Image source: Visual China
The fierce competition in the domestic coffee market continues to this day, and there is still no clear winner.
The accumulated contradiction between low prices and commercial gains is difficult to hide, and it is reflected in the declining profits in the financial reports and the reduction in services that brands are considering. Compared with this kind of signs of whitewashing by the company, the living environment in which workers are constantly being squeezed is recently erupting in an unseemly form.
In the case of successive conflicts between Manner's store staff and customers, public opinion did not stop at the right and wrong of the two sides, and the actions of brand capital could not be absent from this discussion.
Every coffee brand operating in the Chinese market is inevitably involved in this fight. Whether it is Luckin and Cudi, who are obviously of the same origin but have a hard fight, or Starbucks, which has been in China for many years as an outsider, or Manner, the protagonist of this incident, as long as the brand has capital injection and has stakeholders who are responsible for it, they will all participate actively or passively.
They differ in the choice of cost reduction methods. Some of them choose to reduce concessions, others seek new ways of working together to reduce land and operating costs, and Manner chooses the worst way – to squeeze the value of labor. But in any business, people should exist as an end, not as a means.
Cudi and Luckin have been fighting for a long time over the price of "9.9 yuan" coffee, and even though the operating efficiency of a single store is low, both are unwilling to stop expanding the number of stores in order to seize the share.
At present, the discount of Luckin has been quietly reduced, the 9.9 yuan coupon has been returned to the secondary entrance, and the applicable coffee categories have also been reduced. In the first quarter of 2024, Luckin had an operating loss of 70 million yuan, which was too big a gap from previous quarters, turning from profit to loss, and net profit fell from 1 billion yuan to a loss of 100 million yuan.
Even with the trend of closing stores for not making money, Cudi still wants to stick with the "9.9 yuan coffee", and the company recently said that the strategy will continue for at least three years. In an effort to reduce costs, Cudi launched the "COTTI Express" shop-in-shop model last month, renting out coffee equipment to convenience stores, hotels, restaurant chains, and opening points of sale with external locations and storefronts. Li Yingbo, chief strategy officer of Cudi Coffee, said that this move can avoid increasing the cost of rent, and hopes that the staff in these stores can be reused to further reduce Cudi's labor costs.
Starbucks has also made moves. Although its brand positioning does not allow it to join the price melee, in recent months, officials have been offering 7% off coupons to consumers. In mid-May this year, there was news on social media that Starbucks began to strictly implement "consumption seating", and those who did not consume would be politely persuaded to leave. After the fermentation of public opinion, the official response said that there are no such rules and everyone is welcome to come to Starbucks. The "third place" has always been Starbucks' characteristic model, and the emergence of such rumors shows the pressure on its business in China.
In addition to cost, price, and service, labor is also an option that can be compressed in Manner.
After three successive clashes between store staff and customers, Manner's store staffing and staff treatment issues were pushed to the forefront. Several baristas who used to work for the brand took to the social media platform to complain about Manner's impersonal system.
In their descriptions, baristas are required to work long hours, with unguaranteed breaks, and a serious mismatch between wages and labor. This information seems to explain the behavior of the clerk in the video who lost control and "splashed" his emotions to customers, and also made this coffee brand, which was favored by capital and expanded rapidly in a short period of time, be re-examined.
On a legal level, the number of insured companies in Manner is much lower than the actual number of employees. This is being further verified by law enforcement.
Founded in 2015 by Han Yulong and Lu Jianxia, this coffee brand quickly became the darling of the capital market after its establishment. From the end of 2020 to June of the following year, it intensively received four rounds of large-scale financing, from well-known investment institutions such as Meituan Dragon Ball, Temasek, Today Capital, and ByteDance.
Today Capital was one of the earliest investors, investing in Manner in 2018 when it had only a single-digit number of stores. Since then, Manner has been in expansion mode, and the number of stores has grown significantly. As of June 2021, there are 136 stores nationwide.
But what is surprising is that when capital from all walks of life poured in in 2021, capital quietly withdrew today. At that time, there was a saying that the founders and their minds were not in agreement with Today's Capital, and they cared more about the coffee itself than commercialization, so they wanted to find investors who really understood coffee. It is difficult for the capital to mature and the "small and beautiful" boutique tonality of the brand to coexist.
Looking at it now, there is still a hint of truth in the collapse of this statement - Manner has indeed expanded wildly under the coercion of capital, reaching 1,000 stores at the end of October last year, and the company is responsible for making a profit and being responsible to investors; But it is still sticking to the "specialty coffee" route, with a half-pour-over method.
This method of production requires more professional baristas to make it by hand, and it is destined to not be able to develop a flexible way of opening a store like Cudi. And Manner is the main cost-effective, if you bring your own cup, you can also buy a cup of basic products for 10 yuan.
Manner focuses on people for cost compression, so as to meet the "boutique + low price". In this case, people are alienated, and as a labor resource, people can be compressed like store area, equipment, and production materials.
It is difficult to deduce whether today's situation is the original intention of the founders and their wife, because of the entry of multiple capitals, the position of the company's voice may have been occupied by the capital.
As the concept of ESG becomes more and more important in the business community, Manner should improve its employee treatment and management in the long run. The dense outbreak of contradictions shows that the company has been suffering from shortcomings for a long time. Manner's bring-your-own-cup preferential policy has accumulated a certain reputation for it in terms of "E", but "S" and "G" are equally important. If the short board is too short, the long board cannot whitewash the lack of corporate social responsibility.
The unethical cost compression for the sake of market occupation and profit seems to please consumers at the price level, but its negative effects will always be poured back on consumers in various ways. (Fortune Chinese Network)
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