A Hollys store in Seoul | Photo credit: yllyso / Shutterstock

Seoul-based Hollys will open its first store in Japan in the first half of 2024 as part of a new international expansion drive. 
 

In a company statement, Hollys said it will enter the Japanese market by establishing a business entity in the country rather than franchising. The coffee chain will open its first outlet within the Marui Department Store in Namba, Osaka, before seeking to scale across Japan’s other major cities, including Tokyo, Yokohama, Nagoya and Kyoto. 

“To promote the Korean café culture and coffee tastes, we’ve decided to directly enter the Japanese market instead of a master franchise system. Gradually, we’ll open more outlets across Japan and enter other countries as well,” said Lee Jong-hyun, CEO, Hollys Coffee. 

Founded as Hollys Coffee in 1998, Hollys currently operates 550 stores in South Korea, alongside 14 stores across China, Thailand and the Philippines. 

In October 2020, agricultural, chemical and food business KG Group acquired a 93.8% stake in the business from IMM Private Equity for KRW 145bn ($124m). In March 2021, KG Group rebranded the business as Hollys to position it as a ‘lifestyle chain’, introducing an all-day food and beverage menu  new merchandise and a stronger digital presence to resonate with younger consumers. 

KG Group began exploring a potential IPO for Hollys in August 2023, but the process has since stalled according to a March 2024 report in The Chosun Daily newspaper.  

Hollys’ planned Japan launch come as the mid-priced brand faces increased competition in South Korea from value-focused coffee chains.  
 

While the coffee chain opened 103 net new stores in South Korea last year, World Coffee Portal’s Project Café East Asia 2024 report shows that Mega Coffee opened 687 net new stores during the same period to reach 2,675 outlets – closing the gap on market leaders Ediya Coffee and Paris Baguette, which both operate approximately 3,800 sites.

Additionally, Compose Coffee and Paik’s Coffee each opened 223 and 317 net new stores respectively to reach 2,225 and 1,435 outlets respectively. 

The total South Korean branded coffee shop market grew by more than 2,000 net stores last year to exceed 31,000 outlets. The market is forecast to surpass 41,700 stores within the next five years.