From the premise of Luckin, most people think of low-priced coffee and a large number of coupons.
Now when it comes to Luckin, it is the unavailable raw coconut latte and the teacher Leo Xiu who is anxious to get off work.
The netizens who are also intelligent suddenly reacted, isn't Ruixing delisting before? How do you live well now?
In fact, at some point, Luckin has become a unit of measurement.
A few days ago, Ai Faner wrote about Manner Coffee. The popular comment area of the official account was actually occupied by Ruixing, such as "It is more expensive than Ruixing" and "Ruixing is actually better than Starbucks."
Luckin Coffee is not just Luckin Coffee, it is also nicknamed "the light of the nation", "the American capital harvester", and "a conscientious enterprise that is powerful to go abroad." As a commercial enterprise, it has experienced a fiasco, but as a symbol, it has a strong share of users' minds.
What kind of company is Luckin? Perhaps at this moment of its "resurrection", we can look at it more calmly and comprehensively.
Capital comes to the world
The speed of Luckin's initial expansion was crazy.
In October 2017, Beijing Galaxy SOHO Ruixing opened its first store. In May of the following year, it was announced that 13 cities had completed the layout of 525 stores. During the period, it received 3 million orders and sold 5 million cups of coffee. As of the end of March 2019, Luckin had opened 2,370 physical stores in 28 cities across the country, with an average of 5 landings every day.
While expanding vigorously, Luckin issued a large number of free coupons for the first cup and large-value coupons, enabling users to drink handmade coffee similar to Starbucks for only a few yuan or even zero yuan, quickly acquiring initial users, and Consolidated the repurchase rate.
On May 17, 2019, Luckin Coffee landed on Nasdaq and raised US$695 million. From establishment to listing, Luckin Coffee only took 18 months and once created the world's fastest IPO record.
Looking at it as a ridge and a peak, consumers feel that they have received a lot of discounts, but investors can't laugh happily. Luckin's subsidy model has undoubtedly formed a bottomless pit. In 2018, Ruixing lost 1.6 billion, which is equivalent to selling one cup and losing two cups.
Station B UP "Hardcore Half-Buddha Fairy" in "How Does Ruixing Coffee Beat Capitalism?" 》It is very clear in the video that Luckin's revenue has doubled by 5 times in 2019Q3, but its cash flow has only doubled by 3.5 times, which means that it has not burned positive cash flow. On the one hand, consumers are greedy of Lucky's cheapness and will not buy without coupons; on the other hand, all the new cash is raised from the IPO. This directly embodies the nature of "internal public welfare and external cutting of leeks."
The so-called "no profit can not be early", Ruixing is anxious to go public, behind it is bound to be profitable.
According to the analysis on the topic of "What kind of company is Ruixing Coffee?" by Zhihu Friends of "Waste Investment" , U.S. stocks are listed on the registration system, and the securities issuance review agency only conducts formal review of the registration documents, and does not make substantive judgments. There is a corresponding investor and a certain fee can be listed. First draw a blueprint for the future, and then sell the shares to investors in the secondary market after a three-month or six-month lifting period, completing the closed loop of capital operation. The final outcome is that the founder makes a lot of money, investors in the primary market make a small profit, and investors in the secondary market are reaped.
But after all, the paper package can't keep the fire out, and we all know what happened later.
On April 2, 2020, Luckin Coffee issued an announcement, voluntarily admitting to a false transaction of RMB 2.2 billion, and its stock price plummeted by 80%. On June 27, 2020, Luckin Coffee issued a statement stating that the company will suspend trading on NASDAQ on June 29, 2020, and proceed with delisting records.
At this point, Luckin is also considered a strange flower among listed companies, which is precisely a strange flower among listed US stock companies, but it has also indisputably harmed the collective reputation of China Concept Stocks.
After the delisting storm and internal investigations, the management involved in financial fraud has stepped down. At the same time, Luckin Coffee's more than 4,000 stores nationwide are still operating normally. Luckin's financial fraud incident has been recounted over and over again, but is there any other way of saying Luckin's story?
Take the road between the convenience store and Starbucks
Luckin's ability to survive the delisting storm is indispensable for its precise positioning. From the past to the present, Luckin has found and adhered to a possibility between convenience stores and Starbucks, and made commercial coffee that is affordable. Of course, this price-performance ratio will fluctuate according to the face value of Luckin's coupons.
