Coffee shops in Los Angeles Koreatown are diversifying their revenue streams by transforming into coffee shops during the day and wine bars at night.
According to market research firm IBISWorld, there were 15,667 coffee shops in California last year, more than New York (8,413) and Texas (6,979) combined. Of those, Los Angeles alone has 3,552 coffee shops. That’s one out of every five coffee shops in the Golden State.
Competition among coffee shops is getting fiercer, especially as Koreatown has become a coffee shop hotspot, while costs including beans and milk are rising steeply due to inflation and climate change, resulting in a sharp decline in profit margins.
To combat this, some coffee shops are trying to increase profits by transforming into wine bars at night, which are more profitable than coffee shops. “Wine bar customers are also becoming coffee shop regulars, and vice versa, which helps increase customer traffic,” said one coffee shop owner in Koreatown.
MCO on Olympic Boulevard in Koreatown is a coffee shop during the day, but in the evening, it operates as a wine bar called Red Room. It utilizes red lighting to create a speakeasy atmosphere.
3THYME, located near 6th Street and Harvard Boulevard, has been converting to a wine bar (NiteThyme) in the evening since last year. “There are a lot of coffee shops in town, so the competition is tough, but there aren’t many wine bars, so we aimed for a niche,” said the manager Gisela Yoon. “We need to differentiate ourselves from other coffee shops, whether it’s the color of the drink, the quality of the beans, or the interior to survive,” she added. Recently, thanks to the Korean Wave, Yoon said, customers are also looking for soju and makgeolli, so they have launched a Korean liquor menu. In addition, M Cafe at Olympic Boulevard and Catalina Street is also planning to launch a wine bar in the coming months.
Beyond operating wine bars, some businesses are pushing forward with alcohol sales. A sandwich shop, Open Market, sells coffee, but it also sells wine and Korean liquors like makgeolli and soju. “We bring in organic wines from local producers and distributors,” said Brian Lee, CEO of Open Market. “Alcohol and merchandise sales account for about 60 percent of the store’s revenue. Since alcohol sales don’t include extra labor costs, we have a good margin and can sell it at a relatively low price.”
BY JAESUN SUH, HOONSIK WOO [suh.jaesun@koreadaily.com]
