At a Glance (China Coffee Network): The bankruptcy liquidation of premium coffee brand Seesaw has sounded an alarm for the industry, yet it does not mean premium coffee is doomed to stay “small and beautiful.” The real lesson lies in business-model self-consistency, not scale.
On June 7, media reported that the operating entity of the well-known chain coffee brand Seesaw—Shanghai Xishe Coffee Co., Ltd.—had been petitioned for bankruptcy liquidation. Once the “white moonlight” of specialty coffee for many middle-class consumers, it now has only about 30 stores nationwide, having closed more than 100 compared with its peak of 135.
On the surface, Seesaw’s fall from capital darling to bankruptcy liquidation came from the impact of the 9.9-yuan price war in the freshly made coffee market. Yet the price war was at most the last straw; the core factor lies in the brand’s internal wavering between premium quality and scale.
Wanting both premium positioning and scale expansion ultimately left it falling between two stools.
Seesaw’s bankruptcy liquidation undoubtedly sounds a warning bell for the premium coffee industry, yet it is worth asking: in the 9.9-yuan era, is premium coffee doomed to stay small and beautiful? The answer may not be so.
Seesaw’s operational crisis did not appear only now. As early as early 2024 there were reports of widespread store closures nationwide; in early 2025 it was exposed that multiple suppliers were chasing unpaid debts, and later former employees took to social media to demand wages. On platforms such as Tianyancha, the operating entity Shanghai Xishe Coffee alone has 32 commercial cooperation disputes, and founder Wu Xiaomei has been subjected to consumption-restriction orders multiple times. As a pioneer of China’s premium coffee, Seesaw was founded in 2012. At that time the domestic premium coffee market was mainly monopolized by foreign chain brands represented by Starbucks, while local premium coffee mostly existed as independent stores without achieving scale.
Seesaw seized the opportunity, entering the premium coffee track through a “one-store-one-design” decoration style and a complete supply-chain system, pursuing a chain-development route. In 2017 it became one of the first local chain coffee brands to secure financing, and in 2021 and 2022 received investment from several institutions including Heytea, reaching a brand valuation of 1 billion yuan. By 2023 Seesaw had opened more than 100 stores nationwide, covering almost all core business districts of high-tier cities; consumers’ check-ins were everywhere on social media, and founder Wu Xiaomei even boldly declared plans to expand to 500–1,000 stores within the next five years.
Little did they expect that after the peak came a rapid decline.
Many believe the 9.9-yuan price war brought down premium coffee represented by Seesaw, yet this does not seem to explain why Manner, M Stand and other similar brands are doing well.
On one hand, Seesaw’s fall from grace was influenced by the price war. Starting in 2023, chain brands represented by Luckin and Cotti launched a price war, using 9.9-yuan discounts to grab consumers while expanding frantically, a trend that continued until the 2025 delivery-platform war extended it further. Beyond reshaping the domestic coffee market structure, the greater impact is that consumers now have a baseline for the price of freshly made coffee. When 9.9 yuan becomes the industry mainstream, any coffee above that price gets labeled “not worth it” by the mass consumer—though the price war was at most an external factor affecting Seesaw.
On the other hand, the heavy-asset pressure and slow payback cycle brought by the large-store model are actually the more critical internal reason. From its founding, Seesaw followed a large-store route in the premium coffee track. Early stores averaged 100–200 square meters, with some cities like Beijing and Nanjing even having stores over 200 square meters; to highlight its high-end attributes, Seesaw gave each store a bespoke design, similar to Starbucks’ “one-store-one-design.” From the consumer’s perspective, this large-store model is quite attractive. But for the brand, high costs in rent and decoration undoubtedly create significant cash-flow pressure and the shortcoming of low sales-per-square-meter efficiency. More critically, after securing financing in 2017, under the urgent pressure of a valuation-bet agreement, its niche and premium market positioning had no choice but to yield to the goal of mass development, and Seesaw began aggressive expansion. A unique large-store premium model cannot achieve scale expansion relying only on external funding; it must survive the payback cycle and develop stable self-generating cash ability.
