- Reborn Coffee will acquire the iconic Korean Bbang Ssaem Bakery chain and its 31 locations in South Korea
- Its shares went up 22% after the company signed an MOU
- Other brands are already seeing success from their diversification into baked goods alongside coffee
Sustainable coffee brand Reborn Coffee recently announced its planned acquisition of the iconic Korean baking brand, Bbang Ssaem Bakery. This marks a significant step in Reborn’s expansion strategy as it seeks to diversify its offerings and carve a niche in the competitive coffee and baked goods market.
The memorandum of understanding (MOU) signals Reborn’s commitment to integrating the artistry of Korean baking into its product line and solidifies its position as a premier coffee and bakery franchise in the United States and now South Korea.
The coffee brand is set to integrate Bbang Ssaem Bakery’s extensive retail operations in South Korea and the US. The baked goods brand currently operates 31 locations throughout South Korea, where Reborn’s premium roasted coffee will now be served – a huge expansion opportunity.
Reborn’s acquisition of Bbang Ssaem Bakery holds immense value for the brand, offering an opportunity to leverage the bakery’s loyal customer base and expertise in Korean pastries to widen its coffee consumer reach. Its shares went up 22% to $6.40 after the company signed the MOU.
By incorporating Korean baked goods into their portfolio, Reborn aims to attract a wider audience, and differentiate itself in a market saturated with traditional coffee chains.
Korean baked goods have garnered a growing following globally, with their unique flavours, attention to detail, and artistic presentation. The fusion of Korean pastries with Reborn’s sustainably sourced coffee products could be a winning combination.
This integration of Korean baked goods into the US market also has great potential, catering to a diverse consumer demographic looking for new culinary experiences. Reborn Coffee currently operates 13 stores across California, where Korean café culture is taking off.
“I suspect that the growth strategy that led to the MOU between Riboron and Bbang Ssaem Bakery is probably to ride the South Korean coffee culture wave that is going viral in LA and other US locations,” says Pil Hoon Seu, CEO of Coffee Libre.
“A Korean franchise bakery alone would not be successful in the US. They may generate some curiosity, but I think success will be limited if they are not backed by superior quality and a coffee proposition.”
The acquisition isn’t a one-off – the bakery strategy is a strong one for Reborn, which will also acquire a 55% majority stake in Derin Lezzetler, a leading artisan snack and frozen bakery producer based in Turkey to help it further penetrate the US, Europe, Middle East, and Asia Pacific regions.
It has also partnered with TOUS les JOURS, a franchise French-Asian bakery café franchise and one of the largest in South Korea. With over 1,300 stores in Korea and 100 stores in the US and China, it is actively expanding in Southeast Asia using the bakery-café model.
The success of the coffee and bakery duo in Korea
In Korea and across Southeast Asia, the combination of coffee and baked goods has long been a winning formula.
The partnership between coffee chains and bakeries has flourished in these regions, offering a one-stop destination for patrons seeking a diverse range of indulgences, from aromatic coffees to freshly baked pastries and bread.
“Recently, a notable trend in Korea is the rise of large bakery café franchises, led by brands like Bbang Ssaem Bakery,” says Sarah Nayeon Kim, CEO of Foosung Corporation and President of IWCA Korea.
“These large bakery cafés, sometimes called factory-style bakeries, offer dozens of different kinds of bread in a buffet-like setting. Even on weekday afternoons, these cafés are packed. They cater to a wide range of customers, from young mothers and elderly couples to couples and families, creating a relaxed consumer culture where coffee and baked goods are enjoyed together.”
Having a baked goods proposition in a coffee chain not only enhances the overall customer experience but also positions the brand as a versatile and comprehensive culinary destination.
The addition of Bbang Ssaem Bakery to Reborn Coffee’s offerings aligns with this strategy, enhancing its appeal to consumers seeking a diverse range of premium coffee and bakery items under one roof.
“Coffee and bakery are the best couple in Korea, and a very common café format,” says Cera Yunjung Jung, Country Manager of the SCA Korea Chapter. “There’s a term in Korean, ‘Jujeonburi’, which could translate as ‘snacking’. Pastries are a perfect match for coffee, and food sales can significantly boost overall revenue.”
Investors are also hopping on the trend, helping to push coffee brands into new markets. Reborn Coffee recently secured $1m from South Korean investor, Mr. Scott Lee. His vision is to intertwine the coffee lifestyle with the universal appeal of K-pop culture to enhance the coffee-drinking experience and establish a unique cultural phenomenon in the industry.
“Investors may find Korean-style baked goods attractive due to the growing interest in K-POP and Korean culture,” says Pil.
“The quality of baked goods in Korea has improved dramatically and has various creative features, but it takes work to expect them from a franchise product. It is known that the US branches have a different strategy of gentrification and use better ingredients than in Korea.”
It’s a global phenomenon
In Korea, adding specialty coffee to bakeries’ menus is only just starting.
“The use of specialty coffee in premium bakeries here is growing, but it still needs to be improved,” says Pil. “Medium-sized premium bakeries are already doing well, so coffee quality is not a big concern. Even if it is, additional investment in specialty coffee, good machines, and baristas is rarely a priority – just like many Michelin restaurants in Korea that still serve Nespresso capsule coffee.”
Meanwhile, in the EU, US, and Nordic countries, the coffee and bakery combo has established itself as a perennial favourite among consumers, reflecting a global trend.
Iconic and premium bakeries have become destinations of choice for customers seeking indulgent treats and artisanal creations to accompany their specialty coffees. Ole & Steen in the UK, Fabrique in Sweden, Le Pain Quotidien in Belgium, Lagkagehuset in Denmark and Broderick’s Bakery in Ireland are all examples of bakery chains implementing this model.
While these establishments may not prioritise coffee as their main offering, the synergy between high-quality baked goods and specialty coffee creates a symbiotic relationship that elevates the overall experience.
“Integrating premium coffee offerings into high-end bakeries is a win-win for both sides,” says Cera.
“By teaming up, coffee brands can quickly reach new customers and different market segments without opening new shops. This increases brand awareness and leverages the existing customer base of the bakeries. Plus, sharing resources like retail space and supply chains cuts costs.”
By offering premium pastries and pastries, cafés and bakeries can attract a sophisticated clientele willing to pay a premium for quality and craftsmanship, ultimately driving revenue and brand loyalty.
“Korean consumers’ knowledge of coffee is continuously advancing, and accordingly, they are willing to pay higher prices for high-quality coffee,” says Sarah. “In this context, a business model that offers high-quality coffee and bakery items has a strong potential for success.”
“However, Korea is currently experiencing an economic downturn. Amid rising café closure rates and increasing prices of green coffee beans, the Korean market is showing a strong preference for low-cost coffee brands. As a result, the trend toward specialty coffee might be slower than expected.”
Despite issues of pricing and affordability, the café-bakery duo appears to gaining ground globally – and successfully.
The acquisition of Bbang Ssaem Bakery by Reborn Coffee goes one step further – showcasing the power of collaboration and cross-cultural influences in shaping the coffee and bakery landscape.
Coffee Intelligence
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