Ediya Coffee drops IPO for China plan
South Korea’s Ediya Coffee has dropped its plan to go public this year, opting instead to re-enter China through Beijing.
“In terms of growth and profit margin, we are fully ready for an IPO, but we decided we must tend to our franchisees first,” says CEO Moon Chang-ki.
In a move that would have led to Korea’s first coffee stock, Ediya Coffee in December appointed Mirae Asset Daewoo as its underwriter for an IPO this year. Ediya had decided to list to help it challenge Starbucks Coffee on Ediya’s home territory.
Meanwhile, labour costs have shot up in South Korea after the hourly minimum wage was pushed up by 16.4 per cent to KRW7530 (US$7) from January, reports Pulse.
“The subsidy to help franchisees sustain staff increased by 4.5 billion won,” says Moon, partly admitting the spike in labour cost had disrupted the IPO schedule. Instead, the coffee chain will renew its overseas campaign, starting with a shop in Beijing next year. It had pulled out of China in 2008 after three years.
Moon acquired Ediya Coffee from its founder in 2004. Twelve years later it became the first homegrown coffee brand to run 2000 stores. It is expected to open its 2500th store this month. The company generated KRW700 billion in sales last year and as about 10,000 employees.