With a premium identity in one hand and scale in the other, under a naturally contradictory development backdrop Seesaw wavered strategically, and instead lost its supply-chain advantage. With insufficient product R&D on one side and attempts to attract bargain-hunting customers through price cuts on the other, it ultimately fell into the awkward situation of continuously losing old customers while failing to attract new ones.
Looking across the industry, the two ends—extreme cost-performance and high-end premium—in the freshly made coffee market are growing stronger, while the middle is completely hollowed out. This is not the result of the price war, but the inevitable outcome of mature consumer mindsets. In the late 1990s, Starbucks entered the Chinese market with a premium coffee positioning. At that time Beijing’s average housing price was about 2,000 yuan per square meter, while a Starbucks cappuccino started at 19 yuan, and domestic consumers’ awareness of freshly made coffee was almost zero.
By creating a “third place,” Starbucks defined the café as a social spot outside the office, combined with product pricing of thirty to forty yuan and stylish store decoration, making drinking Starbucks gradually a status symbol for urban white-collar elites. Seizing this opportunity, Starbucks cultivated China’s first batch of freshly made coffee consumers and established the mental anchor that “freshly brewed coffee = high-end lifestyle.” From Starbucks’ entry into China, for the next decade and more the first choice for drinking freshly made coffee in China was almost always Starbucks, while those on a limited budget chose instant brands like Nestlé. Although local premium coffee brands were gradually founded during this period, insufficient scale confined them to relatively small circles.
Until 2017, when local chain brand Luckin abruptly emerged as a “catfish” in the freshly made coffee market. With comparable quality and higher efficiency, Luckin and its peers completed consumer education of China’s freshly made coffee market in just a few years. Data shows that in 2018 the domestic coffee market was about 120 billion yuan, with per-capita consumption of 6 cups and instant coffee still the mainstream. By 2025 that scale had grown to 270 billion yuan, with national per-capita coffee consumption reaching 28.57 cups. As freshly made coffee gradually became affordable, efficient and ubiquitous, the direct result was a continuously expanding target consumer base and increasingly normalized coffee consumption; freshly made coffee no longer represents a consumption class as Starbucks once did.
Thus, as the public gradually dispelled the halo above freshly made coffee, the middle brands were hollowed out.
On one side are efficiency-first cost-performance brands like Luckin; on the other are brands like Starbucks that have long captured consumer mindshare and exert a siphon effect on premium coffee brands. Little market share remains for most premium coffee players. A typical case is that Starbucks was also briefly affected by the 9.9-yuan price war in 2025, with both sales and profits clearly declining. This precisely proves Starbucks’ moat—when the price war recedes and consumers turn rational, when truly choosing to buy a cup of premium coffee, Starbucks, with its significant brand influence and broader store coverage, remains the first choice.
The resulting status quo is a clear polarization of the entire freshly made coffee market.
At the mass level, represented by Luckin and Cotti with store counts already past ten thousand and price bands around 15 yuan, the main competition is efficiency; at the premium level, represented by Starbucks, Manner and M Stand, the average spend stays around 30 yuan, leaning toward offline space, quality and community. Manner, relying on a lighter small-store model, now has more than 2,400 stores nationwide; M Stand focuses on high-end malls with over 640 stores.
The trend of market stratification is almost irreversible, and brands in the middle track—especially many medium-sized chain premium coffee brands—generally face greater survival pressure. Data from Zhaimen Canyan shows that in 2024 alone nearly 40,000 coffee stores closed in China’s market, a considerable portion being medium-sized chain brands and independent cafés.
Seesaw’s bankruptcy does not mean premium coffee is doomed to stay small and beautiful. First, although affordable products form the consumer base of China’s freshly made coffee market, premium coffee still has its place. Currently in the domestic premium coffee market, among foreign brands Starbucks, through years of deep cultivation, continues to occupy the high-end mindshare—its fiscal 2026 first-quarter revenue in China reached $823.4 million, up 11% year on year; the success of chain brands like Manner and M Stand directly validates the feasibility of sustained local premium coffee development; not long ago, Luckin’s major shareholder acquired the niche brand Blue Bottle Coffee, increasing its layout in the high-end premium market, which indirectly proves the prospects of the premium coffee market. Second, broadly speaking, the domestic freshly made coffee market remains on a fast-expansion track. Frost & Sullivan industry reports project that China’s freshly made coffee market will exceed 320 billion yuan in 2026. Compared with developed markets in Europe, the U.S. and Japan, the incremental space is huge; even though per-capita annual coffee consumption approached 30 cups in 2025, it is still less than one-tenth of overseas markets where consumption often starts in the hundreds of cups. Third, as the consumption-stratification trend in China’s coffee market becomes more pronounced, the relationship between mass necessity and premium is by no means a “life-or-death” substitution.
