Gourmet Master Co (美食-KY), operator of the 85°C cafe chain (85度C) in Taiwan and overseas, is undertaking its largest restructuring in five years, announcing plans to close more than 40 unprofitable stores and overhaul its supply chain in China.
The move, approved by the firm’s board on Thursday, underscores the growing challenges it faces in the world’s second-largest consumer market, where competition in the food and beverage sector has intensified amid weak consumer spending.
The company said the optimization aims to improve operating efficiency, concentrate resources in high-performing regions, and strengthen long-term profitability and shareholder returns.
Photo courtesy of 85°C
As of the end of June, 85°C operated 441 outlets in China, down 21 from the start of the year. The number of closures planned for this year is to exceed 40 — more than 10 percent of the total — with a faster pace expected in the second half.
The planned shutdowns would mainly target underperforming regions.
Jiangsu Province hosts the largest number of 85°C stores at 134, followed by Shanghai with 119 and Fujian with 109.
The brand’s presence in Anhui, Beijing, Tianjin, Shandong, Sichuan and Chongqing remains limited to single digits, making northern and southwestern China the most likely areas for withdrawal.
Beyond store consolidation, Gourmet Master said it would also restructure its supply chain and production footprint.
Its China operations currently follow a “one major, three minor” model, with a central factory in Kunshan, Jiangsu Province, supported by satellite plants in Fujian, Guangdong and Hangzhou, Zhejiang Province.
Warehouse and logistics capacity would be adjusted in tandem with the store optimization to enhance cost controls and operational efficiency, it said in a stock market filing.
The China business has become a drag on Gourmet Master’s overall performance. The firm posted a loss of about NT$200 million (US$6.55 million) from its China operations in the first half of this year, following a nearly NT$400 million loss last year. The segment last turned a profit in 2021, but slipped into losses in the second half of 2023 as market conditions deteriorated.
Without structural changes, annual losses could surpass NT$400 million this year, the company said.
Gourmet Master operates more than 1,000 outlets globally, with Taiwan and the US serving as its key profit centers.
The group has expanded its footprint in North America and Southeast Asia to diversify revenue sources.
The firm said it would disclose further details about its China restructuring — including the progress of store closures, supply chain adjustments and its strategic plans — in its third-quarter earnings announcement early next month, followed by an investor briefing later in the month.
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