Lu Zhengyao recreates Kudi, can the "Luckin Model" defeat Luckin?

Cudi Coffee is trying to stir up turmoil in the coffee market.

A few days ago, a new Kudi coffee opened near Hangzhou's Xitian City, about 40 square meters, and the poster "Newcomers enjoy 9.9 yuan a cup" posted at the door was particularly eye-catching. Its location is also quite "clever", and directly opposite it, there is a Luckin coffee. As a result, the staff of the two coffee shops stared wide-eyed and observed each other's business as part of their daily work.

"I feel that the people on the other side of Luckin are more rolled than us, and it starts at 7 a.m., and we arrive at about 7:30 a.m. and open normally at 8 a.m." The clerk of Cudi Coffee inadvertently mentioned it while chatting.

Kudi Coffee Westfield City Store / Zinc Finance Photography

This is one of the many Couddy coffee shops in miniature. In the past four months, Lu Zhengyao with his new project Cudi Coffee began to play "satellite-style", within one month of the opening of the first store in the country, more than 20 large and small cities, fully opened the national layout, up to now, Cudi Coffee has opened more than 1,000 stores, and the number of new stores is still rising.

From its previous high-profile appearance to today's barbaric growth, Cudi Coffee seems determined to make a name for itself in the coffee market. And its playing style is also clear at a glance, that is, imitate Luckin, and then become the next "Luckin". Whether it is low-price promotion, or celebrity finding, Internet celebrity marketing, and even product design, it is not much different from Luckin in that year.

Everything looks so familiar, and Lu Zhengyao, the man behind Cudi Coffee, has returned to familiar territory after experiencing successive failures in the two tracks of small noodles and pre-made dishes. However, Lu Zhengyao has left these years, the coffee market has undergone earth-shaking changes, Starbucks and Luckin two giants with absolute store advantages, leading the coffee track, cutting-edge coffee brands quickly entered the game, Li Ning, Huawei and other bigwigs have also started coffee side businesses.

It may not be easy for Cudi Coffee to make a name for himself again.

Face to porcelain Luckin

From the beginning, Cudi Coffee did not intend to avoid Luckin, and even wanted to take this opportunity to hype a wave of heat. Lu Zhengyao knows how to create topics, and the melon-eating masses want to see the "new love" and the "ex" pinch their heads, so he will find a way to stage a large-scale horse-grabbing "ethical drama" in front of the public.

Kudi Coffee wrote on its official website, "Kudi Coffee was created by Ms. Qian Zhiya, founder and former CEO of Luckin, and the original core team of Luckin. In addition, according to media reports, during the investment promotion period, the investment promotion staff of Cudi Coffee mentioned Luckin many times, and even said that they could open a store next to Luckin. At the China Merchants Conference, Qian Zhiya was mainly responsible for introducing Kudi Coffee, while Lu Zhengyao also appeared at the venue and talked with many investors.

Screenshot of the official website of Coody Coffee

Not only that, the store construction, promotion and marketing of Cudi Coffee reveal "Luckin flavor" everywhere.

The first trick of Cudi Coffee is to grab the market at low prices and fight a price war. On February 6, Kudi Coffee opened the "Hundred Cities and Thousands of Stores Coffee Carnival", in nearly two months, six series, more than 70 products with a minimum price of 9.9 yuan, invite new friends and have the opportunity to drink coffee for free at 0 yuan, which is the most important marketing activity since the establishment of Kudi Coffee.

Zinc Finance found that on apps such as Douyin, you can also buy 8.8 yuan for new customers to enjoy all-you-can-drink coupons. Compared with other chain coffees with more than 20 yuan in the market, at this stage, Kudi coffee is the same as giving it away.

TikTok screenshot

At the beginning, Luckin was caught off guard by the rapid growth of market share through discounts and coupons. Now Couddy is changing the soup without changing the medicine, or the familiar taste, just changing the competitor from Starbucks to Luckin.

In order to increase brand awareness as soon as possible, Kudi began to burn money on marketing. The store has not opened a few, first started a sponsorship business, now whether you go to the offline store of Coody Coffee, or log in to its official website, mini program, you can see the big avatar of Messi and other well-known players. Kudi has successively become the sponsorship partner of the Argentine national football team in China, the overall title sponsor of the 2022 Chengdu Marathon, and the strategic partner of Chao brand SMILEY.

The Kudi coffee mini program opens

Li Yingbo, co-founder and CMO of Kudi Coffee, also said that the company will cooperate with popular platforms such as Douyin and Xiaohongshu to carry out in-depth cooperation with celebrities and KOLs. At present, Kudi Coffee invites a star every week to help promote and promote, and Zhang Jike, Liu Yan, Nanpai Third Uncle and others have all appeared.

The Cudi team also reached out to some local influencers in terms of eating, drinking and entertainment, allowing them to Amway coffee and attract more consumers to offline stores. For example, in the Hangzhou area, Douyin's "Eat and Drink in Hangzhou" with 25,000 fans, "Little Apprentice" with 575,000 fans, and other Internet celebrities who focus on Hangzhou life have all done the promotion of Kudi Coffee.

TikTok screenshot

In the product line, Cudi Coffee also chose to directly "copy the work". Comparing the two products, the new products promoted by Coudy include "raw coconut latte", "thick milk latte", and "raw cheese latte", which are exactly the same as Luckin's. You know, when Luckin launched popular models such as raw coconut lattes, it had been taken over by Centurium Capital, which had nothing to do with Lu Zhengyao's period.