Now a growing number of consumers are forming a pattern of drinking functional, affordable coffee on workdays and opting for more quality and emotionally valuable premium coffee on weekends and holidays for check-ins. According to the “2026 China Urban Coffee Development Report,” coffee-bean transaction-volume growth reached 140.38%, far exceeding instant coffee’s 69.05%, indicating that consumers’ awareness and demand for premium beans are rising rapidly—a consumption pattern that precisely leaves incremental space for premium coffee. So, taking Manner and Starbucks as examples, how can premium coffee brands break through the “small and beautiful” ceiling? In summary, there are two paths: Path One, “efficient premium”—using extreme cost control and standardization to make premium coffee “fast”; Path Two, “experiential premium”—using spatial differentiation and localization to make premium coffee “deep.”
The former positions itself as efficient premium, with more than 2,000 directly operated stores nationwide, its core lying in precise control of an all-around strategy. In terms of cost strategy, Manner mainly chooses office-building lobbies and dense mall corners, with 90% of stores in high-tier-city office clusters and areas generally maintained at 5–10 square meters, keeping the rent-cost share extremely low. An Orient Securities research report shows Manner’s rent cost is only 10%–20% of traditional coffee shops, with per-store daily revenue of 7,000–8,000 yuan and a gross margin as high as 62.5%. In product strategy, Manner streamlined its SKU to 47 items, mainly five classic series and two limited editions. The advantage lies not only in a high degree of output standardization but also in the brand’s ability to raise the price of drinks made with SOE single-origin beans to form a high premium and expand profit margins. Adding the catalyst of efficiency to what should have been slow premium coffee, Manner has carved out its own premium route for a fast-coffee consumption scene.
The latter positions itself as experiential premium—Starbucks’ “thousand stores, thousand faces” and the return of the third place. In 2025 Starbucks launched its “Back to Starbucks” strategy, reclaiming its third-place positioning; in 2026 it formed a strategic partnership with Boyu Investment and released a new development strategy centered on “thousand stores, thousand faces,” accelerating its localization transformation. Specifically, Starbucks’ strategy is to build differentiated products and scenario experiences based on the positioning of different community customer groups, constructing a distinctive community culture and related activities. In store innovation, Starbucks covers diverse forms such as 10-square-meter mini stores, office-building convenience points and reserve-themed stores, all with the core purpose of better fitting mainstream lifestyles. In product innovation, the high-protein latte meets the needs of fitness groups and nutrition-conscious consumers, the oat-velvet latte covers the lactose-intolerant, and there are also seasonal limited editions like the camellia latte—Starbucks is giving full play to its localization capability.
Admittedly, the 9.9-yuan price war has caused a reshuffling effect on the industry. Yet in the transformation of the freshly made coffee market, what is truly abandoned is not “premium” but premium coffee brands with unbalanced costs, vague positioning and reliance on external funding. In other words, the future of premium coffee never competes on scale “size” alone, but on the self-consistency of the business model—the precise matching of “cost structure” and “value proposition.” The future freshly made coffee track may split into two types: one pursuing extreme efficiency and cost-performance, the other being differentiated premium brands; brands in the fuzzy middle will likely be gradually eliminated by the market. For premium coffee brands, “small and beautiful” is not destiny—”self-inconsistent” is. In a coffee market that is still on an expansion track, if premium brands can adhere to a business model that suits them better, reaching a thousand-store scale is by no means a fantasy.
Reprint Notice & Disclaimer: This article is reprinted from the WeChat public account “Business Review: Retail Scene” (author: Jia Hehui). All rights belong to the original publisher.
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