Yellow Franchise Signs Keep Crowding in Next Door... Headquarters Thriving as Franchisees Struggle

Coffee Franchise Locations Jump 41% in Three Years
Only Modest or Declining Revenue Per Store

The number of franchise outlets of major coffee brands has increased by over 40% in the past three years. While expanding the number of outlets has led to significant growth in the headquarters' revenue, the average sales per franchise location have only slightly increased, or in some cases, even declined.

Stores of domestic budget coffee brands located in a building in Jongno-gu, Seoul. From the left, Mega MGC Coffee, Compose Coffee, and Paikdabang. Photo by Hyunghan Hur

According to Yonhap News on September 24, an analysis of data from the Fair Trade Commission by People Power Party lawmaker Park Sunghoon, a member of the National Assembly’s Political Affairs Committee, revealed that the number of outlets of the top 10 coffee franchises by franchise count rose from 11,109 in 2021 to 15,692 in 2024, marking a 41.3% increase.

Rapid Growth Centered on Budget Coffee Brands

The expansion has been especially fast among budget coffee brands. Mega MGC Coffee’s number of franchise outlets grew by 1,732 (108.7%) to reach 3,325 in 2024, compared to 2021. During the same period, Compose Coffee grew by 1,364 outlets (106.1%) to 2,649, and The Venti increased by 474 outlets (62.7%) to reach 1,230.

The ranking in terms of the number of stores has also changed. In 2021, Ediya Coffee was ranked first with 3,005 franchise outlets, but in 2024, it has fallen to third place with 2,562 outlets. Mega MGC Coffee now holds the top spot, followed by Compose Coffee in second place.

Revenue growth at headquarters outpaced outlet expansion. The revenue of the operator of Mega MGC Coffee increased from about 8.79 billion won in 2021 to 49.6 billion won in 2024, a 5.6-fold increase. During the same period, operating profit rose by 150%, from 4.22 billion won to 10.76 billion won. For 2024, Compose Coffee’s operator and The Venti’s operator reported revenues of 8.97 billion won and 9.47 billion won respectively, which are 74.2% and 71.0% higher than in 2021.

Sales Per Store Show Slight Increases or Declines

The annual average sales growth per franchise location was relatively small. For Mega MGC Coffee, sales per store rose by 10.7%, from 202.5 million won in 2021 to 224.1 million won in 2024. Compose Coffee saw only a 0.8% increase, from 178.86 million won to 180.3 million won. In contrast, The Venti’s sales per store fell by 5.0%, from 183.14 million won to 174.03 million won.

Lawmaker Park stated, "With headquarters revenue soaring while franchisee revenue remains stagnant, it is questionable who is truly benefiting from this growth," and called on the Fair Trade Commission to investigate whether outlet competition is unfairly shifting the burden onto franchise owners.

This content was produced with the assistance of AI translation services.