Abstract

Pacific Coffee had experienced a major expansion of its network in Hong Kong since CRE took control in 2010. By March 2018, most but not all districts in Hong Kong had Pacific Coffee stores. Yet, with turnover in leases and new potential markets, there continued to be opportunities to expand into new store locations.

In March 2018, Pacific Coffee’s business development and leasing team found two locations up for rent. One was a ground-floor space at a new building on the campus of the Hong Kong University of Science and Technology (HKUST), while the other option was a street-level store in Central district.

For Pacific Coffee’s management, the investment process did not entail just only financial return. Other intangible factors, such as brand building, were essential for the chain’s long-term growth strategy.

Two other related cases in this series include:

1. Pacific Coffee: Making the Numbers Count

2. Pacific Coffee Balanced Scorecard: Operationalizing Strategies

Learning Objectives

Students will learn from this case capital decisions of a corporation, where costs and benefits typically span over a number of years. They will make recommendations by applying financial analysis, decide on investment criteria, and analyze strategic factors for a prospective new store location.