Tea and coffee used to have different consumer demographics. Now, the modern beverage business has merge the two categories.

Take Yihetang for example – the tea beverage business now sells coffee in more than 5,000 stores. Some of the stores make an extra RMB 150,000 in topline off coffee alone.

This year, both the beverage gurus and local chains are all tempted to add coffee to their menu.

Can tea beverage stores actually make money off coffee? Is it wise to launch a coffee line?

100% growth in number of cups;

150k+ revenue off coffee in single stores

Tea beverage chain businesses are milking their latest cash cow: coffee.

According to Chen Ya, Product Development Manager at Yihetang: “We have offered coffee since the brand’s launch. Coffee performs best at our Guangdong locations, with many outlets selling over 40 cups daily. If we take Americanos — our lowest-priced coffee SKU priced at ¥10 per cup — as a baseline calculation, each store can earn nearly ¥150,000 in extra annual coffee revenue, in addition to income from tea drinks.”

Identifying coffee as a big time opportunity, Yihetang invested around RMB 20 million last September to equip almost half of their stores with brand new coffee machines by Dr. Coffee. Since then, their coffee transaction counts and sales income both doubled.

Yihetang is not the earliest adopter of coffee among tea beverage brands. Back in 2019, CoCo already had more than 1,500 stores selling coffee.

Last year, Nayuki developed their coffee line available in 17 Pro Stores. This year, LELECHA launched their coffee brand, DOUDOULE.

According to a commercial real estate professional in Shenzhen, some HEYTEA stores in the city sell up to 1,000 cups of coffee in a day.

In 2020, Zhang Hongfu, former General Manager of Mixue Ice Cream & Tea, stepped down from his position to launch coffee brand LuckyCup, which now operates over 100 physical stores nationwide.

Tea beverage chains are collectively launching coffee lines, driven by robust market demand and bright long-term growth prospects.

In reality, numerous small-and medium-sized beverage brands spotted this business opportunity long ago. Milk tea shop operators often consult me about SCA certification and coffee machine selection.

However, without well-planned operational strategies, most brands run unviable coffee menus. Coffee sales remain sluggish, leaving costly machines as idle store decorations.

Why do milk tea stores fail on coffee?

In terms of product development, coffee is an easier category than tea. So, what are the barriers for small businesses?

1. Equipment: pricey international brands, long payback

For a beverage store to start selling coffee, the first barrier is equipment.

Equipment is the primary threshold for beverage shops rolling out coffee services.

High-efficiency imported fully automatic coffee machines with stable performance can cost up to ¥100,000. Franchisors struggle to persuade franchisees to afford the cost, while small independent brands face heavy cash flow pressure; in extreme cases, the payback cycle even exceeds the store’s service life.

Some store owners compromise on low-cost machines priced at several thousand yuan, yet this brings severe operational troubles. These devices are designed for household use, only capable of making 3–10 cups per day. If required to brew 20 cups continuously during peak hours, output stability drops sharply and many machines break down.

Yihetang has upgraded its coffee equipment through three generations. The brand commented: “We first adopted drip machines, then switched to fully automatic equipment, yet the brewing speed failed to meet demand. We began sourcing third-generation models in September 2019. After nearly one year of testing and comparison across over a dozen brands, we finally settled on our current equipment.”

The brand now adopts fully automatic coffee machines from Dr. Coffee, each priced under ¥10,000. This model has been deployed in more than 1,800 stores, slashing costs drastically versus imported alternatives.

Dr. Coffee machine on Yihatang counter

2. Product R&D Pitfall: Do Not Simply Add Coffee to Existing Tea Menus

Though coffee and tea fall under the beverage category, their product development logics differ fundamentally.

Many small brands merely substitute espresso for tea base in their classic formulas, resulting in unpalatable flavor profiles. Coffee carries distinct inherent notes that must be fully considered when crafting new coffee-blended beverages.

Tea beverage R&D teams excel at balancing classic base flavors with innovative tasting experiences, and this design philosophy equally holds true for fusion coffee creations.

What is more, extraction is key for coffee. Under-extraction and over-extraction can both annoy consumers' taste buds, which means staff shall be properly trained to have fundamental barista skills as well as the experience to tell the difference.

3.Selling: when maintenance gets high, promotor willingness goes low

Equipment cleaning may appear trivial, yet it exerts a major influence on coffee sales. Machines requiring frequent, labor-intensive maintenance discourage employees from actively recommending coffee products, inevitably dragging down overall sales.

Yihetang solved this pain point by upgrading its coffee equipment. Chen Ya stated: “We now use Dr. Coffee machines, which only require a single cleaning cycle after brewing 40 cups. Our previous model needed cleaning after fewer than 10 servings, creating constant operational hassle.”

