Core Viewpoint - The article emphasizes the shift in the Chinese coffee market towards regional brands, highlighting the challenges faced by national chains and the unique strategies employed by local players to thrive in a competitive environment [6][8]. Industry Overview - In the first half of 2025, the number of chain coffee stores in China reached 66,568, with a net increase of 11,841 stores, marking a growth of 21.64% compared to the end of 2024 [6]. - Major brands like Luckin Coffee opened 3,866 new stores, surpassing 26,000 total stores, while Costa Coffee closed 28 stores and Starbucks saw a 41.78% decline in new openings [6][7]. - The industry is experiencing a significant contraction, with over 50,000 closures from August 2024 to August 2025, exacerbated by supply chain pressures and adverse weather affecting coffee production in key regions [7]. Regional Brand Strategies - Regional brands like Xinye Coffee are finding success by focusing on local characteristics and avoiding mainstream practices such as online sales and delivery services [8][10]. - Xinye Coffee, established in 2022, has opened 52 stores, with retail product sales accounting for 40% of revenue and a customer return rate exceeding 30% [8]. Market Dynamics - The article discusses the changing consumer preferences, where regional brands are gaining traction due to their unique offerings and local ties, contrasting with the diminishing appeal of national chains [11][12]. - The founder of Xinye Coffee notes that without financial and supply chain advantages, regional brands face challenges in scaling nationally, suggesting a focus on "small but beautiful" business models [13][14]. Consumer Segmentation - Different generations exhibit varying coffee consumption behaviors, with younger consumers seeking diverse experiences and quality, while older generations prioritize convenience [18][19]. - Xinye Coffee targets consumers aged 25 to 35, emphasizing a balance between spending and saving [20]. Business Model and Operations - Xinye Coffee adopts a unique operational model by investing heavily in customer experience and service quality, including high-end amenities and a focus on in-store engagement [24][30]. - The company aims for a retail revenue model where in-store coffee sales support the business while retail products become a significant revenue stream, targeting a future ratio of 1:2 for in-store to retail sales [39]. Future Outlook - The founder expresses confidence that genuine quality and service will prevail in the competitive landscape, emphasizing the importance of a well-designed business model to balance profitability and consumer expectations [43][44]. - Xinye Coffee plans to open a new store in Kunming, continuing to focus on regional growth and brand recognition [45].