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Manner Coffee: From a 2-Square-Meter Stall to a 2,000-Store Specialty Coffee Unicorn by Han Yulong, Relying on Semi-Automatic Machines to Bear the Pain of Scaling

Founded: Han Yulong and Lu Jianxia (Couple) · Shanghai Yinher Industrial Co., Ltd. (Manner Coffee)

JOURNEY

Key Fields

FIELD STAMPS
IndustryFood & Beverage
RegionChina
ScaleMid-size
ChannelHybrid

Origin

Han Yulong studied veterinary medicine in university but had a passion for coffee. In 2012, he opened a fixed-gear bicycle-themed coffee shop in his hometown of Nantong. Later, finding that customers treated the shop merely as a social space rather than coming for the coffee, he closed it down. Afterward, he ran a studio providing coffee training, selling equipment, and helping others open shops, but he was never able to match Starbucks in customer loyalty. In 2015, he moved to Shanghai, worked at an established high-end coffee shop for a full year to learn the craft, and in 2015 leased a 2-square-meter window stall at No. 205 Nanyang Road, Jing'an District, Shanghai. He named the shop 'Manner' inspired by the line 'Manners maketh man' from the movie Kingsman, focusing on making great coffee part of daily life, priced between 15 and 20 RMB, with a 5 RMB discount for bringing your own cup. He insisted on manual extraction using La Marzocco semi-automatic espresso machines instead of the fully automatic machines used by Starbucks and Luckin, carving out a path of affordable specialty coffee in Shanghai, the city with the highest density of coffee shops in the world.

Milestones

2015
2-Square-Meter Flagship Store PMF
The 2-square-meter stall at No. 205 Nanyang Road opened, flanked by a residential building entrance on the left and a clothing store on the right, with two wooden benches placed at the front. By the third month, the flagship store was selling several hundred cups a day—very few coffee shops sold over 300 cups a day in 2015. At the same time, Han Yulong built a roastery in Songjiang, Shanghai, visiting 3 to 4 times a week to roast beans personally, producing 300 kg of beans a week (using a quarter for himself and wholesaling the rest), and also imported coffee machines to sell to others. He defined Manner as a small coffee industry chain rather than just a coffee shop. The initial investment for the first store was about 300,000 RMB, breaking even in 3 months.
2015
Three Stores in Three Years Turning Point
For the first three years, Manner opened only 3 stores in Shanghai, adopting an extremely laissez-faire approach. Han Yulong did not accept delivery orders or expand aggressively, focusing instead on product research and development and barista training, while holding free coffee classes at stores to explain Mandheling, Kenya, and washed Sidamo. He traveled to dozens of coffee farms in Yunnan to chat with farmers, proposing a high standard to reduce green bean defect rates to below 3%. From the outside, the development pace seemed too slow, but this meticulous craftsmanship laid the foundation for the single-store model that later attracted capital. This stage lasted from 2015 to 2018.
2018
Entry of Capital Turning Point
In 2018, Kathy Xu, founder of Capital Today, secured the Angel round with 80 million RMB, valuing the company at 200 million RMB post-money. Kathy Xu had publicly stated that whether Starbucks tastes good or not doesn't matter; the key is being able to see it everywhere, and opening stores is the solution. She sent investment manager Jin Binbin to deeply intervene in daily operations, effectively acting as CEO, while founders Han Yulong and Lu Jianxia focused on product R&D. Following the capital injection, Manner began lightning-fast store expansion starting in 2019, opening 50 stores in Shanghai within a year, and subsequently expanding outward to Suzhou, Chengdu, Beijing, and Shenzhen.
2020
Lightning Expansion Growth
All stores in the Shanghai region became profitable by 2020, with net profit margins exceeding 10%, while Luckin was burning cash and suffering consecutive losses during the same period. Within the following six months, Manner secured four rounds of financing from Temasek, Coatue, Meituan DragonBall, and ByteDance. In 2021, its post-money valuation soared to $3 billion (approx. 19.4 billion RMB), while having fewer than 200 stores, resulting in a single-store valuation exceeding 100 million RMB. Manner grew from 3 to 133 stores in just three and a half years, with a compound annual growth rate exceeding 300%. Store formats also diversified into four types: window stores, main stores, roasteries, and food-serving stores. This stage lasted from 2020 to 2021.
2021
Exit of Kathy Xu Turning Point
In May 2021, Kathy Xu disappeared from the record of directors of Shanghai Yinher, and all equity held by Capital Today's fund was transferred, with H Capital and Coatue taking over. Given Kathy Xu's past style of accompanying giants like JD.com for the long haul, cashing out for an 80x return in three years instead of continuing the journey sparked market doubts over whether Manner's valuation was overextended. Han Yulong and his wife collectively held 37.58% of the shares, returning as the largest shareholders, and the company temporarily slowed down from its capital-driven runaway pace.
2023
Thousand-Store Dash Growth
In 2023, Manner added 513 new stores, bringing its total store count past 1,000, maintaining its fully directly-operated, non-franchise route. As of early 2024, it had about 1,600 stores, and added another 666 stores throughout 2024 to surpass 2,000. 73.9% of the stores were concentrated in Tier-1 cities, 18.6% in New Tier-1 cities, and its store density ratio of 35% had already exceeded Starbucks' 27% and Luckin's 25%. As of November 2025, its nationwide directly-operated stores reached 2,234 across 58 cities.
2024
Coffee Grounds Throwing Incident Failure
On June 17, conflicts erupted at two Manner stores in Shanghai on the same day: a female employee at the Weihai Road 716 store lost control of her emotions due to a dispute over rushing orders, hurled coffee grounds at a customer, and shouted 'Go ahead and file a complaint!', while a male employee at the Meihailu store engaged in a physical altercation with a female customer. Subsequently, footage of a third conflict at the-Haimeng-Yifang store on May 22 was unearthed. After public opinion exploded, Manner issued an apology on Weibo, promising to optimize operations and strengthen employee training and welfare. Media investigations revealed that stores with daily revenues under 5,000 RMB only scheduled a single person to handle all tasks—a morning shift of 6 hours and an evening shift of 8 hours, with one person performing an extreme workload of about 120 cups, working continuously without time to drink water or use the restroom, for a monthly salary of about 5,000 RMB. With semi-automatic espresso machines taking 2 to 3 minutes per cup, under high-intensity monitoring, baristas having emotional breakdowns was no accident. The involved female employee was dismissed.

