As competition in the domestic coffee market intensifies, the rebranding plan of Ediya Coffee, which has seen its position diminish, is facing setbacks. Ediya Coffee had planned to announce a brand restructuring by the end of last year but has now crossed into the new year. However, it has laid the groundwork for a rebound by conducting 'star marketing' for the first time since its founding at the end of last year and opening its first overseas store in Malaysia. This month, the company replaced its CEO, and its future actions are now under scrutiny.
According to the audit report released on the Financial Supervisory Service electronic disclosure system on the 17th, Ediya's sales in 2023 amounted to 275.6 billion won, a 0.79% decrease compared to the previous year. In 2023, operating profit was 8.2 billion won, down 18% from a year earlier. This marks the first time Ediya has reported a declining sales trend since it began releasing its earnings in 2012. Looking at the 2019 results, sales totaled 220.8 billion won while operating profit was 19.4 billion won; sales increased over five years while operating profit was halved.
The decline in Ediya's operating profit stems from a reduction in franchise locations, leading the headquarters to implement coexistence policies for franchise owners and take on promotional expenses, creating a vicious cycle. An industry insider noted, "It’s not a premium brand like Starbucks, nor is it cheap enough to compete with low-cost coffee shops, leaving it in an 'ambiguous position' that has diminished its competitiveness." Currently, the price of Ediya's Americano is 3,200 won. Starbucks charges 4,500 won, while Mega Coffee offers it for 1,500 won.
Ediya surpassed the 4,000-store mark for the first time among domestic coffee franchises in December of last year. However, the actual number of operating stores appears to be less due to closures. According to the Fair Trade Commission's franchise transaction information, the number of Ediya Coffee franchises was 2,885 in 2020, 3,018 in 2021, and 3,019 in 2022. The number of terminated franchise contracts was 88 in 2021 and 196 in 2022, with closure rates of 2.9% in 2021 and 6.5% in 2022. For Mega Coffee, the closure rate in 2022 was only 0.5%.
In response, Ediya has initiated measures for systemic improvement. Moon Chang-ki, the CEO of Ediya, stated in his New Year's message last year, "We will conduct a comprehensive brand renewal while reflecting on the fundamental values we provide to consumers," adding, "We aim to secure brand competitiveness that can lead trends beyond merely changing interiors and designs."
While it was suggested that a specific brand renewal direction would be presented by the end of last year, the company ultimately crossed into the new year. An Ediya representative said, "We are prioritizing the revenue of franchise owners while considering the rebranding direction," and noted that "it is not easy for franchise owners to fully align with the headquarters' policies, so we are seeking effective approaches." The representative added, "Due to the global economic slowdown and declining consumer sentiment, the burden of investment on franchise owners is increasing," and stated, "We plan to maintain a strategic stance that minimizes the financial burdens of franchise owners while enhancing the long-term value of the brand."
Since last year, Ediya has been trying various initiatives for a rebound. In October, the company selected actor Byun Woo-seok as a model and decided that the headquarters would bear all advertising expenses. In December, it opened its first overseas store in Elmina, a satellite city of Kuala Lumpur, Malaysia. The goal is to establish 200 franchises in Malaysia by 2029. The day before, the company signed a master franchise (MF) agreement with Grandview Property, a subsidiary of the KorAo Group in Vientiane, Laos, to expand into Laos, Cambodia, and Myanmar.
This month, Ediya appointed Jo Kyu-dong, head of distribution and SCM, as the new CEO. Jo will share the CEO role with Moon. In April last year, Kim Sang-soo, head of Lotte Mart's new business division, was appointed as CEO, but he was reassigned to an advisory role after eight months, leading to the selection of an internal candidate once again.
Concerns have also been raised. Consumers prioritize price over star marketing, and the popularity of Thai coffee franchises in the Southeast Asian market may make it difficult for domestic coffee companies to carve out a niche. There are criticisms that frequent leadership changes could adversely affect the organization’s operations.
An Ediya representative stated, "We are pursuing gradual changes focused on strengthening a young and fresh image using Byun Woo-seok as a model, while also emphasizing distinctive collaborations, launching signature menus, and diversifying our beverage and bakery product lines," and added, "Based on our philosophy of 'providing high-quality coffee at reasonable prices,' we will further strengthen our market presence both domestically and internationally, and strive to become a beloved brand among customers."