Taiwan cafe chain hits the spot on mainland

A cafe chain legendary for unusual recipes in Taiwan, its home market, plans to grow by 100 outlets a year on the mainland as a faster pace of life draws more people to pastries, coffee and takeout food.

The number of cafes on the mainland operated by the chain - known as 85C, the ideal water temperature for coffee - surpassed those in Taiwan earlier this year, with 366 today versus 347 locally.

Wu Cheng-hsueh, chairman of Taipei-listed parent company Gourmet Master, wanted to open 100 new mainland cafes per year until he turns 50 in 2017, his spokeswoman said. The mainland contributes 70 per cent of the chain's total annual revenue of NT$11.4 billion (HK$3.03 billion) despite competition from Starbucks and McCafe.

"Why business here is better than in Taiwan is social development, meaning the pace of life has quickened," 85C's mainland spokesman, Wu Yanghan, said. "We have a positive outlook on [the mainland] market. People's spending power is getting better and better, meaning our proceeds can become increasingly stable."

Spending power is forecast to strengthen overall to 2020 as mainland leaders seek to meet outgoing Communist Party chief Hu Jintao's goal of doubling average incomes by that year, which he announced at the party congress on November 8. The average annual income now is US$4,940.

Rapid growth on the mainland is a common story for offshore investors, but 85C's formula differs from that of its peers in other fields. Faced with a large yet increasingly crowded cafe market, 85C designs outlets to look like bakeries instead of coffee houses.