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Watch out Starbucks,
85c is the new
kid in town
Peter Zhu is Assistant General Manager and head of the factory affairs
department at 85c, a bakery and coffee chain originating in Taiwan and now
growing at a blinding pace on the mainland. CHaINA Magazine spoke with
him about their business and operations strategy in China.
: What are your responsibilities? 100 kilometers.
Peter Zhu (PZ): I’m one of the shareholders of the company and When our business started, we did
was also among the 10 cofounders of 85c. All 10 of us are direc- the calculation in Taiwan that our
tors of different departments. I’m the Assistant to the General operation would be profitable only
Manager as well as the head of the Factory Affairs department. when our factory there can supply
more than 60 stores. To make 50 crates of cakes takes almost
Why is the brand called 85c? the same time as making 300 crates of cakes. Your business
PZ: We found that the best coffee is made at 85 degrees Celsius, might only become profitable when the quantity is as big as 300.
then by accident, we found most bread is baked at 85 degrees
Celsius as well, so that’s where the name comes from. How do you manage logistics to each store?
PZ: Currently our 42 stores make their orders every day before
When did you start the business in China? 10 a.m. based on their previous day’s sales. Then our factory
PZ: We opened our first store in Shanghai 2 years ago. We now works 24 hours a day to make the delivery be-
have 42 stores, 31 are in Shanghai and the rest are in Hangzhou fore the following morning since our prod-
and Suzhou. We are planning to open another 91 stores in Shang- ucts have a short shelf-life. We need to
hai by the end of the year. We built our factory in Song pre-set product specifics on each item
Jiang in June last year. Before that we had no into our ERP system. So if I need to
factories. We made everything at the back of produce 1,500 pieces of cake today,
the store. then the system will tell me how much
butter and dough we need and so on.
Why did you choose Song Jiang as the lo- Before 4:00 pm the same day, the prod-
cation of the factory? ucts will be ready and around 7:00pm, we’ll
PZ: We needed a place big enough to accom- make the delivery of the frozen cakes from factory to each
modate us. We have around 6,500 square me- store. At 2:00 am, we’ll make the second delivery of the day of
ters, which has the capability to supply 60 stores. normal-temperature cakes.
Since we are growing so fast, a key issue that
we face is how to supply the growing number of Do you outsource your logistics or manage it yourself?
stores. We have already found a venue in Hangzhou PZ: We do most of the distribution to the stores on our own.
which is 10,000 square meters in size and we’ll soon build an- We also have over 110 suppliers including importers and canning
other factory there. factories which we deal with directly or through a dealer and they
help us to make the delivery to the warehouse.
Why so many factories?
PZ: We can’t build a factory that is too big, because we need to Where do your coffee beans come from?
supply to the stores every day. If the distance between the store PZ: The ones we use are from Guatemala, same as the ones we
and the factory is too far, then the transportation costs will go up. use in Taiwan. In Taiwan, this coffee bean can only be found in
In Shanghai, our factory’s distance to each store won’t exceed either five star hotels or our stores.
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