No franchise fees, no equipment price differences, only 30% of revenue – how does Coffee Tribe's business model enable a win-win situation for both merchants and the platform? In-depth analysis of the economics of shop-in-shop coffee.
In the business world, "free" is often the most expensive.
However, the model of Coffee Tribe has indeed puzzled many businesses: providing coffee machines worth tens of thousands of yuan for free, setting up systems for free, providing training for free, and offering after-sales service for free—how does Coffee Tribe make money?
The answer lies in two words: supply chain .
Coffee Tribe's business model: It's not about selling equipment, it's about selling services.
The traditional profit model of coffee franchise brands is: franchise fee + equipment price difference + raw material price markup + management fee commission . Before the merchant even starts making money, the brand owner has already pocketed the profits.
The coffee tribe is completely different:
| Fee Items | Traditional Franchising | Coffee Tribe |
|---|---|---|
| Franchise fee | Tens of thousands to hundreds of thousands | 0 |
| margin | tens of thousands | 0 |
| Equipment cost | Tens of thousands (purchased independently) | Free placement |
| Management fee/annual fee | Often | 0 |
| Profit sharing | Brand commission rates are high | 70% of merchants |
The profit logic of Coffee Tribe is: by deploying equipment on a large scale, a stable consumption of raw materials is formed, and reasonable profits are obtained from the raw material supply chain .
The more merchants sell, the more raw materials they consume, and the greater the value of Coffee Tribe's supply chain— this is a positive cycle where "merchants make money and the platform also makes money."
The business's economics: How much do they invest? How much do they earn?
Investment side :
- Franchise fee: 0 yuan
- Deposit: 0 yuan
- Equipment cost: 0 yuan (free of charge)
- Renovation cost: 0 yuan (no renovation required)
- Labor cost: 0 yuan (existing employees are part-time)
- The only cost: coffee ingredients (beans, milk, syrup, cups, etc.)
Revenue side :
- Merchants will permanently enjoy a 70% commission on sales.
- No tiers, no tricks, no deductions
- Earnings are available in real time.
Take a store that sells an average of 80 cups per day at an average price of 10 yuan as an example:
- Monthly revenue: 80 cups × 10 yuan × 30 days = 24,000 yuan
- Merchant's monthly revenue share: 16,800 yuan
- Annual revenue share: Over 200,000 yuan
And the startup cost for all of this is almost zero.
Why is a 70% share sustainable?
Some people are worried: If merchants take 70% and KaBuluo only takes 30%, can it cover the costs?
The answer is scaling .
When a coffee machine consumes a certain amount of coffee beans, milk, syrup, and cups every day, the profit margin of a single machine's supply chain is indeed limited. However, when the equipment is deployed on a large scale to thousands or tens of thousands of stores nationwide, the scale effect of the supply chain becomes apparent —reducing procurement costs, improving logistics efficiency, and enhancing brand premium.
This is precisely the business wisdom of Ka Tribe: "Don't make quick money, make long-term money."
Industry Comparison: Why is Traditional Franchising Becoming Increasingly Difficult?
In 2025, over 51,000 coffee shops in China closed down annually. The predicament of the traditional franchise model is evident:
- High franchise fees devour initial profits
- Equipment procurement is subject to price opacity.
- Raw material markups and layer-by-layer exploitation
- Brands only care about collecting money and not about operations.
In contrast, the shop-in-shop model with zero franchise fees, free equipment, and a 70% revenue share is becoming the optimal solution for physical stores to add coffee business.
Instead of profiting from franchise fees, we aim for long-term mutual benefit. This might be the right way to approach the second half of the coffee industry's development.