So far this year, Inside Retail has posted 35 stories that involve, either directly or indirectly, the expansion of coffee chains in Asia – and we are not even three-quarters of the way through this year.Many of these expansions are cross-border launches, as chains muscle in on the territory of incumbent market players. The opportunity to caffeinate populations seems endless: the coffee culture is now deeply embedded and there are a number of different ways to differentiate, including price, cafe experience, bean varietal, food offer, technology, service and eco-friendliness. Locations are not in short supply either: The expanding chains are being accommodated by landlords eager to fill mall space with social uses. For example, Capitaland in Singapore is one among many mall operators reporting that the leading category for lease enquiries is food and beverage, of which coffee chains are a substantial component. (Capitaland says 18 per cent of its mall space is now accounted for by food and beverage.) Of course, it isn’t just malls that can house cafes. The beauty of coffee retailing is that the number of formats and suitable types of locations are abundant.If it seems too good to be true…But while the store and revenue growth looks impressive for many of the large chains, the goldrush has its downside: It drives prices down and in many instances, it eats away at same-store sales growth.China’s Luckin Coffee has expanded to more than 20,000 outlets, nearly double what it was a year earlier. It has been opening stores at a furious pace, including 1371 net openings in the second quarter alone. This has enabled the company to clock up year-on-year revenue growth of 36 per cent, to US$1.2 billion, and net after-tax profit growth of 13 per cent, to US$120 million. There were just under 70 million transacting customers. But it came at a cost: Same-store sales have been whacked and they are down more than 20 per cent at self-operated stores opened for more than a year.The former chair and CEO of Luckin founded Cotti Coffee in China in 2022. It, too, has been off to the races with store expansion, not just in China but overseas as well. Almost immediately after its founding, Cotti engaged in a price war with Luckin itself, selling coffee for just over a dollar a cup and undercutting its low-price competitors, not to mention Starbucks and its peers at the premium end of the market. Unfortunately for Cotti, it wasn’t a long-term strategy for profitability, and it has been forced to incrementally raise its prices on a number of occasions. Inevitably, it lost customer loyalty as a result. Its rapid store expansion from zero to more than 7000 in two years has also rattled many of its own franchisees, who open a store only to see another one open just down the road shortly afterward. Starbucks: collateral damage at the premium endThe growth in store counts by Luckin has made it the No.1 coffee chain in China, eclipsing Starbucks. US-based Starbucks has more than 7300 outlets in China and has seen its own same-store sales crash. Both transaction counts and transaction values are down, leading to a 14 per cent decline in its same-store sales in the most recent reported quarter. An additional metric illustrating Starbucks’ plight is store productivity: While the number of stores in China increased by 826 during the course of the year, store productivity (sales per store) crashed by more than 20 per cent. Former Starbucks CEO Laxman Narasimhan ruefully, and with no small amount of understatement, told investors that the result wasn’t good enough and pinned a lot of the blame on intensification of competitive pressures: “In the past year, unprecedented store expansion and a mass segment price war at the expense of comp and profitability have also caused significant disruptions to the operating environment.”  Nonetheless, he still sees white space in the China market, commenting that Starbucks was so far only in 900 of the country’s approximately 3000 county cities, and it would, therefore, “build out the long-term opportunity”. So, beleaguered as it is with competition, Starbucks wants to be in on the expansion, too. Moreover, it hasn’t kept its nose completely out of the price war, it has offered discount coupons.A number of Asian chains are preparing for domestic and/or foreign expansions. Most recently, as reported in Inside Retail Asia on September 11, Malaysian chain Zus Coffee has just secured funding to launch in Brunei and Singapore. At the same time, it is being joined in its own market by Ediya Coffee from South Korea, which wants to roll out 200 stores in Malaysia in the next five years. Luckin has also just joined the fray in Malaysia. The Philippines’ Bo’s Coffee has announced plans for 85 new units domestically, but it, too, is having to make room for another competitor with the arrival of Indonesia’s Tomoro Coffee, which reportedly wants 100 stores in the Philippines by the end of this year. Everyone, it seems, wants a bit of everyone else’s turf.Not all of the expansions will be successful, as Flash Coffee found out when it abandoned its foreign expansion in favour of opening more units in its native Indonesia. Regional tastes certainly differ and you need local knowledge to hit the target exactly right.Research by management consultancy IMARC puts the coffee market at more than US$19 billion in China alone. Mass urbanisation and rising disposable incomes have gradually turned China from a primarily tea-drinking culture into a coffee-drinking one. That offers some cheer for Starbucks, which states that the strategic partnerships it is pursuing to recapture its mojo in China are cause for optimism. Maybe so, but the Starbucks blueprint of expanding rapidly by opening stores in overlapping trade areas has now been copied by others, and it will take a massive turn of fortune for it to climb back onto its perch.