Core Viewpoint - The Taiwanese coffee chain 85°C is undergoing significant store closures in mainland China, with over 40 stores expected to shut down this year, marking the largest adjustment in five years. This move aims to address intensified competition and declining consumer spending in the mainland market [1][4]. Group 1: Store Closures and Financial Impact - 85°C plans to close more than 10% of its mainland stores to improve operational efficiency and reduce losses [1][4]. - The company reported a loss of approximately NT$200 million (around RMB 46 million) in the first half of this year, with projections indicating that losses could exceed NT$400 million (over RMB 93 million) by 2025 if operational structures are not adjusted [2]. - The mainland operations, which were profitable in 2021, have turned into a financial burden, with losses reaching nearly NT$400 million (approximately RMB 93 million) last year [4]. Group 2: Market Position and Competition - 85°C's rapid expansion in mainland China began in 2007, but management issues have hindered its performance, leading to a focus on internal improvements rather than aggressive expansion [5][9]. - The brand has struggled to maintain a clear consumer identity in mainland China, where it is perceived more as a traditional bakery rather than a coffee shop, resulting in a lack of loyal customer base [10][12]. - The competitive landscape has shifted, with local and foreign bakery chains posing significant challenges, diminishing 85°C's initial market advantages [10][12]. Group 3: Management and Strategic Decisions - The company has faced management challenges, including a failed franchise strategy and high turnover among key personnel, which have contributed to its operational difficulties [8][9]. - Following a period of aggressive expansion, 85°C has shifted its focus to internal talent development and closing underperforming stores [9]. - The brand's inability to establish a strong brand identity and customer loyalty has been a critical factor in its declining market position [12].