More than 10 billion capital influx, the Chinese market can drink these coffees?

Unexpectedly, during the epidemic, coffee has become the most abandoned thing for Shanghainese. As the city with the largest number of coffee shops in the world, whether the operation of Shanghai coffee shops under the epidemic has been affected has aroused concern. On March 29, the reporter learned from Tims (China) that the impact of the Epidemic in Shanghai on its current situation is not large, but the number of takeaway orders during the epidemic has doubled, so Tims (China) has launched a community delivery service, with 10 single deliveries per district. Except for Shanghai Puxi Puxi due to rotational sealing, the delivery service was stopped, and the delivery service in other regions was still supported.

In addition, on March 29, Seesaw Coffee told the "China Times" reporter: In the face of this round of shanghai sealing, the enterprise delivery business began to reduce the delivery fee, adjust the scope of delivery to ensure the transport capacity. For communities and enterprises that are sealed and controlled and have no capacity to support, establish Seesaw community purchases, and reduce delivery fees for communities with successful group consolidation.

The deep love of capital for coffee

According to the data of Tianyancha, only last year, there were nearly 30 investment and financing incidents in the coffee industry, and the overall financing amount exceeded 17 billion yuan.

Entering 2022, the enthusiasm of capital for the coffee track is undiminished.

On March 10 this year, Tims China announced additional financing commitments totaling US$194.5 million (about 1.229 billion yuan), after Which Tims China has received financing from Tencent for two consecutive years; in February, Seesaw Coffee, the company's earliest specialty coffee chain brand, completed a series of financing of hundreds of millions of yuan, and it is also the first batch of domestic coffee chains to receive financing. In 2017, Seesaw Coffee received 45 million yuan in financing from BaifuKu Holdings and Woosheng Investment. It was not until four years later that Seesaw Coffee received a second round of financing, this time investors including Heytea, BaifuKu Holdings, and Cornerstone Capital, and the amount of financing also reached more than 100 million yuan.

After multiple rounds of financing, the pace of Seesaw Coffee's expansion is also fast, and the reporter learned from Seesaw Coffee that its current number of stores nationwide is nearly 100. In addition, in March this year, Manner Coffee, like Seesaw Coffee, as the representative of the new coffee chain, announced that more than 200 new stores were opened in 10 cities at the same time, and officially opened a takeaway service, and the takeaway cooperation platform was Meituan. At present, the reporter found that on the takeaway platform, Beijing, Shanghai, Shenzhen and other cities have supported their takeaway business.

For Manner Coffee to open the takeaway business, industry insiders believe that the epidemic in many places is one of the reasons for its open delivery, under the epidemic, many people work from home or are inconvenient to buy offline, if the company only relies on stores, the operating pressure will be great.

As a new coffee force, Manner Coffee has obtained 5 rounds of financing since its inception in 2015, and has obtained 3 rounds of financing in the first half of 2021 alone, including hundreds of millions of dollars of strategic financing from Meituan in May, and then obtained byteDance's strategic financing in June.

In addition, in the past 2021, M Stand, algebraics, and Nova coffee in the new coffee chain brands have all received financing last year. Among them, M Stand is currently valued at 4.7 billion yuan; algebraics have received 3 rounds of financing, the most recent of which is a strategic financing from Tencent, with a valuation of 1 billion yuan.

In addition to continuous financing, the Chinese coffee market has welcomed new players, and in February, the specialty coffee brand Blue Bottle Coffee, known as the apple of coffee, also officially entered the Chinese market, and the first store was located in Shanghai, and the major shareholder behind it was Nestlé. In addition, the Italian coffee brand Lavazza chose to cooperate with Yum China, and the two sides funded the establishment of their own subsidiary to jointly operate lavazza coffee shops in China.

In addition to the coffee chain, the attention of capital has not spared the instant coffee track. In the first half of 2021 alone, Sumida Chuan, Sando Andan, Shicui SEA, Yongpu and other instant coffees each won a round of financing. Among them, three and a half and Yongpu have entered the offline store.

In the past two years, the financing of chain coffee brands has not only raised a high frequency, but also has a financing scale of more than hundreds of millions of yuan. At the same time, the capital camp is also very luxurious. In addition to well-known investment institutions such as Sequoia Capital, Haina Asia, Black Ant Capital, CMC Capital, and Challenger Capital, investment institutions such as Tencent, Meituan, ByteDance, Heytea, and Belle Group have also come down.

