Shanghai-headquartered on-demand coffee startup Coffee Box will form a joint venture with petrochemical giant Sinopec to run a separate coffee venture, 36Kr reported on Thursday, citing unidentified sources.
Sinopec will be the largest shareholder for the JV, called Yijie Coffee, which plans to sell coffee inside existing Yijie convenience stores, located inside Sinopec’s gas stations, and to set up coffee shops inside shopping malls or near offices.
In return, Coffee Box will shut down almost all of its stores, leaving only Coffee Box Lab, a flagship coffee shop opened in January 2019 in its headquarters in Shanghai. Following the shutdown, the startup will sell coffee mainly online, including through its own WeChat mini program, and an online store for instant coffee, which is to be launched on Tmall in the third quarter of this year.
The company started out in 2014 as a delivery service, collecting orders for Starbucks or Costa Coffee from already popular social media platforms such as WeChat or food delivery app Meituan, and in 2016 launched its own brand, Coffee Box. Prior to the joint venture, Coffee Box began providing coffee products, such as freshly ground coffee, for Yijie convenience stores since January 2019.
Coffee Box turned profitable in late 2017, but fell into losses when competing with Luckin Coffee by expanding its presence offline. The firm raised RMB 206 million (USD 30.6 million) in its Series B3 financing round and planned to use the proceeds to build 500 bricks-and-mortar coffee shops by the end of 2019, according to a KrASIA report.
36Kr is KrASIA’s parent company