The development history of Luckin Coffee

The development history of Luckin Coffee is as follows:

Ruixing Coffee was founded by Qian Zhiya, the former COO of China UCAR Group. The first store opened in October 2017 and in 2018 On the 1st of the year, trial operations were launched in 13 cities including Beijing and Shanghai. After 4 months of running-in on products, processes and operating systems, 525 stores were completed. During the trial operation period, Luckin Coffee completed approximately 3 million orders, sold approximately 5 million cups of coffee, and served more than 1.3 million users. It announced its official opening on May 8.

On April 18, Luckin Coffee APP ranked first in the free list of food and drinks in the Apple mobile app store. On July 11, Luckin Coffee announced the completion of Series A financing of US$200 million, with a post-money valuation of US$1 billion (Dazheng Capital, Joy Capital, Government of Singapore Investment Corporation (GIC) and Legend Capital participated in this financing) . On August 1, Luckin Coffee announced its entry into the light snack market.

On September 6, Tencent and Luckin Coffee announced a strategic cooperation. Both parties will give full play to their respective advantages and jointly explore the application transformation of big data, mobile Internet, artificial intelligence and other technologies in offline scenarios and WeChat mini programs. Intelligent marketing to help build Luckin Coffee’s “smart retail” solution.

On December 12, Luckin Coffee announced the completion of a US$200 million Series B financing, with a post-investment valuation of US$2.2 billion (Joy Capital, Dazheng Capital, Government of Singapore Investment Corporation (GIC), China Gold Company and others are participating companies); on December 25, Luckin Coffee Shanghai New World Daimaru Department Store officially opened, announcing the birth of the 2,000th store, and also marking the completion of Little Blue Cup’s 2018 store opening plan one week ahead of schedule.

In the first three quarters of 2018, revenue was 375 million, costs were 808 million, period expenses were 424 million, and losses were 857 million; on December 28, foreign media reported that Ruixing Coffee was in preliminary discussions with overseas investment banks. The final possible listing destination is Hong Kong or New York. Luckin Coffee has registered Luckin Coffee (Hong Kong) Co., Ltd. overseas; on January 7, 2019, Reinout Schakel was appointed as the company’s chief financial officer and chief strategy officer, and reported to the CEO Qian Zhiya reports.

Why are many people not optimistic about it? So why do many people around us not be optimistic about Luckin Coffee? The reasons are mainly concentrated in the following:

1. Expand market share by burning money, then raise funds, and then continue to burn money

If the financing does not go smoothly, it will inevitably directly affect Ruixing Will coffee’s market subsidy strategy become another OFO?

2. Serious losses

If a company obtains 2C traffic through subsidies and considers going public, if there were still people paying for it in the overseas capital market before 2018, it was because of the reliance. China’s demographic dividend background; then in 2018, especially after the second half of the year, the valuation of 2C in overseas capital markets has reached a clear turning point. If an Internet company cannot have positive free cash flow or cannot expose losses If the mouth narrows, the capital market has gradually begun to no longer buy it.

3. Focusing on hot topics

In the domestic Internet circle, there is a well-known "secret". If a startup company wants to take the lead, it needs to fight with the big guys in the industry and push them to the top. Its YY becomes its own competitor. On the afternoon of May 15, 2018, Luckin Coffee announced at a media conference that it would sue Starbucks for alleged monopoly.

At the same time, Luckin Coffee issued an open letter stating that Starbucks was suspected of violating the relevant provisions of Articles 14 and 17 of the Anti-Monopoly Law and planned to file a civil lawsuit in the relevant court. As a new player, Luckin Coffee is preparing to directly sue the industry giant Starbucks. This method of Luckin Coffee has made more people, especially Starbucks fans, look down upon it, and even think that it is unscrupulous to promote itself.

What do you think of Luckin Coffee?