Turning Points

  • In 2018, Capital Today entered with 80 million RMB, shifting the company from a laissez-faire 3 stores in 3 years to lightning expansion, as the will of capital overpowered the founder's relaxed rhythm.
  • In 2021, venture capital queen Kathy Xu and Capital Today fully exited, Han Yulong and his wife returned as major shareholders, and doubts regarding valuation bubbles intensified.
  • In 2024, coffee-throwing incidents erupted at two stores in a single day, exposing the disconnection between the idealistic semi-automatic model and high-speed expansion management.
  • In November 2025, rumors of a Hong Kong IPO resurfaced with a valuation of up to $3 billion, marking 14 years of entrepreneurship finally delivering a scalability report card to the capital markets.

Failures & Pitfalls

  • Being overly laissez-faire during the first three years by opening only 3 stores meant it almost missed being discovered by capital; while the slow expansion polished the single-store model, it also missed early market windows.
  • After stepping out of Shanghai, the 2-square-meter small store model suffered from localization friction; lower-tier markets had low awareness of specialty coffee, caught in a sandwich between Starbucks' third space and Luckin's 9.9 RMB pricing.
  • Insisting on semi-automatic espresso machines made it impossible to switch to fully automatic ones. Standardization and scale expansion are naturally contradictory, and what machines cannot do must be compensated for by humans, causing people to break under high pressure.
  • The 2024 coffee-throwing incident exposed the loss of control in the high-pressure, single-person-per-store labor efficiency model, damaging brand reputation, while the involved employees were fired rather than management engaging in self-reflection.
  • Extremely high barista turnover earned it the reputation of being the 'Whampoa Military Academy' of the coffee chain industry; people trained at great expense could not be retained, and non-compete agreements and training penalty fees were eventually canceled.
  • In 2021, Han Yulong publicly denied plans for a Hong Kong IPO, only for media outlets to report renewed IPO rumors four years later, with his response shifting to 'no comment'; this change in attitude reflects capital pressure.

