Tech Planet (WeChat ID: tech618)
Wen | patience
Cover source | IC photo
On the evening of March 24, Luckin Coffee released its 2021 Q4 and annual financial reports. Not only has the total revenue nearly doubled, but the bigger highlight comes from surpassing the "foreign big brother" Starbucks.
According to the financial report, Luckin's total net income in 2021 was 7.965 billion yuan, an increase of 80.7% over the same period last year. By the end of 2021, the total number of Luckin coffee stores has reached 6024, surpassing Starbucks China's 5557 stores. For a time, the number of #Luckin stores surpassed Starbucks China#, and the comment area directly called "Luckin is going to be resurrected".
With the annual total net income of Luckin Coffee and the total net income of Q4 ushering in a year-on-year increase of 97.5% and 80.7%, the losses under both calibers were reduced compared with the previous year. "Young and crazy" Luckin, not only got rid of the financial fraud scandal exposed in 2020, but also realized Starbucks China, which has more stores than "nearly fifty years old", and has become the largest chain coffee brand in China.
Luckin's series of "halos" contrast sharply with Starbucks' "falling". After the "Chongqing police" incident, Starbucks used the second price increase in just four months to "calm the storm with the storm", and many fan operations confused consumers.
But has the coffee consumer market really reversed? From "Luckin vs Starbucks", to "Luckin killed Luckin", and then to "Luckin is resurrected", did Luckin turn over with 99% of his efforts, or Did Starbucks "die" and fall off the altar?
Starbucks is in turmoil, with declining revenue and CEO departures
Founded in 1971, Starbucks has long been considered a representative of coffee culture, symbolizing the modern and vibrant modern urban lifestyle. With its first-class brand image, comfortable and beautiful consumption space, and middle-class lifestyle creation, Starbucks has a "god" status in the Chinese coffee market.
But at the end of 2021, Starbucks accidents were frequent.
On December 13 last year, the Beijing News published an investigative report "Reporter Undercover Starbucks: Expired Ingredients Continue to Sell, Shelf Life Is Changed At Will, Scrapped Pastries Are Put on the Shelves The Next Day", which undoubtedly breaks the image of Food Safety and ultimate hygiene pursuit that Starbucks focuses on marketing. In November, Starbucks had just been punished with an administrative penalty for not handling expired mooncakes; in October 2021, Starbucks announced its first price increase in two years. The stack of surprises and disappointments has made the outside world question the so-called highest standards of the coffee industry's "ceiling".
Wave after wave, wave after wave. At the beginning of this year, Starbucks even "resident" at the top of the hot search.
On February 13, 2022, Starbucks caused public anger because the Chongqing store expelled the police who ate at the door in the name of "damaging the brand image". On the cusp of public opinion, Starbucks China "high-profile" price increase, this time only 4 months from the last time. On the eve of "315", Starbucks was exposed to the news that "there are cockroaches in the drink", which was a heavy blow to Starbucks, even if it was clarified, public opinion no longer bought it.
In contrast, Starbucks' financial report showed that in the first fiscal quarter of fiscal 2022, Starbucks' sales in China fell by 14% year-on-year, and the unit price of customers fell by 9%, ultimately resulting in a 6% decline in transaction volume.
Perhaps, the price increase is one of the keys to Starbucks' profitability. Starbucks backs the 90 days of active members of the My Starbucks Rewards Club about 18 million people, such a large membership base, is the capital of Starbucks arrogance. However, price increases alone cannot rise in the future.
As Starbucks' second-largest market in the world, china's fiscal 2021 revenue reached $3.67 billion, accounting for 12.6% of its total revenue. And Starbucks, which has experienced food safety and arrogant price increases, today's brand image is not as good as before. Meanwhile, Starbucks' life in the United States in its first market is not good.
To save the global coffee giant, which is in decline. On March 17, Starbucks's official website announced that the current CEO of Starbucks, Kevin Johnson, will leave the company on April 4, when Howard Schultz, the 68-year-old founder of Starbucks, will join the board of directors and become acting CEO, returning to the helm of Starbucks. The announcement released by Starbucks shows that Starbucks will find its next CEO this fall. There is not much time left for Schultz, who is the CEO of Starbucks for the third time.
Luckin "Time to Run"
While Starbucks continues to decline, Luckin seems to be in operation from time to time.
Luckin was once known as the "loser" who would only burn money to expand, but it was also the more than 2,000 stores that burned money to expand, but it became the golden egg of Luckin's "resurrection".
After the financial fraud incident, Ruixing faced huge losses and capital withdrawal, and had to start "careful calculation" to gain weight. Before delisting, in order to prevent the collapse, Luckin slowed down the speed of store opening, closed stores that did not meet the standards, and merged the milk tea brand "Xiaolu Tea", which had poor performance.