Screenshot of the Kudi coffee applet

Cudi Coffee's set of combination punches is aimed at Luckin. Looking back, why did Couddy open the store next to Luckin? The marketing is similar, the service is similar, the products are similar, but the price is cheaper than half that of Luckin. Kudi is using the name of "lucky" to brazenly grab Luckin's business.

Lu Zhengyao wants to be a "coffee dreamer"

In terms of the level of drawing flatbread, the average company is really not comparable to the new player Cudi Coffee. On the joint operation page of the company's official website, Cudi proposed the "Coffee Dreamer Plan", which introduced the project highlights, product introduction, cooperation details in detail, and finally threw a 24-hour hotline to welcome the majority of franchisees to sign a consultation.

Screenshot of the official website of Coody Coffee

Cudi Coffee's "sincere" gesture seems to indicate that this project is definitely not to cut the leeks of franchisees, but to give each franchisee a home.

Lu Zhengyao formulated a more radical store expansion plan for Cudi Coffee than the original Luckin, and opened the franchise in less than a month after the first store, and quickly expanded the store to thousands in 4 months. Lu Zhengyao's ambitions do not stop there, he once promoted Kudi coffee in a high-profile circle of friends, shouting the goal of "10,000 stores in 3 years".

Looking back at Luckin Coffee, the direct operation model and multiple rounds of financing are an indispensable part of its rise. According to Luckin's financial report, as of the third quarter of 2022, the total number of Luckin stores is 7,846, of which 5,373 are self-operated stores and 2,473 are franchised stores. That is to say, although Luckin has also opened up the franchise model, as of now, self-operated stores are still its main choice.

"Lu Zhengyao may run out of money", this is the main view of the outside world on Kudi Coffee's asset-light model different from Luckin. Generally speaking, it takes at least 6 months to 1 year for the single-store model to run through, and Kudi Coffee opened up so quickly, indicating that Lu Zhengyao's team's financing may encounter a bottleneck.

If there is any big difference between Cudi Coffee and Luckin, it is the positioning of the coffee shop. In the early planning, Cudi Coffee did not want to be a coffee snack shop, but wanted to create a full-time coffee shop: providing users with coffee and Italian specialty biscuits BIscotti in the morning, meals at noon, healthy snacks in the afternoon, and alcoholic drinks in the evening. Lu Zhengyao planned to eat all the big and small, and contracted all the food and drinks for urban young people for a day.

Screenshot of the official website of Coody Coffee

Although the business prospects seem to be promising, for Kudi Coffee, it is not a small challenge to balance the high-traffic prime business district and the large store area. With limited funds, it is simply impossible to quickly open large stores across the country.

At present, Cudi Coffee does not take the opening of a standard store of 40-150 square meters as the first choice. According to the data of the Kudi Coffee Mini Program, in first-tier cities such as Beijing, Shanghai and Hangzhou, the main layout is still about 40 square meters of fast pick stores, and then a few standard stores and shop-in-shops are scattered.

Hangzhou/Beijing/Shanghai Kudi coffee store layout

And as of now, the only meals that Cudi Coffee can provide are American hot dogs, the so-called light Western food, fresh roasted and alcoholic beverages have not yet been launched, and the official website only shows "stay tuned". The differentiating advantages of Cudi coffee over Luckin have not been realized.

It can be seen that Lu Zhengyao's "coffee dreamer" is still in the dream stage.

It's easy to imitate, but it's hard to surpass Luckin

The turbulent coffee market is very different from when Luckin first entered the market a few years ago. Now that the coffee track is more crowded than ever, old brands are accelerating store openings and stabilizing market share, and emerging brands are constantly entering the market, even if Coody Coffee starts over again according to Luckin's play, it may not be successful.

Kudi, who entered the market at a low price, seems to have failed to "please" consumers, but has been criticized for the taste of the product. On social media, many netizens said that the taste of coffee is light, and it feels like a copy of Luckin, and generally can only be drunk.

Social media screenshots

Kudi coffee is still in the early stage of development, the scale is still small, there are shortcomings in the supply chain, it is difficult to establish in-depth cooperation with mainstream suppliers, resulting in unstable product quality and higher costs than other large chain brands. According to Kudi's current cup of 9.9 yuan, after deducting the cost of raw materials and promotion expenses, the loss is almost inevitable.

On the other hand, the reason why Luckin Luckin successfully adopted the "low-price strategy" was that at that time, there were only high-end coffee mainly Starbucks in the domestic market, and there was a lack of affordable coffee that the public was willing to consume. Luckin entered the market at this point in time, occupied the user's mind with coupons, subsidies, etc., and when the coffee returned to the original price of ten or twenty yuan, consumers could also accept it.

But now consumers are willing to order Kudi coffee because it is temporarily cheaper than Luckin, which is a substitute. If Cudi has been imitating Luckin and can't push his own explosive model, then after it raises prices in the future, consumers are likely to be reluctant to repurchase. In other words, there is already a highly accepted Luckin in the market, why should consumers choose the "copycat version" of Kudi?

After two failed ventures, Lu Zhengyao went all in coffee again and tried to fight a beautiful turnaround. But if Coody Coffee wants to survive the cruel market competition, in addition to rubbing the heat of Luckin, it also has to run its own new way.

Text/Chen Yan

Edit/Gale