For the current capital funds like a flow of water into the coffee track, what is the attraction of the coffee track. Wang Hongdong, founder and catering analyst of The Catering Treasure Book, said in an interview with the China Times reporter: "Capital betting is mainly because there are no enterprises that can be called the head of the coffee price bands. The emergence of Luckin has refilled the imagination of ready-made coffee, and investors are more willing to believe that the coffee category will be more likely to appear listed companies than other categories. ”

Direct or franchised

According to the 2021 Shanghai Coffee Consumption Index released by Shanghai, the number of cafes in Shanghai reached 6913, far exceeding New York, London, Tokyo, Melbourne and other cities, ranking the world's largest. Behind the figures is the battle for coffee brands to grab the beach with the help of capital.

On March 24, Luckin Coffee released an unaudited 2021 financial report showing that Luckin Coffee's total net income in 2021 reached 7.965 billion yuan, an increase of 97.5% from 4.033 billion yuan in fiscal 2020, and the total net income in the fourth quarter alone reached 2.432 billion yuan.

And Luckin's eye-catching financial report is inseparable from Luckin's rapid expansion. In January last year, Luckin restarted its franchise program delayed by the epidemic, and by the end of 2021, Luckin had a total of 6,024 stores, surpassing Starbucks' 5,557 stores in China. In 2021, the number of Luckin's associated stores doubled to 1627, which also brought Luckin a revenue of 1.306 billion yuan.

The franchise model allows Luckin to go deep into the sinking market. The opening of stores has also become a contest between chain coffees. Unlike Luckin, most of the new chain coffee stores are mainly directly operated. Tims China, Seesaw Coffee, Manner Coffee, and M Stand are all directly operated stores at present, so the number of stores is also lower than that of Luckin.

In March this year, Tims China disclosed that the current number of stores in China is about 410, in mid-December last year, the number of its stores was still about 340, more than 3 months, an increase of nearly 70, under the direct operation of the store expansion speed is fast. Not only that, Tims China once said when entering the Chinese market that it will open 1500 stores in 5 years, but in 2021 Tims China will upgrade its goal to build more than 2750 stores by 2026.

At present, Seesaw Coffee, Manner Coffee two coffee brands, the number of stores are nearly 100 and 350 respectively, Manner Coffee's 10 cities at the same time opened more than 200, the future will also let the two in the number of stores continue to distance. But in terms of store size, the Manner Coffee store is only about 10 square meters, which is also one of its advantages of rapid expansion. In addition, M Stand currently has about 150 stores, and its stores are designed for one store and one, with an industrial style minimalist third space 2.0 model, which is positioned as a starbucks for a new generation of young people in China.

Among the new coffee chains, the more special is the nova coffee established in 2019, according to its official website, as of February 2022, the number of its stores has reached 1500, which has distanced itself from other brands in terms of the number of stores. Unlike other new coffee chains, it is currently open to join.

For the new coffee in the store model in the main ways, iResearch consulting analyst Wang Xiaopei pointed out to this reporter: "According to the management model, it is mainly divided into self-operated and cross-industry cooperation. Cross-industry cooperation mainly refers to finding physical places related to coffee consumption scenarios and cooperating, such as gas stations, convenience stores, and bakeries. Under the self-operated mode, according to the scope of the products, it is mainly divided into: catering stores that provide meals, light meals, etc., ordinary stores or more flexible small take-away stores. ”

Profitability conundrum

The listing of Luckin in 2019 fired the first shot at the listing of Chinese coffee companies. It also gave enough confidence to the coffee market, and then more capital entered the coffee track. But capital betting, brand expansion, how many in the future can persist to the end?

Tims, which entered China in 2019, announced in August 2021 that it would package its China operations through a merger with silver Crest Acquisition Corporation ("SPAC"), a blank checking company, before listing on the NASDAQ in the United States. According to Tims China's original plan, the merger transaction was supposed to close in the fourth quarter of last year, but was subsequently postponed to the first quarter of this year.

In March this year, Tims China announced that it would be refinanced, and the termination date of the merger agreement with the blank check company SPAC was extended to June 30, 2022, because the merger with SPAC is an indispensable prerequisite for Tims China's listing, which also means that the company's IPO process may be postponed again.

Although Tims China is currently optimistic about capital and the speed of opening stores is fast, from its disclosed data, as of 2020, Tims China's revenue is 212 million yuan, a net loss of 143 million yuan, and profitability is still a problem.

In addition, Luckin, which was listed in the United States, is currently further profitable, but it has not achieved profitability as of 2021. Going to an IPO in the future will be the choice of most companies, but profitability is also an unavoidable problem for companies.

In order to achieve brand image and market share, companies have to attract consumers through advertising and preferential strategies. Interestingly, when you search for coffee on Taobao, Yongpu, Luckin, Sandun, Seesaw Coffee, and Sumidagawa all pop up on the homepage with advertising logos.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng