■ The cruel market and picky capital are not a small challenge for Luckin Coffee.
Produced by | Explorer Finance
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Luckin Coffee, which has not been new for a long time, has recently reappeared in people's field of vision because of shelling.
01
Li Guoqing, a well-known entrepreneur, released a video saying that 90 tons of Ethiopian Huakui coffee beans were bought by Luckin, while China's total imports of such specialty coffee beans were only 100 tons, and Luckin alone accounted for 90 percent of them.
Li Guoqing believes that Luckin's behavior of grabbing specialty coffee beans is a "monopoly", and Luckin's behavior of snatching specialty coffee beans will make those who really drink hand punches, do fine products and cafes have no beans to drink, or cause the price of fine beans to rise.
It seems that Li Guoqing and Ruixing, two unrelated individuals, actually appeared in this "dream linkage", but Li Guoqing has always been known for his "big mouth", and his criticism has caused a lot of controversy.
From one side, Li Guoqing's approval of Luckin's monopoly of specialty coffee beans also shows that the coffee beans used by Luckin are of excellent quality, although it is a criticism and spit, but Li Guoqing's words are exported, more like an advertisement for Luckin.
On January 11, Luckin Coffee officially responded to Li Guoqing's shelling, saying that the more than 90 tons of Huakui beans purchased were drunk in just 10 days, and the second batch of beans is expected to reach some cities tomorrow.
Not only that, in response to the so-called "monopoly", Luckin also said: More than 90 tons of fine flowers were won in overseas bidding, and it was a bit too scary to talk about upstream monopoly.
From Li Guoqing's question to Ruixing's response, between a question and an answer, not only publicized Ruixing's "good beans", but also helped Li Guoqing brush a wave of existence, no wonder some netizens said that Ruixing and Li Guoqing look like joint hype.
After experiencing a huge financial fraud storm, Luckin was delisted, facing a class action lawsuit, the CSRC penalty, and the company's team changed blood and was once silent.
When people think that Luckin has reached a state of near-death, they find that Luckin is still struggling to keep a low profile.
And Luckin's 90 tons of Huakui coffee beans "were drunk nearly half in 10 days" Versailles propaganda, which also reflects that Luckin is now living well.
02
On December 9, 2021, Luckin Coffee released its unaudited financial results for the third quarter of 2021.
According to the financial report, Luckin's net income in the third quarter was 2.35 billion yuan, an increase of 105.6% over 1.143 billion yuan in the same period last year.
Product sales revenue was 1.934 billion yuan, an increase of 83.9% from 1.051 billion yuan in the same period last year.
The company's net income for the first nine months of 2021 was 5.533 billion yuan, an increase of about 106% compared with 2.688 billion yuan in the same period last year. Net loss also narrowed significantly.
According to the data, the same-store sales of Luckin's directly operated stores in the third quarter increased by 75.8%, an increase of 3% year-on-year; revenue from franchised stores was 416 million yuan, an increase of 355% from 91.5 million yuan in the same period of 2020; and the average monthly turnover of customers was 14.7 million, an increase of 79.2% from 8.2 million in the same period last year.
Revenue and customers are showing a growing trend, in this regard, Luckin said that the main reason for the net income growth is the increase in the average selling price of the company's products, the increase in the number of monthly transaction customers, and the increase in the number of products sold in stores.
Since delisting, Luckin has undergone some adjustments, and the results of these adjustments can also be seen in the latest financial report data.
In terms of store revenue, same-store sales of directly operated stores increased by 75.8% in the third quarter, an increase of 3% year-on-year; revenue from franchised stores was 416 million yuan, an increase of 355% from 91.5 million yuan in the same period in 2020.
Luckin's goal of opening a store has been advancing, but this time the route is very clear, that is, the way to join the store.
From the beginning of 2021, Luckin began to open the publicity of joining, from the information given by luckin's official channels before, this open franchise city is more than 100, and basically second- and third-tier cities, from January 2021 to September in the financial report period, luckin franchise store brought revenue effect is very obvious.
According to the financial report data, as of the third quarter, the total number of Luckin stores was 5671, of which 4206 were self-operated stores and 1465 franchised stores, which increased by 6.4% compared with 3952 stores in the same period last year, and the number of franchised stores increased by 66.7% compared with 879 last year.
Some people joke that the way Luckin's wave of franchise stores sink is like the pinduoduo of the coffee industry, to go deep into the small town youth and meet their needs for consumption upgrading.
However, there are also voices questioning whether Luckin's way of opening franchise stores is really in line with consumption upgrades or a trick to cut leeks?
After all, after the previous financial fraud scandal caused Wall Street investors to be "beaten" by Luckin, Luckin's brand trust reconstruction still needs a process, and the operation of franchise stores is a common means of cutting leeks in the catering industry, especially the high franchise fee, which is often criticized by consumers.
According to public information, there are three main parts of the cost to be paid to join a Luckin coffee store, including decoration costs of 110,000 to 130,000 yuan, production equipment of about 190,000 yuan and a deposit of 50,000 yuan. Overall, the upfront investment of a franchise store is 350,000 to 370,000 yuan.
However, Luckin also said that it will not charge franchise fees for franchise stores.
For the profit of the franchise store, Luckin gave a very attractive calculation template, the total monthly gross profit of goods is less than 20,000 yuan, and the gross profit of the franchise store is 100%. Above 20,000 yuan, the proportion of gross profit available to franchisees will decrease accordingly.
03
From adjusting the store opening strategy to reporting good news in financial data, Luckin is trying to get back on track.
Is it really feasible to target the sinking market and take the road of pinduoduo in the coffee industry?
At the beginning of the listing, Luckin once used the gimmick of "China has a trillion coffee market" to earn enough eyeballs, and also attracted investors to invest in round after round.
