Coffee shop chain Caffe Bene embarking on aggressive US expansion plan; company has nearly 1,300 stores in South Korea and China
NEWARK, New Jersey
June 6, 2014
– A Korean-flavored coffee challenge is brewing in North Jersey.
Caffe Bene, a coffee shop chain launched in Korea in 2008 -- with bene, the Italian word for good, in its name to create an Old World European ambiance -- has embarked on an aggressive U.S. expansion plan with North Jersey as a prime growth target.
The company, which has close to 1,300 stores in Korea and China, wants to use franchising to become as well-known in this country as coffee leaders Starbucks and Dunkin' Donuts.
It currently has franchisee-owned stores in Palisades Park, Fort Lee and Hoboken, with other locations planned for Edgewater and Tenafly. Caffe Bene wants to add 180 stores in the New York metropolitan area over the next three years, with about 25 of those in Bergen County. A bakery to supply those new cafes with pastries, breakfast waffles, Korean honey bread, and other desserts, is scheduled to open in Ridgefield this summer.
John Barry, Caffe Bene's U.S. director of franchising, who has worked in the past for Quiznos and other companies that grew by franchising, signed on with Caffe Bene because he "couldn't resist the challenge of going against Starbucks," he said. "I love going up against the big guy. I felt there was a niche here that we could come into and just take a slice of the pie."
The pie is a U.S. coffee market that research firm IBISworld estimates at $30 billion. Starbucks currently has the biggest piece of it, with a market share of 37.7 percent, according to IBISworld, followed by Dunkin' Donuts at 25.5 percent. Caffe Bene investors believe there are enough people looking for an alternative to those giants to support their expansion.
Caffe Bene is looking to grow in this country, after saturating its home base in Korea, at the same time that Starbucks and Dunkin' Donuts are seeking their future growth overseas.
Caffe Bene intends to differentiate itself from the competition by creating a more relaxed, European-style coffee and dessert shop that offers an alternative to the grab-and-go culture of a Dunkin' Donuts and to Starbucks, which is becoming increasingly takeout-oriented, with a wider variety of food options, such as gelatos, bubble teas and breakfast items, Barry said.
But Caffe Bene, a Korean chain looking to enlist American franchisees to drive its growth, will be bucking the normal franchise tide, in which successful American franchise concepts flow overseas, rather than the other way around.
"Generally, American franchises are exported, and you don't see a lot of imports. But there are some," said John P. Hayes, author of several books on franchising and author of the blog howtobuyafranchise.com.
One asset Caffe Bene has, Hayes said, is the Korean entrepreneurs who have been the initial franchisees in this country.
"Look at Dunkin' Donuts, 7-Eleven, look at many of these small retail food operators and the most successful operators are often immigrants to the United States," Hayes said.
Hayes was hired by Caffe Bene to appear in a video about the coffee industry, but does not have an ongoing business relationship with them.
The chain's success in this country will depend on getting the right franchisees who can survive in the highly competitive coffee shop category, Hayes said. "Caffe Bene, the promise they make, as I understand it, is that they are the Nordstrom of service" among coffee shops, he said. "Is everybody cut out to provide that level of service? No," he said.
Barry said the company originally sought Korean-Americans for its first U.S. locations because they tended to be familiar with the Caffe Bene brand and in touch with Korean populations in this country. The towns selected for the chain's first locations -- Palisades Park, Fort Lee, Edgewater and Tenafly -- have significant numbers of Asians living nearby. Now, he said, the company is getting interest from non-Koreans who want to become franchisees.
Bergen County's first Caffe Bene opened on Broad Avenue in Palisades Park at the end of 2012. Soomin Jung, 23, who owns and operates the cafe with her mother, MiSun Jung, said she knew the Caffe Bene chain from visits to Korea. She and her mother wanted to open a coffee and dessert shop, and thought a Caffe Bene shop was the perfect opportunity because the company would "train us and provide all the coffee knowledge."
On a recent weekday afternoon, most of the customers working on their laptops or chatting with friends over iced coffees and teas at the cafe's wooden tables were young Korean-Americans, but Soomin Jung said a growing number of non-Koreans are frequenting the shop, and even ordering misugaru, a Korean multigrain drink served both hot and cold.
"A lot of non-Asians are trying it, too. They really enjoy it," she said.
Caffe Bene shops usually are 1,600 to 2,000 square feet and the typical startup costs are between $415,000 to $782,000, Barry said.
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