关键成功要素

  • The ultimate 2-square-meter micro-store combined with a semi-automatic espresso machine required an initial investment of only 300,000 RMB and broke even in 3 months, proving the feasibility of an extremely high sales-per-square-meter model early on.
  • The 5 RMB discount for bringing your own cup served as an environmental policy that both guided in-store consumption and shaped brand mindset, while lowering per-customer transaction costs to achieve a budget-conscious brand narrative.
  • Vertical integration of the supply chain: building its own roastery in Songjiang to lower bean costs, requiring a green bean defect rate of 3% in Yunnan far exceeding Starbucks' 8% standard, and using 24.5 grams of coffee grounds per milk coffee along with Asahi Weipinhui milk.
  • Adhering strictly to a directly-operated, non-franchise model to guarantee quality consistency—even when sending a franchise questionnaire to employees in February 2025, it ultimately did not open up franchises, maintaining restraint amidst the wave of Luckin and Cotti's ten-thousand-store franchise boom.
  • Pricing between 15 and 25 RMB positioned the brand between Starbucks and independent shops, offering near-independent shop quality at half the price, accurately addressing the daily essential demands of Tier-1 city white-collar workers.

Lessons

  • Small-and-beautiful and scalability are naturally contradictory; the semi-automatic coffee machine is both Manner's quality moat and its expansion ceiling, and non-standardized gentleness will be ground down by the coldness of scale.
  • Management cannot lag behind after capital accelerates; going from 3 stores to 2,000 stores over six years from 2018 to 2024 without iterating the labor staffing model resulted in the coffee-throwing incidents as a concrete manifestation of systematic arrears.
  • The issue of labor efficiency limits cannot be shifted onto individual employee qualities; a single person running a store making 120 cups a day under constant monitoring means emotional breakdown is an organizational design problem, not a barista problem.
  • Before stepping out of its home base, the replicability of the model must be verified; a model selling 500 cups a day in a Jing'an District office building in Shanghai may not necessarily succeed in Tier-2 or Tier-3 city shopping malls, and regional differences are the first step of expansion that must be faced squarely.

Core Data

  • 2018 Post-Money Valuation：200 million RMB (Public data source, independent review not verified)
  • 2021 Valuation：$3 billion, approx. 19.4 billion RMB (Public data source, independent review not verified)
  • Tier-1 City Store Share：73.9% (Public data source, independent review not verified)
  • Peak Valuation Rumor：$3 billion (Media estimation, independent review not verified)
  • 2020 Net Profit Margin Shanghai：Over 10% (Public data source, independent review not verified)
  • Founding Team Shareholding：Han Yulong and wife 37.58% (Public data source, independent review not verified)
  • Single-Store Valuation Peak：Approx. 100 million RMB (Public data source, independent review not verified)
  • Single-Store Daily Average Cups：500 cups for regular stores, 700 cups for top stores (Public data source, independent review not verified)
  • Founding Year：2015 (Public data source)
  • Gross Profit Margin：62.5% (Public data source, independent review not verified)
  • Store City Coverage：58 cities, 24 provinces (Public data source, independent review not verified)
  • Store Count November 2025：Approx. 2,234 directly-operated stores (Public data source, independent review not verified)
  • First Store Area：2 square meters (Public data source, independent review not verified)

Competitors / Peers

Luckin Coffee has swept the market with nearly 28,000 stores and a 9.9 RMB price war; Starbucks China remains committed to its third space and plans to introduce Boyu Capital to expand to 20,000 stores; Cotti Coffee closely follows Luckin with an ultra-low-price strategy; M Stand secured a 700 million valuation with 10 stores pursuing specialized differentiation; and Seesaw and Tims are also running at a fast pace. Among the top six coffee brands by store scale, only Manner and Starbucks China insist on full direct operations, while all others have opened up to franchising.

Sources

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⚠️ This entry draws on self-reported accounts and public reporting, not independently verified, and is not investment, startup, or legal advice; revenue figures are case-specific and not representative of typical results.