Louisa Coffee: the Taiwan coffee chain with more stores than Starbucks

This is an English adaptation of a FoodBud historical article originally published on September 6, 2022.

Taiwan had two publicly listed coffee chains on the Taiwan Stock Exchange at the time of the article: Louisa Coffee and Cama Cafe. In that market, Louisa Coffee had already surpassed Starbucks by store count, while Starbucks Taiwan was operated by Uni-President.

According to Louisa Coffee's prospectus, the top four coffee chains in Taiwan by store count in 2020 were Louisa Coffee, Starbucks, 85C and Cama. Louisa had more stores than Starbucks, but the formats were different: Starbucks mainly operated larger stores, while Louisa's average single-store revenue was lower.

Financial profile

Louisa Coffee disclosed first-half 2022 revenue of RMB 230 million, or NT$1.0 billion, up 10% year on year. The breakdown was:

• Company-operated store foodservice revenue: RMB 136 million
• Franchise-store product supply revenue: RMB 81.73 million, or NT$360 million
• Other business revenue: RMB 11.38 million, or NT$50.17 million
• Net profit: RMB 4.54 million, or NT$20.03 million

For 2021, total revenue was RMB 426 million, or NT$1.88 billion. Of this, company-operated store foodservice revenue was RMB 236 million, franchise product supply revenue was RMB 162 million, and other revenue was RMB 27.543 million.

Based on the latest figures cited in the article, Louisa Coffee's market value was around RMB 600 million. Against 2021 revenue, that implied a price-to-sales ratio of under 1.5x. Over the prior five years, the share of revenue from company-operated stores had been rising, and in 2020 company-operated-store revenue exceeded franchise-business revenue.

From small stores to larger community formats

Louisa Coffee was founded by Huang Ming-hsien in 2006. Ten years later, Louisa Coffee Co. was established. In 2019, the brand began testing international expansion by entering Thailand. In 2020, it began preparing for a Taiwan Stock Exchange listing.

According to Louisa Coffee's 2021 listing presentation, the chain had reached 524 stores in 2021.

In the early stage, Huang started with NT$390,000, about RMB 88,400. Before Louisa reached 60 stores, most sites were small, around 10 ping, and located in less prominent areas where rents were lower.

As store scale and brand strength improved, Louisa began a transformation in 2018. One key mechanism was an operating-trusteeship model to help smaller stores convert. Franchisees with stronger operating capability could receive headquarters support to convert into larger stores. For operators whose strength was mainly coffee preparation rather than adapting to standardized processes and new rules, headquarters could take over direct management of the store, with the franchisee receiving dividends instead of managing operations. Some could also move into support roles at headquarters' larger stores.

A broader foodservice model

Beyond changes to store management, Louisa also shifted its store model after its small-store expansion had built meaningful market share. The brand redesigned its visual identity and moved from coffee-only shops toward a coffee + space + food model.

Store size increased, locations moved closer to communities, and food sales became a larger part of the mix. The goal was to raise average ticket and broaden the customer base, including families with children, students and household consumers.

On the supply-chain side, Louisa built its own factories for coffee beans, bakery products and prepared foods. In 2020, utilization at its bread factory rose to 94%, while utilization for coffee beans and pastries also increased.

When discussing why the company wanted to list, founder Huang Ming-hsien said the main reason was internal control, noting that bank-authorized financing capacity could exceed the amount raised through listing.

After listing, Louisa's strategy remained centered on adjusting its Taiwan store model: moving from small stores to larger stores, and from coffee-only retail to broader lifestyle services. Once the foundation market had been organized, the company planned to expand cautiously internationally.

Note: IPO, market-value, valuation and forward-expansion figures are historical, based on the 2022 article.