4. Operational Risks: Uneven After-Sales Service Across Equipment Suppliers

After-sales operational hurdles often deter brand operators. When imported coffee machines break down, replacement parts must be shipped from abroad, with lead times stretching several weeks — a severe disruption to daily store operations.

Is Adding Coffee a Viable Business Move for Milk Tea Shops?

With fusion coffee and yuanyang milk tea gaining mainstream popularity, the dividing line between coffee and tea beverages has blurred. Adding coffee menus has become an upward trend for tea shops, and the overlapping customer base of tea and coffee lovers continues to grow.

Yuenyeung milk tea

For beverage stores, one more product line means one more sales opportunity as well as one more consumer group.

For a tea beverage store to sell coffee, the key lies in identifying a product strategy that fits, considering equipment, ingredients and marketing.

1. Reliability even in busiest hours, and short learning curve

Unlike cafés, tea beverage stores prioritize reliability, efficiency and convenience in their coffee line.

Stable, consistent productivity even during busiest hours is the top demand.

Justin Coffee under Suntory, Japan is a dedicated coffee solution provider for retailers, hospitals and corporate offices. Including 2,200 Lawson convenience stores, Suntory owns 3,000+ coffee counters in China.

According to Yang Chao, Coffee BU, Suntory, they also work with 3,000 sets of Dr. Coffee's machines in China. In some hospitals and schools, one machine makes 200+ cups per day, and the fault rate is less than 2% despite such intensity.

Dr. Coffee's machine on Lawson counter

“Dr. Coffee has recently rolled out its new F4 model, capable of brewing up to 600 cups per hour and drastically easing peak-hour operations,” Yang Chao commented. He also highlighted the brand’s reliable after-sales support: “Dr. Coffee dispatches field engineers to store locations within 24 hours of a service ticket submission and resolves all malfunctions within 48 hours. The brand boasts robust R&D capabilities, with all products deeply developed around real consumer demands and commercial service scenarios.”

Dr. Coffee's latest F4 model

Major global brands including Lawson, TOUS les JOURS, Illy and Tesla have equipped their coffee stations with Dr. Coffee equipment. Annually, Dr. Coffee ships over 50,000 fully automatic coffee machines to global partners, covering well-established coffee markets across Europe and beyond.

“High output with minimal maintenance” has become the core standard for beverage retailers when selecting commercial coffee machinery.

Small-scale outlets cannot afford to hire fully certified professional baristas. Staff will only actively market coffee drinks if the machine is intuitive to operate and requires little upkeep. For chain brands, this functionality is also a fundamental requirement to guarantee uniform product quality and service across all locations.

Chen Ya explained that all Dr. Coffee machines are equipped with IoT connectivity. Brand headquarters can remotely adjust brewing parameters with just one click, enabling fully standardized beverage output — a standout capability rarely found on most imported coffee equipment.

2. Not necessarily Arabica

Beverage retailers do not need to rely purely on 100% Arabica beans for great flavor, nor are they required to serve single-origin espressos the way boutique specialty cafés do.

Whether blends include Arabica beans or carry sweet profiles, all product decisions should align with target customer groups. Winning menu items are those tailored to local consumer preferences and price tolerance.

It's all about your demographics

3. Marketing that takes coffee consumers to you

Regarding store marketing, Chen Ya makes the following comment:

“Simply placing a quality coffee machine at the counter cannot guarantee robust coffee revenue. Without themed signage, promotional campaigns and standardized selling talking points, stores fail to build an immersive coffee-drinking atmosphere and cannot capture coffee-loving customers.”

Finding the right equipment and ingredients is only the first step. Next is to communicate "we sell coffee" to customers.

Ending note

As tea beverage becomes a blue ocean market, raising sales income and single store profitability becomes the absolute key for any brand.

The top brands are putting their money on coffee as growth booster.

Coffee has long been featured within milk tea store menus. As early as 2008, Zhang Hongfu, General Manager of Mixue, blended Nestlé instant espresso with sugar and milk powder to create the brand’s first 3-in-1 coffee, brewed using its juice blenders. He rolled out promotional posters advertising the new drink: “Iced Cappuccino – 1 RMB per cup”.

The product sold phenomenally well. On one winter day alone, the store moved over 1,000 servings of this 1-yuan drink.

Mixue later formally incorporated coffee into its permanent menu and launched an ice-cream-topped coffee priced at 1.5 RMB per cup, which became another massive commercial hit for the brand.

Ice-cream topped coffee by Mixuebingcheng

For modern tea beverage brands, whether it is professional specialty coffee or coffee flavored sweet drink that they sell, as long as a viable product solution is landed, there is a chance to ride on the growth trend.