Consistent with the temperament of crazy expansion, Luckin Coffee never concealed its ambitions. At the beginning of its birth, it set the goal to challenge Starbucks in the domestic market.
Just comparing the coffee in ordinary stores, Luckin and Starbucks are indeed similar. Coffee machines, coffee beans, milk and other raw materials are all similar in cost, and many of Luckin's baristas dig from Starbucks. The automatic coffee machine, Arabica beans, and UHT high-temperature sterilized milk make most of Luckin coffee and Starbucks coffee, but there are some differences in roasting and quality control.
But this is in comparison with ordinary stores. Unlike Luckin's use of fully automatic coffee machines, in some core stores and selected stores, Starbucks still uses semi-automatic coffee machines La Marzocco, as well as the world's top Nova White Eagle semi-automatic coffee machines and Black Eagle semi-automatic coffee machines, some Starbucks The store also offers expensive Geisha coffee beans.
Therefore, Luckin and Starbucks are not on the same track. Compared to taste, the scene is the key issue. Starbucks has created a "third space in the city," where office workers and urban petty bourgeoisie work and relax. What Luckin is doing is "infinite sceneization", opening coffee shops to the corners of schools, CBD, science and technology parks, communities, and commercial streets. Luckin also has Youxiang stores, but the strategic focus is on quick-access stores. At the same time, Luckin attaches great importance to the operation of online mini programs, and food delivery frequently enters the streets and alleys of the city. The consumption scenarios of the two are obviously different.
But Luckin tied up with Starbucks in a high-profile manner from the beginning, which is indeed very clever. When analyzing Luckin, Starbucks could not help being compared over and over again, including this article. Luckin's goal has indeed been achieved. Its brand recognition has been very successful. In addition to its own strong investment in branding and marketing, Starbucks, which has long been known throughout the country, has also passively played an important role.
Luckin and convenience store coffee also have a lot in common. The fully automatic coffee machine in the 7-11 convenience store is the same model as Luckin, and the milk is Pakistani fresh milk, which is fresher than Luckin's. It is also convenient and easy to get, Luckin still has its own uniqueness. Its behavior of benchmarking Starbucks on raw materials and its fashionable brand logo has enabled it to enter a coffee market with a unit price of 20-30 yuan. The main customers are white-collar workers with the most market potential in China, but consumers are The price is close to the convenience store, but the current price will be higher. Moreover, for many consumers, it tastes more and better.
All in all, Luckin has found a very precise positioning between Starbucks and convenience stores, filling the market gap in the early stage of development and occupying the minds of users.
YoYo is a loyal user of Luckin and Starbucks at the same time. She likes to work at Starbucks. When she visits Luckin, she usually chooses to take it away. "The Luckin table is relatively small and has no sockets. It is not actually a third space."
Therefore, Luckin is a brand with no strengths and no shortcomings. The overall score is quite high. As Lucy user Lucy said: "I don't think Luckin Coffee has any bright spots, but sometimes I go out. Outside, you need to find a place to rest and chat. McDonald’s and KFC are too noisy. Hey tea, Nai Xue’s tea, and Starbucks items are all more expensive. Luckin is relatively a compromise with enough price-performance ratio. s Choice."
At the beginning, it was said that it was a good benchmark for Starbucks, but in the end it became cost-effective. This is Luckin's own choice.
To find a real "similar" or "predecessor" for Luckin, it should be Doutor coffee , the most highly acclaimed chain coffee brand in Japan. Its characteristics are delicious, inexpensive, and everyday. However, Luckin is still far from Doutor coffee in terms of brand, quality, category and aesthetics.
From spending big money to budgeting
Rui Xing, who was crazy to burn money at the beginning, is slowing down and heading to the opposite of the past, becoming another savvy self.
The expansion of Luckin's stores has not slowed down. According to its published data, more than 2,000 new stores will still be opened in 2020. However, the expanded stores are dominated by fast-track stores, rather than exquisitely decorated Youxiang stores. Cache stores are generally located in areas such as office buildings. The number of staff is small and the demand for takeaway is large. This is conducive to Luckin's cost control.
