Ediya Coffee hesitates on rebrand, struggles with market positioning

An undated photo shows an Ediya Coffee store in Seoul. Courtesy of Ediya Coffee. Franchisees reluctant to invest amid declining sales By Ko Dong-hwan Ediya Coffee CEO Moon Chang-ki / Courtesy of Ediya Coffee Attempts at rebranding by Ediya Coffee, once Korea's largest coffee shop chain, remain on hold as the company has yet to determine its positioning in the highly competitive coffee market, which is sharply divided between premium and budget brands.

The company now finds itself in a difficult position, offering products priced between premium and affordable tiers. Declining sales have made franchisees reluctant to invest in store rebranding. Meanwhile, management is grappling with how to refresh the brand's image without alienating its franchise partners.



On Jan. 2, 2024, CEO Moon Chang-ki announced that the company will "leap forward this year with change and innovation." In his New Year's announcement, he outlined plans to enhance managementl efficiency to strengthen competitiveness in the coffee industry, revamp the brand, prioritize investments to boost franchisees' sales and expand into international markets.

However, despite discussions about brand renewal, the company's 3,000 stores across the country and their menus have seen little change. Ediya had initially planned to announce measures to execute the rebranding by the end of 2024, but failed to meet the deadline, according to industry officials. They said the coffee shop chain seems to remain undecided on which direction to take.

Ediya’s lack of direction comes at a time when Korea’s coffee market is becoming increasingly polarized between premium foreign brands and budget-friendly local options — a divide the company seems to fall outside of. Last year, Singaporean premium coffee brand Bacha Coffee opened its first store in Seoul in August, attracting customers. Prices at Bacha start at 16,000 won ($10.

88) for a 350-milliliter cup, roughly three times the cost of Starbucks and 10 times that of Compose Coffee. Lotte Department Store, which acquired the sales rights for Bacha Coffee, opened a pop-up store inside Lotte World Mall in Seoul in December, drawing significant attention. Meanwhile, Shinsegae Department Store partnered with Intelligentsia Coffee, a premium coffee roasting and retail company from the United States.

Intelligentsia opened its second store in Seoul last year. These premium brands are attracting consumers by creating the perception that they offer a rare and luxurious coffee experience that cannot be found anywhere else in Korea. Customers walk into a Mega MGC Coffee store in Incheon, Apr.

6, 2024. Korea Times file In contrast to these premium brands, low-priced options like Mega MGC Coffee, Compose Coffee, and Paik’s Coffee are dominating the market. With a cup of Americano priced under 2,000 won, these top three brands have been sweeping the country’s coffee market and rapidly increasing their number of franchisees.

Mega MGC Coffee alone surpassed 3,300 stores last year, the highest number among coffee brands in Korea. Together, the top three brands have nearly 7,600 stores nationwide. Amid this polarized market trend, Ediya’s performance has slowed in recent years.

According to its latest 2023 disclosure, the company reported sales of 276 billion won, a year-on-year decline of 0.79 percent, and operating profits of 8.2 billion won, an 18 percent drop from the previous year.

This marked the first annual sales decline since Ediya began disclosing its financial data in 2012, and it was the first time its earnings fell below 10 billion won since 2013. Despite the CEO’s announcement of a rebranding initiative, the plan has faced resistance from the company’s franchisees. While management is committed to rebranding and investment, the strategy requires franchisees’ agreement, as they will need to invest in refurbishing their stores and making other changes.

However, Ediya stores have struggled in the face of Korea’s increasingly polarized coffee market. Last year, rising prices in food, restaurants, and retail products led more consumers to opt for cheaper coffee brands. This shift in consumer behavior further eroded Ediya’s customer base, leaving franchisees hesitant to make additional investments.

In October, Ediya hired actor Byeon Woo-seok as the brand’s official model, covering the entire fee. This marked the first time the company enlisted a triple-A celebrity to represent the brand. "We are still considering the direction and extent to which our rebranding should proceed.

The country’s sluggish consumption and the saturated coffee market are our biggest concerns," an Ediya official said. "If the rebranding does not bring any benefits to our franchisees, it will be a failed measure. Therefore, we are working on rebranding strategies that won't place financial pressure on them.

On our part, we've hired Byeon to boost sales and send the message that we are truly committed to change," the official added..