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Ediya, Twosome strive to be second only to Starbucks.

Ediya Coffee and A Twosome Place are positioning themselves to become the only coffee shop chain next to Starbucks Coffee, which has dominated the Korean market.

The two local coffee franchises are pushing ahead with initial public offerings (IPO) to raise funds for their expansions in domestic and global markets.

According to industry officials, Ediya hired Mirae Asset Daewoo last week as an adviser for its KOSPI listing. The coffee shop chain reportedly aims to be listed on the benchmark bourse by the end of next year.

If so, Ediya will be the nation's first listed coffee shop franchise. While several franchisers, such as MP Group, Haimarrow Food Service and Didim, are listed on the stock market, there have been no coffee franchises. Caffe Bene has sought an IPO for years, but has failed to follow through.

The investments in Ediya will likely be used for building a roasting factory and expansion in overseas markets. The company bought 12,983 square meters of land for 6.4 billion won ($5.8 million) in Pyeongtaek, Gyeonggi Province. Also, Chairman Moon Chang-ki has hoped to expand Ediya's presence to other countries.

In Korea, Ediya ranks third in terms of sales and first in terms of the number of stores. With its 2,200 stores nationwide, the company posted 150 billion won in sales, following Starbucks with over 1 trillion won and Twosome with 200 billion won.

Ediya is seeking to catch up with Twosome, by achieving the goal of 1 trillion won annual sales, as it overtook The Coffee Bean and Tea Leaf and Angel-in-us Coffee.

A Twosome Place coffee shop in Seoul. / Courtesy of CJ Foodville

Against this backdrop, Twosome plans to separate from CJ Foodville in February next year.

CJ Foodville announced last month it will spin off the coffee shop brand into a subsidiary. The restaurant operating unit of CJ Group said the decision was made to enhance the brand's global competitiveness.

Twosome is reportedly holding talks with major private equity firms (PEF) to attract up to 200 billion won in investments. Despite its profitability, the coffee chain has suffered difficulties in attracting investors due to CJ Foodville's other debt-ridden brands.

It is also expected to be listed on the Seoul bourse to raise more funds.

If Twosome successfully arranges the investments, it will likely gain the momentum to compete with the business bellwether Starbucks in the domestic market.

According to industry officials, Ediya and Twosome have performed exceptionally well, while other local coffee chains suffer losses.

The capital of Caffe Bene has already been impaired. Tom N Toms Coffee turned into deficit last year, showing a 2.7 billion won net loss. Hollys Coffee has improved its performance since IMM Private Equity acquired the company, but the PEF has failed to sell the coffee chain in the market.

The number of coffee shops in Korea has already surpassed 90,000. However, global coffee shop chains are still fixing their eyes here. Blue Bottle Coffee recently joined the competition as well, establishing a local subsidiary. The U.S. specialty coffee brand is expected to open its first Seoul store in March.

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Publication:The Korea Times News (Seoul, Korea)
Geographic Code:9SOUT
Date:Dec 19, 2017
Words:586
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