How ZUS Coffee become Malaysia’s largest coffee chain in 4 years
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ZUS Coffee, a Malaysian firm that began as a small kiosk in Kuala Lumpur, took just over four years to become the biggest coffee chain operator in the country.
The firm quickly expanded to surpass U.S. giant Starbucks in a market with over 3,300 branded coffee outlets, a figure expected to grow 4-5% this year, according to global coffee industry research platform World Coffee Portal.
It launched at the end of 2019 with a 200-square-foot (18-square-meter) kiosk in the Kuala Lumpur City Center area.
The brand positioned itself in the mid-priced segment, which was largely untapped at the time, aiming to make specialty coffee a daily necessity rather than a luxury.
One of its main draws is its frequently updated menu, which features unique drinks like the Ice Shaken Osmanthus Orange Espresso, Sakura Rose Frappe, and Cheese Crème Latté.
But this was not the only factor setting it apart from other options in Malaysia’s coffee market as it is also known for its tech-driven approach.
The company digitized its operations and had an app at launch that facilitates online ordering, pick-up and delivery, with the aim to shake up the market by focusing on digital orders and fast service.
The app also collects data on customers’ tastes and preferences, which is used to develop new products or improve existing items.
The company had a rough start as cashless payments and online coffee ordering were slow to catch on in Malaysia.
However, the Covid-19 pandemic hit a few months after the startup launched, transforming the local coffee landscape. Delivery services and contactless payments quickly became standard, making ZUS’ focus on technology highly successful.
“It launched at the end of 2019 with a 200-square-foot (18-square-meter) kiosk in the Kuala Lumpur City Center area.”
“We became profitable just 10 months after we launched. Timing was crucial – it is not just the product or the team, but being in the right place at the right time,” Venon Tian, the firm’s COO and co-founder, told Nikkei Asia.
Tian’s ambitious plans for his business would see it challenge international brands in the local market.
“Hopefully we will be able to surpass the bigger boys in town soon and be something for Malaysians to be proud of as well,” Tian told The CEO Magazine in 2022, when the chain had just over 150 stores.
As its popularity and presence grew over the years, the firm became the largest coffee chain operator in Malaysia. It has 566 stores as of September 2024, surpassing Starbucks, which is in second place with 411 outlets.
Its revenues jumped from 15.7 million ringgit (US$3.5 million) in 2021 to over 200 million ringgit in the fiscal year ending June 30, 2023, while its net profit surged from 134,000 ringgit to 10.2 million ringgit during the same period.
The chain is now looking to expand into the international market. It has already opened more than 40 stores in the Philippines since entering the market last year after Filipino billionaire Frank Lao acquired a 30% stake in the company.
It opened its first store in Singapore in October and launched in Brunei late last month with an outlet at the Setia Point shopping center in the capital city of Bandar Seri Begawan.
Tian said at a conference hosted by Tech in Asia earlier this year that ZUS would be expanding to Pakistan by the first half of 2025. He expects its revenues and net profit to reach 600 million ringgit and 30 million ringgit, respectively, this year.
He told Nikkei Asia that the firm aims to become a “national champion,” comparing it to Malaysian airline AirAsia. “Who knows, we could be the AirAsia of coffee – a Southeast Asian brand recognized globally.”
Questions & Answers
Q.What factors allowed ZUS Coffee to grow so quickly and surpass Starbucks in Malaysia?
What factors allowed ZUS Coffee to grow so quickly and surpass Starbucks in Malaysia?
ZUS Coffee positioned itself in the mid-priced segment, which was largely untapped, making specialty coffee accessible. Its tech-driven approach with an app for online ordering and data collection also contributed significantly to its rapid expansion.
Q.How did the Covid-19 pandemic affect ZUS Coffee's initial struggles with its digital strategy?
How did the Covid-19 pandemic affect ZUS Coffee's initial struggles with its digital strategy?
The pandemic transformed the local coffee landscape, making delivery services and contactless payments standard. This change helped ZUS Coffee's focus on technology become highly successful after a slow start with cashless payments and online ordering.
Q.What are ZUS Coffee's current plans for international expansion and future financial projections?
What are ZUS Coffee's current plans for international expansion and future financial projections?
The company has already opened over 40 stores in the Philippines, launched in Singapore and Brunei, and plans to expand to Pakistan by early 2025. It expects revenues to reach 600 million ringgit and net profit 30 million ringgit this year.