Overreach Plunges Caffè Bene into Crisis

Michelle Jung, April 5, 2017, 9:29 a.m.

Coffee franchise Caffe Bene is in crisis due to excessive expansion and poor management of overseas branches.

According to the Financial Supervisory Service on Tuesday, Caffè Bene last year posted W81.7 billion in sales, an operating loss of W13.4 billion, and net loss of W33.6 billion last year (US$1=W1,124).

Sales plunged 32 percent while the operating loss soared 18 percent and the net loss 25 percent compared to the previous year. Total liabilities have swollen to W14.8 billion

Industry insiders blame Caffè Bene's strategy of aggressive expansion when the market was already saturated. The failure of joint ventures in the U.S. and expansion into the restaurant and bakery businesses in Korea put extra pressure on its finances.

But the chain is determined to weather the storm. "There is no plan for a capital reduction, and we will find our way out of this crisis with investment from overseas," a Caffè Bene spokesman said.

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