Produced by | Bullet Finance
Author | Ruth
Edit | Fang Fang
American Editor | Qianqian
Audit | Ode
"The coffee industry has opened 88,925 new stores in the past year, with a net increase of 51,144."
This is the data provided by the narrow door dining eye as of April 8, China's coffee market is growing rapidly at a visible speed, with the intensification of competition in the industry, many coffee companies in order to tap new increments, resolutely choose to seize the new tea market, among them, Cudi Coffee's action is the most "radical".
Since April 19, Cudi has launched a marketing campaign with the theme of "Tea Season", and more than 20 products in six categories, including raw leaf freshly extracted milk tea, fruit tea, matcha, plant-based milk tea, pure tea, and Kuco ice, have been launched one after another.
(Photo / Cudi Coffee Mini Program)
When you open Cudi Coffee's mini program, you can also find that more than one-third of the entire menu bar is occupied by decaf drinks such as fruit tea and light milk tea.
However, Cudi's brand is already a brand specializing in new tea drinks, so why does Cudi himself spend a lot of effort to promote milk tea? Could it be that Cudi was so ruthless that he even beat himself?
1. The status of the tea cat's "sub-brand" is not guaranteed
Although coffee and tea drinks are not separated, the behavior of a chain coffee brand to promote milk tea does seem to be a bit unprofessional.
In response to Cudi Coffee's series of "riotous operations", various voices have also appeared in the market, such as whether Cudi intends to continue to expand its boundaries outside the coffee business? Another example is whether it is because the opening of the tea cat store did not meet expectations, there are too many production materials, and Cudi Coffee can only help consume some ......
There is some truth to these speculations, but whatever the reason for Cudi to start pushing milk tea, it seems to be a definite fact that the tea cat is not developing as expected.
In order to open the second battlefield to absorb social funds, the tea cat has always been the "sub-card" pushed by Cudi, and it can also be found on social platforms that want to join Cudi, or Cudi's existing associates, are persuaded and forced to open the tea cat, but many people would rather not open a store than choose the tea cat.
Behind the "dislike" of the tea cat, it is actually inseparable from the relatively high investment cost.
Although the tea cat does not charge a franchise fee, in fact, according to the tea cat investment manual, if you buy human-computer collaboration equipment, you need to invest about 300,000 yuan to open a tea cat standard store, and 450,000 yuan to invest a brand store; If you lease human-machine collaboration equipment, you need to invest about 200,000 yuan to open a tea cat standard store, and about 350,000 yuan to open a brand store.
With such a high cost, Tea Cat must come up with a matching profitability in order to attract interested associates, but apparently the current Tea Cat has not done this.
(Photo / Little Red Book)
In Guizhou, for example, a potential associate said after an investigation that the first batch of tea cat associates had lost rent for several months, and the brand had not responded to the compensation plan. Some industry insiders found that Guiyang Camellia Flower Orchard and Century City have recently removed huge advertising paintings, coupled with the fact that the stores are full of birds, and it seems that they have entered the "countdown to store closing", which also dissuades a large number of potential associates who are still hesitating.
In addition, the chain coffee market is seriously involuted, and the new tea drink is not inferior.
According to the latest data from Tianyancha, there are more than 338,000 new tea-related enterprises, of which more than 54,000 are newly registered from January to December 2023, and there will be more than 30 financing events in the field of new tea drinks in 2023, with a financing amount of more than 1.9 billion yuan.
Realizing that they will face more fierce competition in the industry, new tea players have lowered their prices to adapt to the changes in consumer demand. Nai Xue's tea official announced the launch of the "9.9 yuan per week to drink Nai Xue's fresh milk tea" activity; Tianlala launched an 8 yuan fresh milk tea series; Gu Ming released an exclusive event for members on Friday, and you can buy corresponding drinks for 9.9 yuan; CoCo can launch a single card of 9.9 yuan and 12.9 yuan, which can be used to write off one designated drink for free......
In this way, the attractiveness of the tea cat, which focuses on the "low-price brand", has naturally been greatly reduced.