1. Two consecutive rounds of financing have been in place, and most of the investors have continued to participate in rounds and have good backgrounds. I believe that even if there are "prerequisites" for funding, the financial pressure on the company's operational level will not be great;< /p>

2. In the current capital market, being able to continuously obtain high amounts of financing and being a well-known institution shows that there is a high probability that capital will be happy to see some undisclosed data or business models;

< p>3. Cooperate with Tencent to increase traffic; after all, the most expensive thing in China right now is traffic cost;

4. The repurchase rate is 40%, making everyone remember it as quickly as possible This brand;

5. Some people are seriously comparing the store data of Starbucks, which has been operated for 18 years, from the number of stores, the output of coffee cups in a single store, the cost of a single cup, and even Deducing the sales price of a single cup of Luckin Coffee to achieve breakeven. It looks very professional, but in fact, we took Luckin Coffee's overall operation data from 0 to 9 months, statically analyzed and inferred the operation indicators, and completely ignored the process of early store opening, customer acquisition, and cup volume growth, and we came to this conclusion. There is still bias.

6. Luckin Coffee has established 2,000 stores in 22 major cities including Beijing, Shanghai, Guangzhou, and Shenzhen. During the first four months of trial operation, Luckin Coffee sold 5 million cups of coffee. Users It was 1.3 million; seven months later, on August 1, the total cup volume of Luckin Coffee was 18 million, and the number of users was 3.5 million; the data 11 months later was that the number of stores was 1,700, and the total cup volume of coffee sales reached 8,500 Ten thousand.

The next 1,200 stores of Luckin Coffee were completed in the next four months, and the initial store investment costs were huge, and sales did not take off in the short term. It is obviously unreasonable to compare the operating indicators and efficiency of the 809 stores in the first nine months with Starbucks' more than 3,000 mature stores. If Ruixing wants to challenge Starbucks' status, early investment is necessary. However, judging from the market share it has captured so far, as well as the data of a 60-square-meter cache store and Starbucks' 200-square-meter standard store, Ruixing Coffee's performance is still Remarkable.

7. Luckin Coffee has launched a new retail coffee model. In the core areas of key cities, Luckin has been able to achieve 100% coverage within a range of 500 meters, and users can reach it within a 5-minute walk. After doing such a big thing, we only lost 857 million yuan. Compared with those Internet companies with light asset models that frequently lose tens of billions of yuan, we can still see the value of fixed investment.

8. Nowadays, the per capita customer acquisition cost in most Internet fields starts at 10 yuan, and in Internet finance it is even higher. Calculated based on the total cup volume, Luckin Coffee’s average customer acquisition cost per user is less than 100 yuan. to 80 yuan. This is related to Luckin Coffee’s rich experience in “fission marketing”.

Adopted the preferential strategies of "buy two, get one free" and "buy five, get five free", as well as a series of social fission new methods such as red envelope fission, new attracting rewards, IP fission, etc., and most of the advertising The fees are used as user subsidies to encourage old users to share with their friends and attract new users, which greatly reduces user costs and market investment expenses. This kind of gameplay is completely different from Starbucks’ traditional store welcoming customers;

9. Capital has demands. If capital is used as leverage, through Luckin Coffee’s business operation model, a certain part of Starbucks can be cut out. I think it is a success if we further improve the overall sales gross profit level through SKUs other than coffee, and narrow the loss exposure on the basis of consolidating market share, then it can be fully used as a capital story. It has landed in the capital market, and this model is completely "flawless"!

What should we think about? Let me share my views through the case of Luckin Coffee:

1. For new economic industries, especially the Internet industry, do not use the thinking logic of traditional industries to view the business of enterprises in this field. Model; this point, to put it bluntly, is not to make "metaphysical" mistakes.

2. When we look at new problems, we must check whether the process can bring us new ideas, instead of looking at a thing with colored glasses, such as Ruijin. Lucky Coffee is “dumping”.

3. The operation of new economy enterprises is almost always driven by capital. So from the perspective of capital, why do you like it and are willing to continue investing? This is a topic that requires empathy. , it also requires us to think from another angle.

4. Regardless of the final success or failure of a company, if we learn the "nutrition" of the process and details and can build up the ability to predict other things in the future, then it will be rewarding.

5. Look at the problem as you look at a person, learn to always smile, and avoid extreme left or right.