Bankruptcies of Coffee Shops Decline for First Time in Two Years Despite Coffee Bean Price Surge

Teikoku Databank conducted a survey and analysis on bankruptcy trends among coffee shops.

A shift is observed in the coffee shop industry, which has faced harsh operating conditions due to rising coffee bean prices, labor costs, and rent. Bankruptcies of coffee shops (with liabilities of 10 million yen or more, legal reorganization) occurring from January to May 2026 totaled 24 cases. Although the cumulative number for the first five months remains high at over 20 cases for the third consecutive year, it turned to a decrease for the first time in two years and is lower than the record high of 2023 (72 cases annually, 33 cases in Jan-May). If this pace continues, annual figures may fall below the previous year for the first time in two years.

In coffee shop management, the surge in prices of premium beans like Arabica, the main variety for coffee shops, has squeezed profits, along with rising costs for side-dish ingredients such as bread, milk, and eggs. In addition to raw material costs, shops face owner aging, higher utility and gas bills, and labor costs for part-time workers. Competition from major café chains, convenience stores offering low-cost high-quality drip coffee, and fast-food restaurants with affordable Wi-Fi environments continues to pressure small and medium coffee shops.

However, recent years have seen changes in coffee shop management. Looking at profit trends for fiscal 2025 (net profit basis, as of April), 35.7% of shops reported increased profits. While this is lower than the previous year's 43.4%, it marks a significant improvement from fiscal 2023 (29.1%). Since the pandemic, a growing number of coffee shops have consistently maintained profitability. These successful shops have shifted from focusing solely on coffee gross margins to offering 'space and experiential value.' This includes specialty coffee, high-end coffee concepts, expansion of high-margin food menus with Instagram appeal, and tea café formats featuring tea and green tea (with more stable costs), as well as matcha popular among inbound tourists, successfully increasing average customer spend. Conversely, the proportion of shops with losses or declining profits has risen, indicating a polarization in the industry. Shops hesitant to raise prices due to fear of losing customers have relied on regulars, leading to squeezed profits as operating costs rise.

Currently, self-service major café chains are further oligopolizing, and other sectors like eyewear chains are entering as lifestyle cafés. Amid market expansion, the stay-type coffee shop is turning into a red ocean. Traditional coffee shops face challenges such as high raw material costs, labor shortages, and aging regular customers, questioning the very existence of coffee shops as places to enjoy coffee.