Zhu Danpeng, an analyst of China's food industry, also believes that in 2024, the new tea industry has entered an all-round and multi-dimensional competitive node that is more than brand, scale, marketing, product, supply chain, and capital market empowerment.
If in 2024, Chamao cannot keep up with the trend of the consumer market and accumulate brand potential energy, it may be difficult to explore incremental space.
2. Can the "subsidy law" extend Cudi's "lifeline"?
Perhaps because it was found that the current tea cat was not enough to support the "second curve", Cudi Coffee began to turn the gun and return to its main business while pushing light milk tea.
Recently, Cudi announced that the current store subsidy policy will be extended to December 31, 2026, saying that the policy covers all stores of Cudi, and different stores will receive different amounts of subsidies according to factors such as rent and competition, and the maximum single cup can be subsidized to 14 yuan.
It seems that Cudi hopes to stabilize the market and increase its attractiveness to potential affiliates by extending the subsidy period, but the "land-based play" with "low prices" and "subsidies" as the core may not continue to work today.
On the one hand, whether it is defaulting on the payment of the associates, or the uproar of layoffs and salary cuts, it proves that Cudi's cash flow situation is not optimistic.
In March 2023, July and January this year, Lu Zhengyao still had three pieces of information that were executed, with a total of more than 1.1 billion yuan in the execution target, plus the latest 1.89 billion yuan, a total of nearly 3 billion yuan was executed.
The labelling of spiritual leaders as "old men" undoubtedly further weakens Cudi's ability to raise funds, and in this way, the sustainability of Cudi's subsidies is questionable.
On the other hand, in the more than a year since Cudi was established, the "cake" that was once drawn in the investment brochure has gradually faded from the "vest" and revealed its true face.
Douyin blogger "Yangyang said to open a store" made an official phone call and learned the information of Cudi's franchise, which is "no franchise fee and brand usage fee", "payback cycle of 4-6 months", "gross profit margin of about 60%"......
But in fact, according to the revelations of Cudi's departing employees on Xiaohongshu, even if there is no franchise fee, there are high entry fees, decoration fees and second-hand equipment price differences, which are a lot of expenses for people who want to open stores.
(Photo / Little Red Book)
In addition, according to the data speculated by China Merchants Securities, Cudi stores are calculated according to the average daily sales of 400 cups and 10 yuan per cup, and the investment return cycle is about 18 to 24 months.
What's more, at this stage, most Cudi associates simply cannot reach the average daily sales of 400 cups, according to the Tencent database Dizhou cup volume estimates, in early March, Cudi's average daily cup volume has hit a new low, only 128 cups, which also dissuaded a large number of potential associates who are waiting and seeing.
In addition, after announcing the extension of the subsidy policy, Cudi also announced that the global supply chain base in Anhui has been officially put into operation, trying to create a positive case of reducing costs and increasing efficiency.
However, the "pie" of self-built supply chain, which Cudi began to describe in July last year, has been delayed again and again, not only nearly a year later than the originally expected production time, but also the shortage of materials at this stage has not been improved.
(Photo / Little Red Book)
In the past month, many consumers have reported on social platforms that they encountered out-of-stock when buying Cudi products, such as "they were sold out on the first day of launch" and "they have changed several stores, but they have been sold out......
The "death" of the supply chain has not been resolved, and the internal contradictions have broken out first.
(Photo / Little Red Book)
More and more Cudi employees began to expose the internal problems of Cudi, including but not limited to "arrears of wages" and "passing on the conflicts between the company and the associates", etc., which seriously affected the brand image and damaged the confidence of the associates and potential associates again.
All in all, whether it is to promote milk tea, or to extend subsidies and announce the commissioning of supply chain bases, in fact, Cudi Coffee just wants to establish a reliable image in front of existing and potential associates, but whether a brand is worth following, rather than verbally describing a beautiful blueprint, what Cudi needs to do now is to practice its internal skills.
*The title image in the article comes from: Camera.com, based on VRF protocol.