Luckin Coffee also selectively restarted its unmanned retail business. On March 8 this year, Luckin Coffee announced on its official public account that it would launch the "Rui-Shopping" unmanned coffee machine to attract investment. The open areas include 38 major cities such as Beijing, Qingdao, Changsha, Shanghai, and Hangzhou. Ruijigou and Ruixing stores use the same fully automatic coffee machine, milk and coffee beans to ensure that the product quality and taste meet the same standards as Ruixing stores. At the same time, the unmanned vending machine "Rui Costume", which sells a variety of fresh food and snacks, was strategically abandoned.
The most obvious thing for consumers is that Luckin's products have increased in price and subsidies have decreased.
The current discounts are mainly full discount coupons, 50% discount coupons, and 4.8% discount coupons. The first cup of free for new users has been cancelled. The way to obtain coupons has also changed, mainly in the Luckin store community for lottery distribution, and users will also receive some coupons after placing an order or when they have not placed an order for a long time.
However, from personal experience, you can find that the full discount coupon and the 50% discount coupon can only be used for the original price of a single product, and cannot be used in addition. For example, in the mini program, "Ovaltine Melaleuca Rena Ice" shows that the actual price is 20 yuan, which is the price for orders placed without coupons. There is also a crossed out gray word "32 yuan" to indicate the original price, so if you use a full discount coupon of 29 yuan minus 15 yuan, the final price is 32 yuan-15 yuan, which is 17 yuan, which is actually only a discount of 3. Bucks. The discount looks like a good deal, but it's actually a game of words.
At the cusp of the storm, Luckin is still launching new products. In April 2020, Luckin launched the spring cherry blossom series and the Duoduo family. In September 2020, it launched the thick milk series, as well as the recently exploded raw coconut latte. In addition to coffee, Luckin also launches a variety of soft European buns and desserts from time to time.
At the same time, Luckin put more energy on private domain traffic and social marketing. For example, the store community mentioned above is to use coupons to attract users into the group, and pull the group around the LBS location of the store. After entering the group, the operating staff will push new products, distribute benefits, and push different items at four different time periods every day. The product coupons indicate that Luckin is no longer as crazy as before, but hopes to retain more repurchases. In addition, Luckin has also settled on the food delivery platform.
In terms of social marketing, Luckin's most recent move out of the circle is to hire Lilu Xiu as an endorsement.
Lilu Xiu, a contestant in the variety show "Creation Camp 2021", when other students tried their best to make his debut, he bluntly said that the draft was very tired, and he just wanted to get off work and go home quickly. On the contrary, he became a stream and gained super popularity. . However, apart from the draft, he is very serious about everything else. He is shown as a "working emperor". He once worked as a Russian purchasing agent, set up a street stall, and even sold his own photos in exchange for power banks.
In Luckin’s commercials, no matter what kind of coffee it is, the ad slogan is the same: "XXX, YYDS". Lelouch repeats it over and over again. It is very simple and direct, somewhat perfunctory, awkward and funny. . At the end of the video, Lelouch also asked "Can I get off work", which fits Lelouch's usual personal style. The image of a worker in the Lee Road repair entertainment industry is similar to the temperament of Luckin's "civilian version of Starbucks". This marketing has achieved good results. Luckin also took advantage of the hot iron to apply for the registration of the "YYDS 歪歪滴艾斯" trademark.
Luckin's own image on Weibo has become more and more lively. For example, after the raw coconut latte was sold out, it created the stalk of product developers who went to Hainan to pick coconuts. This shows that Luckin is working hard to create social topics that are easy to spread, which is consistent with the marketing of most new consumer brands at the moment.
Luckin often likes users or spokesperson fans about Luckin's content, and there are also many "follow + forward" lucky draws to send coffee and cups to welfare activities. This daily and people-friendly small move maintains a good amount of interaction. Luckin also launched co-branded peripherals with LINE FRIENDS, co-branded credit cards with Minsheng Bank, and limited-edition fashion peripherals with Kazilan, stimulating frequent consumption in the short term.
