Should Panera enter the China coffee market following Starbucks and Dunkin’?

Factors to consider when making the market entry decision

As of 2019, there are 4,123 Starbucks stores (successfully grew from 185 since 2005) and 16 Dunkin’ Donuts (projected to open 1,600 since 2015 but failed) in China. As the third largest coffee chain in the United States, Panera (combining its JAB brands, has 4,739 units in the U.S. as of Oct 2019, following Starbucks’s 14,875 and Dunkin’s 9570) should take serious consideration before its China adventure.

Photo by Pedro da Silva on Unsplash

I will segregate the topic into three parts: revenue opportunity, cost efficiency, and market environment.

Revenue Opportunity

First, let’s take a look at the revenue-related pros and cons of the potential market entry of Panera in China’s coffee market.

Pros:

1. Market size

The coffee market is a fast-growing segment in China, the most populous country with over 17 billion people in the world. According to the data of Statista, the total revenue in the coffee segment amounts to US$14b in 2021, tripled the figure in 2012 ($4.4b), and expected to reach $20b in 2025.