The Great Café Chain Store War: How to Survive in the Era of “Soaring Costs” and “Starbucks Domination”?

Can Starbucks, the absolute king, be toppled?

The rush to raise prices is hitting the cafe industry as well.

On June 12, Cafe Veloce, which operates 159 stores mainly in the Tokyo metropolitan area, revised the prices of 10 items, including coffee blends. This is the sixth price increase since the beginning of Reiwa, and the price of a cup of blended coffee (R size), which was 200 yen in Reiwa 2038, is now 380 yen at some stores. Since many of these stores are located in central Tokyo and many of them have Wi-Fi and power outlets and no time limit, they have been popular as rest areas and shared offices for office workers. ……

The rent is relatively high, partly due to the fact that the stores are located in tenants with a large retail space. In February, they began accepting applications for franchisees, but they do not have the weapons to convince franchisees that Veloce is profitable. The existing stores are also deteriorating. The existing stores are seriously aging, and it is unlikely that Veloce will regain its momentum soon after losing its low prices,” said Mitsuhiko Suda, a producer in the restaurant industry.

Even as Japan’s major players are struggling, Starbucks, the absolute champion with approximately 2,000 stores nationwide, is doing well.

Starbucks has established itself as a fashionable icon, and any measures it takes are now considered cool. Starbucks has done a great job of attracting young women by changing the image of coffee shops, which used to be dominated by old men, into cafes. The “Frappuccino” was not available in Japanese coffee shops until then. The company has employees who specialize in store construction, and many of its stores are unique. There was no criticism when they introduced the much-maligned paper straws, advocating sustainability, or when they discontinued them. In addition to being exceptionally good at adding value to their products, such as by developing goods with a local flavor, they are also less affected by price hikes because they do not emphasize cheap prices. I don’t think Starbucks’ momentum in Japan will ever wane,” said economic journalist Takai Naoyuki.

Will there ever be a chain that can break the stronghold of the “Starbucks empire”?

Doutor-Niles Holdings, Inc., which currently holds the second place in the industry behind Starbucks, will challenge the champion with a combined force of ” Doutor Coffee Shop ” with 1,075 outlets, ” Hoshino Coffee Shop ” with 269 outlets, and ” Excelsior Cafe” with 125 outlets. Doutor” is a pioneer of the “self-serve café” (customers bring their own items to their seats), which has now become the mainstream. The founder, Hiromichi Toba, came up with the idea when he saw a businessman drinking coffee milk with a piece of bread in his hand on a station platform. As a result, “Doutor,” which opened its first store in ’80, became a popular place for businessmen to relax. Until the 2000s, it surpassed Starbucks as the No. 1 shop in the industry.

Today, Doutor has become a kind of city infrastructure, attracting customers who want to kill time or cool off for a while rather than stay long. The reason we have been able to maintain the number of stores at nearly 1,100 amidst the increasing number of rivals is because we have succeeded in creating stores that pursue “convenience. The company has a directly managed coffee plantation in Hawaii, so the taste is stable, and the price of blended coffee is as low as 330 yen for an M-size cup. In many cases, small stores are set up in locations close to train stations.

However, for Doutor, which prides itself on cheap prices and convenience, the recent sharp rise in prices and consumer sentiment that emphasizes “brand value” are creating headwinds.

We can no longer expect as many businessmen to visit our stores during the daytime as we used to. If we can’t get enough customers, we have no choice but to raise the price per customer, so Doutor is enhancing its food menu with such items as the Milano Sando (490 yen) and the limited-time-only Brown Sugar Mille Crepe (520 yen).

However, increasing the price per customer is a double-edged sword for Doutor, which emphasizes low prices. Doutor-NILES HD’s chosen strategy is to separate its multiple brands.

Excelsior” is a store located slightly further from the station than “Doutor” where customers can enjoy Italian-style coffee such as espresso (R380), which is a little more expensive. Doutor’ focuses on convenience, while ‘Hoshino Coffee Shop’ emphasizes comfort, and has a sofa seating area and other interior design features. Hoshino Coffee Shop’s main selling point is its oven-baked soufflé pancakes (580 yen for a single),” said Takai.

Meanwhile, Tully’s Coffee (818 stores), the second largest foreign-affiliated chain, has successfully diversified its sales channels in partnership with a Japanese capital giant.

The U.S. headquarters has already gone bankrupt, and Tully’s in Japan has been sold to Ito En. With the help of its parent company, which is strong in beverage distribution, the business of selling bottled coffee in supermarkets, convenience stores, and vending machines has become a mainstay. On the flip side, the company is able to carefully select locations for opening new stores without unreasonable development. The risk of opening unprofitable stores is reduced to a minimum, and profits are made through distribution. This strategy is quite unique among the major players,” said Suda.

St. Mark’s Cafe (285 outlets), which originated as a bakery restaurant in Okayama Prefecture, differentiates itself from other stores by offering an extensive bread menu, including its signature “Choco Kuro” (230 yen).

Komeda’s Secret Weapon

As we have seen, what is required to overthrow the “Starbucks empire” is a comfortable atmosphere, a wide variety of menu items other than drinks, and a large number of sales channels. Doutor, which is at a disadvantage in this respect, is losing momentum, while Komeda Coffee Shop, which has 1,018 stores nationwide, is making a strong push.

The interior is as relaxing as one’s living room, with plenty of sofa seating. The food menu, including “Shiro Noir” (730-790 yen) and “Katsu Pan” (910-1000 yen), is also extensive and popular, with volumes so large that they are said to be “reverse photo fraud,” despite their high unit prices.
While most “Starbucks” stores are directly operated, the majority of “Komeda Coffee” stores are franchisees. The reason for the expansion is not based on sales, but rather on a simple royalty rate: number of seats x 1,500 yen (per month). The more management effort the owner puts in, the more money he makes, and since the head office distributes bread, coffee, and other foodstuffs, he has a way to earn money that goes beyond just running the stores. It is truly a win-win situation,” said food analyst Junnosuke Nagahama.

As a next step, Komeda Coffee opened ” Komeda Nagomi Cafe Okagean ” in the center of Shinjuku, Tokyo, in February this year.

The “Japanese-style cafe” market has a lot of room for growth, as matcha green tea has been attracting attention from overseas and Ito En has opened “Saryo Ito En”. One of the main attractions of Okagean is the “dango” (dumplings), which you can bake yourself using an electric heater on the table (580-710 yen for three dumplings). When combined with matcha (powdered green tea) (530-680 yen), the price exceeds 1,000 yen, but this is understandable considering the value of the experience. In addition to the elderly, inbound demand is also expected, and this may be the key to further growth for Komeda.

The most powerful assassin with the treasured sword of overthrowing the empire has acquired a new weapon. The day when the “Komeda Kingdom” is born in the cafe chain industry may not be far off.

From the July 11, 2025 issue of FRIDAY