafe.
Repeat customers have grown fond of its coffee style, and online customers helped the small business to withstand uncertainties in its initial stage, explained Yang.
Currently about 40 percent of sales at the cafe comes from delivery sales.
The increase in coffee spending in the first few months of this year is the latest signal of a broader rebound in consumer sentiment.
According to Meituan data, coffee delivery orders in Shanghai has stayed ahead of those in other Chinese cities, and in the first two months of 2023 jumped nearly 60 percent from a year earlier.
Hotpot chain Haidilao is one of the established chain stores to respond quickly to new habits and demands as more customers seek additional beverages such as milk teas and alcoholic drinks, as well as traditional hotpot dishes.
General manager of the community operation unit Zhang Ying said that major sports events such as the World Cup boosted demand for late night meals and snacks.
Last year, Haidilao's delivery business more than doubled from a year earlier, and Zhang told a recent industry forum in Shanghai that it had swiftly followed new consumption demands to add new menu items, which was helpful in boosting overall sales.
On-demand delivery for food and beverages along with other groceries remained strong as pandemic restrictions gradually eased, with more frequent purchasing in recent months.
According to the latest figures by Kantar Worldpanel, more than 34 percent of Chinese households purchased fast-moving consumer goods through real-time retailers and delivery sites in the first quarter.
"As foot traffic gradually return to a normal level, delivery spending on snacks, beverages and other discretionary items will steadily pick up," said Carrie Zhang, a partner in Bain & Company's consumer products and digital practice in Shanghai.
Snacks and drinks ordered between meals have made up the majority of additional spending for delivery services.
The latest white paper by Bain and Meituan suggests vendors pay more attention and target specific customer groups to cater to their niche demands.
Market watchers pointed out that delivery platforms are an increasingly important channel for new item launches, promotional activities and even raising brand awareness, rather than just driving sales.