What is more interesting is that Luckin has many loyal fans on social media, and the sentiment in the comment area is often more positive, which is in sharp contrast to its negative image in the US stock market. At the time Luckin's apology statement about financial fraud, there was a large group of consumers who supported Luckin. Many people believe that if there is no change in quality and no significant increase in price, this information will not affect consumer desire. Because the twists and turns of the capital market are too far away from ordinary people, consumers are more willing to pay attention to information about their vital interests such as price, taste, and marketing interest. In these aspects, Luckin has done quite well.
Why is Luckin Luckin
Today, Luckin seems to have come out of the delisting storm.
On the one hand, on December 16, 2020 Eastern Time, Ruixing and the US Securities and Exchange Commission reached a settlement on the financial fraud. Ruixing agreed to pay a fine of US$180 million (approximately RMB 1.175 billion) to avoid allegations. The settlement has brought many conveniences to Ruixing, such as being able to face investor lawsuits and judicial investigations more calmly.
On the other hand, Luckin once again won the favor of capital. On April 15 this year, Ruixing Coffee issued an announcement announcing that it had reached a stock investment agreement with the company's major shareholders, Dazheng Capital and Joy Capital, for a total of 250 million U.S. dollars. And under certain conditions, Dazheng Capital and Yuyue Capital can make an additional investment of US$150 million in proportion.
In August 2020, Luckin announced for the first time that it has realized a positive cash flow for a single store. According to the report released in December 2020, more than 60% of directly-operated stores achieved store profits in November. As of the end of 2020, Luckin had nearly 100 million registered users. During the Spring Festival holiday in 2021, Luckin Coffee opened more than 1,900 stores across the country. The volume of ready-made beverage cups was nearly 5 times that of the same period last year, and revenue was nearly 7 times that of the same period last year. Luckin's management expects to achieve overall profitability in 2021.
However, as a fast-entry company, crazy subsidies and delisting at the speed of light, business model fraud, negative brand image, huge claims from investors, lack of US stock financing channels, and hidden cash flow are still the biggest crises. On November 3, 2020, the law firm Federman & Sherwood issued an announcement calling on investors to initiate and join a class action lawsuit. Luckin's future is still being tested.
Luckin is certainly not a good role model, but it shows a typical new consumer brand.
It started with frantically subsidizing users and burning large amounts of financing, with the goal of squeezing out competitors and quickly conquering cities. The high cost performance not only occupies the market share, but also captures many brand fans, but also gains a fairly high reputation.
After the false business model was punished in the capital market, Luckin slowed down, "reformed", launched more new products, operated a stable customer base, played brand marketing, and created social topics.
In fact, Luckin is not the original creator of the subsidy model. Ruixing is only the third listed company of the former chairman Lu Zhengyao. Shenzhou Car Rental, which was listed in Hong Kong in September 2014, and Shenzhou UCAR, which was listed on the NEEQ in July 2016, were both created by Lu Zhengyao. Coincidentally, it is not a book. China Rent-A-Car also used subsidies to raise the bar. Back then, there were a lot of recharge promotions of "recharge 100, return 100, no cap", and the model was similar to Luckin. Moreover, Luckin's previous rounds of investment came from the Shenzhou Department with strong capital.
Lu Zhengyao's "Lu-style capital technique" can perfectly sum up his model-"Focusing on the trend, establishing a company, huge financing, burning money for expansion, and quickly seeking an IPO." In addition to the Shenzhou department, there are also many takeaway platforms, e-commerce platforms, social platforms, and travel software that started in this way.
But there is a huge gap between various industries. Returning to the original starting point, Luckin was able to enter the stadium successfully because it chose the right track and told investors a pleasant story: "Compared with the US and Europe with 400 cups per capita, and Japan and Korea with more than 200 cups per capita. In 2017, the per capita consumption of coffee in mainland China was only 4 cups a year. Behind this is a huge incremental market. What Luckin does is to develop, explore, and cultivate this market.”
Its grand blueprint did impress a group of American investors who believed that no one could resist the charm of coffee. Luckin was able to take advantage of capital and use subsidies to eliminate the price pressure of Chinese people drinking coffee and capture consumers with high price sensitivity. Then slowly use new businesses in multiple channels to stabilize these consumers. Although this model is not glorious, Luckin's story of ups and downs, for itself, may be more rational than we thought.
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