Big cof­fee am­bi­tions, on wheels

The founder of Wheely’s China wants the brand’s nim­ble cof­fee carts to out­num­ber Star­bucks and Costa Cof­fee out­lets within 10 years

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai

xu­jun­qian@chi­nadaily.com.cn

The cafes that Bai Xiaofeng has been try­ing to in­tro­duce to China are dubbed the world’s small­est of its kind in the world. And they’re mo­bile, too.

First started in Swe­den in 2014, the con­cept of Wheely’s Cof­fee is that of “a so­lar-pow­ered cof­fee cart that could take on Star­bucks”. Maria De La Croix, the founder of the brand, said that she came up with the idea af­ter her job ap­pli­ca­tion for a Star­bucks po­si­tion in Stock­holm was re­jected.

The rea­son? Her hair was “too blue”.

That in­ci­dent turned out to be a bless­ing in dis­guise. In less than two years, De La Croix turned Wheely’s Cof­fee into a global com­pany with a pres­ence in nearly 50 coun­tries. The brand is also backed by en­ter­prises from Sil­i­con Val­ley, as well as a num­ber of tech gu­rus in­clud­ing the cre­ator of Gmail and founder of dig­i­tal li­brary Scribd, as it was deemed to em­body the sta­tusquo-dis­rup­tive ethos es­sen­tial for en­trepreneur­ship.

Bai, a for­mer in­vest­ment banker who spent sev­eral years in Sil­i­con Val­ley, is now in charge of ex­pand­ing the brand in China af­ter strik­ing up a part­ner­ship with De La Croix. China is cur­rently home to about 50 mil­lion cof­fee drinkers.

But un­like the Dan­ish en­tre­pre­neur, Bai isn’t all that con­cerned about tak­ing on the cof­fee gi­ants.

“It’s not a live-and-let-die sit­u­a­tion for us and Star­bucks, or any brands. China’s cof­fee mar­ket is large enough for both, and more play­ers,” said the 33-year-old Shang­hai na­tive.

He be­lieves that the di­ver­sity and pop­u­la­tion of China has seg­re­gated the do­mes­tic cof­fee mar­ket into dis­tinct sec­tors that play­ers can fo­cus on — Star­bucks, for ex­am­ple, are geared to­ward the above-thirty of­fice work­ers who value ac­ces­si­bil­ity, stan­dards and speed.

In the case of Wheely’s and other in­di­vid­ual cafes, they are gen­er­ally the des­ti­na­tion of choice for the post-1990s gen­er­a­tion who want fun and in­di­vid­u­al­ism in their cups of cof­fee.

There are cur­rently five Wheely’s cof­fee carts in Shang­hai that are run by Bai’s com­pany Wheely’s China. Ad­di­tional carts run by in­de­pen­dent fran­chis­ers in three to six cities could be mak­ing their de­buts in the near fu­ture.

The set up costs of run­ning a Wheely’s mo­bile cafe starts from 100,000 yuan ($14,759), de­pend­ing on the bike model. Wheely’s China, which can pro­vide busi­ness plan­ning sup­port to fran­chise own­ers, gets 10 per­cent of the rev­enue from each cart.

Ac­cord­ing to Bai, any­one can be­come a “Wheeler” but those who have prior ex­pe­ri­ence in the ser­vice in­dus­try are fa­vored. While fran­chise own­ers must sell Wheely’s house cof­fee, they are per­mit­ted to per­son­al­ize their own menus and in­clude sec­ondary prod­ucts such as pas­tries, as well as pick their own lo­ca­tions to op­er­ate as long as they pro­cure all the of­fi­cial doc­u­ments re­quired for a F&B busi­ness in China.

He es­ti­mated that by sav­ing the rental and op­er­a­tional costs of run­ning a cen­tral­ized multi­na­tional com­pany, Wheely’s could re­duce the re­tail price of a cup of cof­fee in China by 25 per­cent. This is a highly at­trac­tive propo­si­tion for not only cus­tomers, but also those with as­pi­ra­tions to run their own cafes.

Last month, at a meet­ing in Shang­hai with po­ten­tial fran­chise own­ers from all over China, Bai en­cour­aged the au­di­ence to be cre­ative with their cof­fee carts and of­fer­ings, sug­gest­ing that lo­cal foods such as Chi­nese pan­cakes and steamed buns could be a hit with do­mes­tic cus­tomers.

He also noted that the big­gest chal­lenge for fran­chise own­ers would be find­ing the right lo­ca­tions. How­ever, be­cause of the na­ture of the busi­ness, fran­chise own­ers are af­forded a mo­bil­ity that mit­i­gates the dam­age caused by pick­ing an unideal lo­ca­tion. For in­stance, a Wheely’s cof­fee cart that was sit­u­ated at the en­trance of a Car­refour su­per­mar­ket for a test run was able to pack up and re­lo­cate af­ter just one week due to low cus­tomer flow.

“Be­ing small and mo­bile means be­ing nim­ble and adap­tive to changes, and per­haps more im­por­tantly, cost-ef­fec­tive,” said Bai.

Look­ing ahead, Bai hopes to have more Wheely’s carts in China than Star­bucks and Costa Cof­fee out­lets. Ear­lier this year, Star­bucks an­nounced that it would open one new out­let in China ev­ery day for the next five years, bring­ing the to­tal to 5,000 by 2021. Con­sult­ing firm Euromon­i­tor es­ti­mated that the two cof­fee gi­ants cur­rently ac­count for around 82 per­cent of the mar­ket share in China.

“We don’t want to be the num­ber one player. I think cof­fee in China should be more fun and di­ver­si­fied,” said Bai, who added that his 10 years in Aus­tralia has turned him into a firm be­liever in hav­ing a unique cof­fee cul­ture.

“Star­bucks is a great com­pany in that it man­ages to get Chi­nese con­sumers to think about it when­ever they want a cup of cof­fee. I want to achieve the same with Wheely’s — I want peo­ple to as­so­ciate us with a fun cup of cof­fee.”

PRO­VIDED TO CHINA DAILY

Wheely's China CEO Bai Xiaofeng be­lieves the mar­ket is big enough for mul­ti­ple play­ers. Bai Xoaofeng, who is in charge of ex­pand­ing Wheely's in China

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