According to relevant statistics, on the eve of Luckin's delisting (currently in the powder single market), the number of stores opened decreased by 80% in half a year; as of the beginning of 2021, Luckin's self-operated stores had 3929, a year-on-year decrease of 12.82%.
On the other hand, Luckin stopped internal friction, and finally the founding team, led by Lu Zhengyao, was asked out of the new board of directors after 600 days.
At the same time, Luckin, which has experienced layoffs and a major change of management, has constantly developed new products to attract users: first the thick-breasted latte that is highly sought after by young people, and then the raw coconut latte that broke the sales record with more than 10 million cups in a single month, plus the explosive velvet latte series. According to statistics, Luckin Beverage has 56 products, while Starbucks Beverage has 52 products.
Of course, like Starbucks, Luckin is also quietly raising prices. After Luckin was newly introduced, the discount rules have also undergone subtle changes. There is no discount roll below 4.8% off, the minimum discount is 5.5% off, the unit price of shopping mall stores has been raised by 2-4 yuan, and ordinary stores have been raised by 1 yuan. At the same time, the SKU category is no longer limited to coffee. After implementing this style of play, many stores finally began to make a profit.
Luckin, which has always been very heavy on marketing, has also continued to make a fuss about brand spokespersons. Luckin Coffee brushed a wave of heat last year because of the star "Liluxiu"; this year, it bet on the world championship and achieved brand value repair. Luckin signed Gu Ailing half a year ago: Gu Ailing won the winter Olympics, the company immediately launched a cooperation poster and updated joint products, and the two new products launched by Luckin were robbed.
In order to compete with Starbucks' "third space" dislocation, Luckin mainly delivers, shouting "We drink coffee" when entering the market, asking consumers to pay only for coffee. Luckin's Q4 2021 2021 for the first time separates the delivery fee from the sales and marketing costs, and the Q4 delivery fee is 233 million yuan, an increase of 83.8% year-on-year.
"To fatten and thin", to raise prices, to be new, to repair the brand, and to compete in dislocation, this is the self-help action of Luckin in the past two years, and through this financial report, it has also initially achieved "turnaround".
"Luckin's victory" is too early
With the concept of "new retail", Luckin has seized the market that Starbucks cannot sink due to high prices, and has also covered the business circle on a large scale through the strategy of intensively opening stores and sending them out. Luckin, which won through this "rural encirclement of the city", made the entire industry have to look at Internet coffee with surprise. At this time, Starbucks is deeply involved in the whirlpool of insufficient product innovation, aging service models, food safety, etc.
Compared with the financial reports of the two, the same is the data of direct stores, Starbucks same-store sales in the fourth quarter of 2021 fell by 14% year-on-year, and Luckin increased by 43.6% year-on-year. Looking back at the performance of the previous quarter, Starbucks same-store sales in the third quarter fell by 7% year-on-year, and Luckin increased by 75.8% year-on-year.
From the second half of 2020 to the present, the results of luckin's adjustment, which has undergone rebirth, are reflected in the financial report. But in fact, Luckin still has a long way to go to surpass Starbucks.
For Luckin, which is driven by "store pick-up + online takeaway", the taste is often criticized by consumers. Coffee drinkers think luckin is a "fast food coffee", "thin like water", with a very poor taste. This is undoubtedly a greater test for Luckin, in the key indicator of the industry's success, "repurchase rate".
Coupled with the takeaway model of Luckin Coffee, there is a loss of taste due to delivery time, and the quality is no better than many takeaway casual drinks. When it comes to Luckin, many consumers said, "I often classify it with tea hundreds of dishes, a little bit, etc."
At the same time, Luckin's customer unit price is far less than Starbucks. The unit price of Starbucks is 30-40 yuan, while the unit price of Luckin is only half of starbucks, at 15-25 yuan.
According to Starbucks' fiscal 2021 (October 2020-September 2021) financial report, Starbucks' consolidated net income was US$29.1 billion, an increase of 24% year-on-year, and in fiscal 2021, china's Market revenue was US$3.67 billion, China's same-store sales increased by 17%, and the number of global stores was 33,829; Luckin Coffee's total net revenue in 2021 was RMB7,965.3 million (US$1,249.9 million), and its non-GAAP operating loss in 2021 was RMB236 million.
It can be seen that Ruixing, which overtakes Starbucks China in a cost-effective corner, is still in a state of loss. There are many gaps in revenue, the number of global stores, market value, customer unit price and other fields.
Luckin Coffee, after the financial fraud, is indeed trying to change, but it is only "catching up with the self that was pinned on high hopes." As its investors said: the greater significance is to make up the financial report on time and get on the right track.
