Coffee boutiques need a double-shot of post-lockdown revival
Shanghai Daily and Yili Group have initiated the "iDEALCafe: A Cup of Comfort" summer drink project to reinvigorate about 50 independent Shanghai coffee houses to escape the pandemic gloom.
As Shanghai has reopened after its two-month lockdown, the city is once again savoring the coffee aroma wafting from its more than 7,000 cafes, the world's biggest number.
A way of life, a benchmark of economic vitality and a symbol of cultural diversity, the beverage is brewing strongly again to reaffirm the city's coffee culture capital mantle.
Statistics show that Shanghai's per capita coffee consumption is about 20 cups per year, while the national average is four cups. It ranks first in terms of coffee consumption scale, number of coffee shops, and coffee industry development.
However, the brakes were slammed on the blooming industry by the citywide lockdown from April 1 to May 31 as the COVID-19 pandemic resurgence hit.
The city has cautiously rebooted since June 1 when it lifted the lockdown, and it's trying hard to get back to normal life, with convenience stores, wholesale markets and coffee shops now allowed to open.
Boutique street-corner coffee houses are still struggling to survive as they strive to pay rent and wages.
"We cannot 'lie flat' (lay back) now. It's a hard time for everyone, but also a time to wire in and catch up on what we've missed during the past two months," said Cai Zhongshun, founder and owner of MQ Coffee, one of the earliest boutique cafes in China.
The brand has developed to cover the whole industry chain from bean plantations, roasting factory, online and offline coffee houses, barista training and consultancy.
Cai's Shanghai flagship cafe in a historic brick house on Shaanxi Road S. opened last November, but had to shut down quickly when the coronavirus hit in mid-March, followed by two months of strict closure.
The heavier blow was to Cai's roasting plant in suburban Jiading District and the online business team, because the supply chain was stopped, and all staff were quarantined at home. He signed about 150 applications for permission for his employees to come back to the office during the lockdown.
With the city gradually getting back to normal in June with the resumption of logistics, coffee sales have had their biggest bounce-back – but only in the online sector. Data from Dianping (a widely used food app) shows that online group purchases of coffee in Shanghai rose by 433 percent. At the same time, the sales of coffee brands such as Sumidagawa and G7 increased by about 300 percent year on year on Vipshop, an online shopping platform.
"The good thing is that the industry is recovering after June 1, though there is no 'revenge spending' so far," Cai said. "Our annual plan doesn't change, that is, the sales volume is to reach 100 million yuan (US$15 million). We'll be working harder in the next half year."
His flagship cafe has launched a summer menu with a new "iced coffee jelly" – coffee in cold cubed jelly mixed with milk, as part of "iDEALCafe: A Cup of Comfort" project, initiated by Shanghai Daily and Yili Group, to reinvigorate the about 50 independent local coffee houses in the wake of the pandemic.
"We're ready to welcome back customers," he said. "Fine food lies in the dine-in experience. A coffee house is, to some extent, a place of not only good beverage but also cozy, free ambiance for in-person communication and exchange of ideas."
A report in China Business News in April last year noted that 55.88 percent of cafes in Shanghai are specialty coffee or independent cafes, indicating the city's coffee lovers have shifted from coffee sold through the assembly lines of chain brands such as Starbucks and Costa Coffee to specialty houses with fine craftsmanship like brewing.
These cafes have begun to offer more specialty coffees of a higher quality – paying close attention to the beans' specific place of origin, roasting locally on the premises, and offering a variety of brewing methods. These specialty coffee retailers not only provide a product of the highest quality, but can also offer an educational consumer experience.
However, the independent cafes, unlike big chain brands, often have lower capacity to manage crises and withstand risks.
"We are still hanging in here, but I'm not sure about the future," said Fu Jiachao, owner of NNNF Cafe on the Bund. Its foods all expired and ingredients were scrapped during the lockdown.
The cafe has a great view of the Bund and is a hub for young fashionistas. At night it turns into a pub that offers live performances.
But it remains to be seen if it can recover quickly enough after the lockdown. Fu planned to open more outlets in the city this year, but now he is trying to "keep this one first."
Bai Zhifei, owner of the Missing Gallery cafe on Sinan Road, is stuck with the same dilemma Fu is facing. Opened in September 2020, the boutique coffee house has always taken the pandemic circumstances into consideration. It keeps developing various products such as drip bags and freeze-dried powder for sale in online channels and through private communities, and actively gets involved in nearby neighborhoods.
"But this lockdown in Shanghai has meant a much bigger change than the one in 2020," Bai said. "We have become more sensitive and more cautious because of the uncertainty."
She has shelved a plan to expand the cafe this year.
For the beverage industry, winter is usually an off-season while summer is the peak season. Accordingly, Bai and her partner have made tailor-made summer coffee drinks.
"For a cafe that concentrates on making creative drinks on its premises, the dine-in experience values in-person communication, the ambiance, lighting, music, and the process of how we make a cup of coffee with a cocktail or fruit," Bai said.
After an almost month-long "takeaway only" policy for eateries, Shanghai officially allowed the resumption of dine-in services from Wednesday – a welcome move for cafes and restaurants that have been struggling to survive the lockdown.
Diners still have to produce a 72-hour valid negative nucleic acid test result to enter the cafeterias and eateries. They have to scan the venue code, wear a mask, and receive temperature checks as well.
Bai's cafe is accepting reservations to welcome back its loyal coffee lovers.
Though the coffee industry will inevitably benefit from the retail bounce-back, small boutique cafes are sure to take a longer time to recover than big chain brands.
"But small street-corner cafes, in my view, satisfy the greater love and ardor of Shanghai's coffee drinkers," Bai said. "Anyway, the lockdown is also teaching these independent cafes that we need to develop more products with lower homogeneity and higher added value."