Beijing Bilibee Chain Commerce Co, which operates convenience stores in China that use digital technologies for self-service checkouts, has accelerated efforts to extend and upgrade its in-store fresh coffee business.

Since May, it has been gradually adding hand-brewed coffee with baristas at its stores. The firm operates 2,000 stores in all. Now, it is seeking to better compete with leading on-premise coffee chains such as Starbucks.

Beijing Bilibee has installed new coffee stations called Sober Hi at its stores to offer hand-brewed coffee and tea products priced between 10 yuan ($1.56) and 20 yuan.

As of May 24, there were 38 Sober Hi coffee units in use at Bilibee's convenience stores in Beijing, Tianjin, Shanghai and Nanjing, Jiangsu province.

The chain has plans to make the hand-brewed coffee station an essential part of its every outlet in the next few months, said a Bilibee executive.

The company has been looking to hire baristas as there has been a sharp rise in demand for coffee-brewing professionals.

In addition to Sober Hi machines, Bilibee will continue to use its consumer-operated fresh-coffee dispensers, with promotional prices－between 3 yuan and 12 yuan－to differentiate its products. For example, a cup of latte made by the automated coffee machine is priced 6 yuan at the convenience store.

Industry experts said the move is similar to McDonald's plans to invest 2.5 billion yuan in the next three years to open more than 4,000 McCafes nationwide.

McDonald's has geared up its efforts to open new outlets, upgrade facilities and train personnel to bank on the coffee-brewing business.

Wang Zhendong, head of the consultancy firm Shanghai Feiyue Investment Management, said McDonald's and Beijing Bilibee have shared the same business model, which is to open coffee outlets within the stores they already operate. By doing so, the retailers are able to save on costs like rents and expand their coffee business quickly through their existing vast network.

"Clearly Bilibee is hoping to achieve a lift in terms of its coffee quality and the drinking experiences with the new business format," said Wang. "The numbers look good on the growth of the coffee sector at convenience stores. But it still takes time to see whether the presence of baristas at convenience stores would serve as an advantage to stimulate coffee consumption there, if that creates competition with other on-premise coffee houses."

According to Mintel, total sales value of on-premise coffee market reached 35.8 billion yuan in 2020, almost a 16 percent decline in growth rate compared with a year before, primarily a result of the COVID-19 pandemic.

However, the market is anticipated to rebound steadily, with an annual growth rate on average of 11 percent between 2020 and 2025, said Mintel.

The Mintel report showed that convenience stores' determination to gain footfalls in the market also pillars the growth. The market is forecast to climb close to 190,000 coffee outlets in 2025.

Meanwhile, "on-the-go" coffee has emerged as a new trend, a habit bred since the pandemic shattered the dine-in coffee market last year, highlighting the advantage of convenience and quality coffee drinking, according to Wen Yu, food and drink analyst of Mintel China.

The Mintel report said that convenience stores and traditional coffee chains have turned out to be the most-visited channels last year.

This showcases the two channels' resilience in combating the outbreak and bouncing back from the slump, said Wen.

Convenience stores catered to consumers' need for fresh coffee last year while traditional coffee chains have been able to keep any negative impact under control, thanks to their operational efficiencies and robust cash reserves.

Established coffee chains have continued to speed up expansion of their outlet networks and to further enhance their digital engagement with consumers.

Starbucks in April opened its 5,000th store on the Chinese mainland in Qingdao, Shandong province. The Seattle-based coffee house chain has recently launched Startag, an online social networking service on its WeChat mini-program, where consumers can share their coffee preferences with their friends.