To become an owner of a coffee shop is an ambitious goal for many Thai entrepreneurs, with coffee corners and stores flourishing for both international and local brands in recent years.
Many brands have thrown in the towel because of stiff competition and the recent outbreak, but Class Cafe, the eight-year-old coffee brand from Nakhon Ratchasima province remains.
"Our business is thriving, although many coffee brands have made inroads in the Thai market," said Marut Chumkhuntod, the founder and chief executive of Class Coffee Co.
He contrasted the company's survival to the startup concepts used by Luckin, a brand in China that fell on hard times.
Mr Marut said Class Cafe was established not only because of his own passion for coffee, but also his vast experience in working with a number of e-commerce and telecommunications firms such as Internet Thailand, GMM Grammy, Nokia Thailand and Hutchison CAT Wireless Multimedia especially in the fields of digital marketing and wireless services.
"Class Cafe is not only a place to drink coffee, but for young people to spend their life. As a small player, it is faster for us to change or apply a new strategy. That is why we are here today," he said.
Established in 2013 when the first branch opened in Nakhon Ratchasima province, the number of Class Cafe branches reached 28 in 2019.
"The spending power of Isaan people may not be as high as those in Bangkok, but their brand loyalty is very high," he said.
According to Mr Marut, Thailand's coffee market is a red ocean. The company has to compete with big coffee players, it thus has to explore new opportunities.
A Class Cafe branch at Central Festival EastVille.
The company recently launched pasteurised coffee in a bottle. It is raising about US$2-5 million to expand its digital platform, back office to support online sales, e-commerce, logistics and set up its production facility for pasteurised coffee in Nakhon Ratchasima.
According to Mr Marut, he will maintain 75% stake in the company, while shedding 25% to venture capitalists including companies under Saha Group, the country's leading consumer product manufacturing conglomerate, Shift Ventures managed by Gavin Opaswongkarn, son of Asia Plus Securities chief executive Kongkiat Opaswongkarn, and Suvabha Charoenying, former managing director of Thanachart Securities Plc.
Nevertheless, Class Cafe was affected by the pandemic like other businesses.
Shortly after the viral outbreak, Mr Marut immediately closed 13 Class Cafes in February, nine in Bangkok, two in Pathum Thani and one each in Nakhon Pathom and Rayong.
At the same time, he has opened a new 700-square-metre cafe in Khon Kaen where its brand is stronger than Bangkok.
With the popularity of latte art coffee waning during the coronavirus pandemic, Mr Marut has changed its business model from serving coffee cups at the store to selling coffee bottles via the digital channel.
"We are never afraid of technology. We have never stopped investing in technology and digital platform, using data analytics, developing applications and a cashless approach to customers," he said.
"With these strategic approaches, our sales have now fully recovered after an 80% drop during the lockdown."
The company has reopened 24 Class Cafe stores and is scheduled to reopen the remaining four stores over the next five months.
The company reported sales rose to 70 million baht last year from 40 million in 2018. The company aims to raise sales to 80-85 million baht this year.
It is scheduled to list on the Market for Alternative Investment in 2022, one year behind its earlier plan, aiming to raise proceeds to expand its coffee branches and develop logistics services and support its e-commerce business.
A coffee business expert who requested anonymity said there is still potential for fresh coffee because coffee consumption in Thailand is still low at 1.2 kilogrammes per person per year, compared with 4-5kg per person and 3kg in Europe and Japan, respectively.
Moreover, the Agriculture and Cooperatives Ministry is promoting coffee as the country's new economic crop, he said.
