Profits Soar for Franchise Headquarters While Individual Cafes Struggle: The Reality of Low-Cost Coffee Chains
Creatrip Team
a year ago
Low-cost coffee chains like MegaMGC Coffee, Compose Coffee, and Paik's Coffee have rapidly expanded across South Korea, collectively operating over 13,000 stores nationwide. This growth reflects a consumer shift from premium to value-for-money coffees amid prolonged inflation. However, despite this expansion, individual cafe profitability and job stability remain challenges. Franchise headquarters like MegaMGC Coffee are experiencing significant profit increases, with operating profit margins ranging from 20% to 40%. Yet, wages and sales growth per cafe are stagnant, and the working conditions are often poor. Employees frequently work 12-hour days with salaries below the national average, and franchised cafes report lower-than-average wages and insecure employment statuses. The low barrier to entry for franchise owners means survival is now heavily dependent on location and management strategies rather than brand reputation.