But does China really have a "trillion" coffee market?
According to qingyu data, the proportion of freshly ground coffee in the world has reached 87%, while China only has 18%.
If you simply compare according to this data, China's freshly ground coffee market still has a lot of room to open up, China's population base is large, the rise of the new generation of consumption forces after 90 and 00, bringing more diversified consumption habits, higher acceptance of coffee products, there is also a stronger dependence, if according to such a consumer structure and market outlook, the trillion-level coffee market is not impossible.
However, when the so-called trillion coffee market can be realized, the time point given by the media survey is not the same.
Zinc Finance mentioned in previous reports that some research institutions believe that China can reach the level of the trillion coffee market in 2025, and some research reports push this time back to 2030.
In the end, there is no trillion market, different institutions have different ways of measuring, the media draws a question mark on this, but after a series of storms, now Luckin has rarely mentioned the concept of trillion market, and instead focuses on making money and marketing.
After the bubble burst, Luckin did not have to spend too much effort to paint the cake for capital, it had to face how to survive and how to make money steadily.
The trillion market is still unknown, even if there is a trillion market, if Luckin cannot survive today, the future market is not related to it.
The market is a touchstone to test whether Luckin can live better, and it is still necessary to take out Starbucks to "lower the fire" for Luckin.
Will Luckin, which opens franchise stores in second- and third-tier cities or even lower-tier cities, revitalize it through "Pinduoduo"-style means, and then beat Starbucks violently?
At this point, we still have to mention the problem of China's coffee market and coffee consumption.
According to the data previously disclosed by the media, the success of giant Starbucks in China, the highest contribution rate in its product line is not coffee drinks, but desserts such as Frappuccino.
In addition, among the so-called Starbucks coffee drink products, the latte is Chinese favorite coffee product, but the latte product is essentially more inclined to milk tea. Products like Bingle Starbucks contribute 15% of Starbucks' revenue, and the proportion in China is even higher.
So, can Luckin really tap the so-called trillion market with coffee? The experience of "Star Daddy" tells you that it is difficult.
04
Previously, Luckin was found to have registered a trademark named "Crooked Drop Ace", which is a Chinese character translation of the Internet buzzword "YYDS" in the 2021 fire, and most of the people who are used to using the Internet are young people, and Luckin has a high degree of pandering to young people from products to trademark applications, which has also been recognized by many netizens.
Open the franchise store, mobilize the emotions of young people, and Luckin really find a second way out?
It's not that simple.
Looking around, Ruixing's opponent is not just a Starbucks?
Recently, the news about the price increase of new tea brands has been breaking out, including new tea brands such as tea color and color have seen price increases to varying degrees, and Luckin, which has been known for "price fractures", the discount is also smaller than before, and even some netizens have found that the price of a single cup of Luckin coffee has generally risen by 1 to 2 yuan.
The rise in prices is directly related to the rise of raw materials such as coffee beans, at the same time, Luckin vigorously promotes the increase in the number of franchisees, and it is necessary to give franchisees a certain profit in order to ensure the growth of franchisee data, and then achieve the improvement of revenue and profit.
Therefore, price increases are inevitable.
In addition to price increases, the "deer tea" drink that Luckin has vigorously promoted has also quietly returned to people's vision, can Luckin's comprehensive playing method of "coffee + milk tea" help it go to a higher level?
The competition in the new tea market itself has been very fierce, from Xi Tea, Nai Xue's Tea, Tea Delight, to a little, COCO, and then to Mi Xue Ice City, the brand tea market of various price segments has almost been saturated, and on this basis, Luckin Coffee wants to make Deer Tea into a subversive trump card, I am afraid it is more difficult.
Combined with coffee products, it is difficult for Luckin to steal the starbucks market in the high-end market, and the success of Starbucks is not only coffee, but the star ice music we mentioned above, and even some of the environmental services provided by the surrounding and stores, etc. This point, Luckin compared to Starbucks, has no offensive power at all.
After the price increase, Luckin,the price advantage was weakened, although the brand effect is still strong, but its drinks in the same price segment is facing a large number of alternatives, the competitiveness of the natural decline.
After the price increase loses its price advantage, in order to ensure the franchisee's profits and the brand's positive and benign model cycle, Luckin can only harden the price increase.
Luckin is still seeking the help of capital, according to deep financial news, Luckin continued to trade in the US powder single market after delisting, and on September 15, 2021, its stock price climbed to a recent high of $17.79, more than 10 times more than the stock price at the time of delisting. However, after that, Luckin's stock price fell back, and as of January 11, 2022, Luckin's share price in the powder single market was $8.69.
In August last year, Luckin was revealed to be seeking a new round of financing, and it was reported that Luckin had achieved the overall profitability of the group in May 2021 and completed the annual target ahead of schedule. In this regard, Luckin denied that there was a new round of financing plans.
Moving forward, in April 2021, Luckin announced that it had reached a new round of financing agreements totaling US$250 million with the company's shareholders, Dapu Capital and Joy Capital.
Luckin still has a yearning and desire for the capital market, but today is different from the past, once Luckin relied on a vivid story to teach capitalism a lesson, investors who have experienced "violent beating" have erected a natural barrier of scrutiny in the face of Luckin.
And Luckin is no longer the Luckin of the year, experiencing a big fluctuation of rebirth, although Luckin strives to scrape the bone to cure the poison, but the market is cruel, the opportunity will not stay because of your efforts, the opponent will only take the opportunity to steal your job, the process of rebirth, for Luckin is not to continue to write an inspirational story so simple.
The cruel market and picky capital are not a small challenge for Luckin.
Ruixing was reborn, and he still had to draw a big question mark.
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