Cotti Coffee Middle East Low-Cost Franchise Global Expansion Model

📌 Background

After establishing its brand domestically in China with ultra-low-priced 9.9 RMB coffee, Cotti Coffee replicated the exact same franchise model overseas, accelerating its Middle East deployment starting in 2025. The Middle East coffee market is experiencing rapid penetration growth with a high proportion of young consumers, creating a supply gap for high cost-performance coffee. By leveraging low franchise barriers and a local partnership approach to reduce market entry costs, Cotti attempts to replicate its domestic store opening speed overseas.

👤 Target Customers

Middle Eastern local franchisees, young Middle Eastern consumers, and expatriate workers. Franchisees are the primary paying parties, recovering their investment through store operations; consumers gain a high-frequency consumption experience through low-priced coffee products.

💰 Revenue Streams

1) Franchise fees: Charging franchise fees and deposits per store from Middle Eastern franchisees; 2) Supply price differences: Earning margins on core raw material and equipment supply based on store order volume; 3) Brand management: Collecting monthly brand management fees per store; 4) Store sales revenue sharing: Taking a proportional cut of overseas store sales revenue (optional item, with no verifiable source currently for the scale of revenue sharing).

🧮 Cost Structure

Establishment of overseas warehousing and logistics systems, Middle Eastern local raw material procurement and certification, franchisee training and supervision teams, localized menu research and development and marketing placement, and compliance and legal costs.

🛡️ Moat

Scarcity of the 9.9 price anchor overseas; high degree of standardization and rapid replication speed of the franchise model; ability to drive down raw material costs through bulk procurement.

🔑 Keys to Success

• Selection and empowerment of local Middle Eastern partners
• Supply chain logistics efficiency and cost control
• Single-store profitability balance under the low-price positioning

⚠️ Risks

• Capital chain pressure from rapid expansion before the single-store economic model is fully proven
• Intensified competition in the Middle Eastern market as more brands flood in
• Raised operational barriers due to local compliance and food safety standards

🏢 Cases

• Cotti Coffee storms the Middle Eastern market with its 9.9 coffee strategy, becoming a representative case study of Chinese coffee brands going global

📊 SWOT Analysis