Under the fierce battle between Starbucks, Luckin and Cudi, Xiaocai Coffee, which started with a self-service smart coffee machine in 2017, began to polish the offline store model in 2022, and in more than a year, starting from Beijing, it highlighted the positioning of tea and coffee products, copied the style of play in the growth period of a certain coffee, and quickly became an eye-catching new brand in the current market.
In 2024, Xiaocai has set itself the goal of "100 cities and 1000 stores", and the number of new stores will exceed 1,000 throughout the year. On the one hand, it accelerates in the domestic market; On the other hand, the overseas plan will be fully launched, and the first overseas store will be landed in Cambodia. At the recent brand strategy upgrade conference and partner conference, Zhu Baoju, the founder of Xiaoca, said that Xiaoca's plan for the next three years is to open 1,500 stores by the end of 2024, 4,000 by 2025, 8,000 by 2026, and start the process of listing on the main board of Hong Kong in 2025.
And at the moment, Starbucks, Luckin, Cudi, Manner, Nova Coffee...... There are many brands that can break through 1,000 stores in domestic coffee stores, and they have gone through rounds of sinking and price wars. There are also only a handful of listed brands.
The coffee track is getting more and more rolled, and the up-and-coming coffee coffee seems to have a lot of ambitions, wanting to accelerate and tell a high-growth story.
However, the little coffee who is striding forward is not lacking in his evaluation of himself. Yang Guo, co-founder of Xiaocai Coffee and former core member of Meituan, told Titanium Media APP that in the field of self-service coffee machines, Xiaocai Coffee can be regarded as a dark horse, but at the store level, it is actually still a "pony".
From To B to To C
In 2017, Xiaocai Coffee was established, and at that time, it was also the time when Luckin Coffee began to take off. Xiaocai Coffee did not become a To C store at the beginning, but first entered the market from self-service coffee machine equipment in banks, gas stations, universities and other channels. Yang Guo, co-founder of Xiaocai Coffee, told Titanium Media APP that making coffee machines is a way to add To B and To C, and has obtained some results.
But soon, Xiaocai found that no matter how good To B and To C are, it is just a supply chain player hidden behind the brand, and many people in the market don't know who Xiaocai is.
Starting in 2022, Xiaocai Coffee will open a second business line and open its own stores in the To C field. But soon, the team found that just using To B's channel resources to build a small store is not suitable for the stage where early products have not yet been played. "For example, today you open a small store in a university, but when the business is good, as long as you bring in a Luckin or Cudi, there will still be competition." Yang Guo said.
To C is not the same as To B. To B relies on resource integration, and channel capability is the first. Second, products with absolute leading technology and exclusive advantages can be invincible. To C is a very comprehensive sector, and there can be no shortcomings in organization, technology, equipment leadership and management ability, and good brand power and products are required.
"At the product level, if you just follow the chain brand explosive product strategy, it is actually the ceiling that determines the upper limit of life. Consumers, why should they buy you? Yang Guo said.
The small shop did not go so smoothly in the early stage. Around July 2023, the team was focusing on the second and third tier sinking markets that were hot at that time. But in the end, the team believes that the first-tier cities are the most suitable areas for small coffee to accelerate their development.
Therefore, after August 2023, the small coffee that previously made stores according to the advantages of To B began to make adjustments, on the one hand, at the scene level, from a channel store-in-store to a shopping mall office store type.
On the other hand, Xiaocai chooses to focus on tea and coffee at the product level, and with the help of the software advantages of its own self-service coffee machine, the product is developed using IIAC gold medal beans and high-quality original leaf freshly brewed tea.
Before positioning coffee and coffee in China, Xiaocai did a lot of data research and found that tea and coffee are the most likely category for new brands to run out compared with fruit coffee, which has higher supply chain costs.
However, the difficulty is that the category of tea and coffee is still in the stage where many brands need to jointly educate users. Office buildings in first-tier cities are usually the golden shops for coffee brands to compete for.
But the pace of the coffee market has changed, and the adjustment is destined to be unstoppable. Yang Guo, co-founder of Xiaocai Coffee, told Titanium Media APP that now, within Xiaoca, coffee machine equipment and stores are two completely independent business divisions. Most of the team's energy and time in the future will be spent in the store.
The ambition of breaking 1,000 stores
The importance of location for coffee stores is self-evident.
The location of the coffee store is very similar to the logic of the hot pot restaurant, when the product delivery does not have a unique advantage, the location is the first place. Analogous to many Luckin Coffee stores, the straight-line distance between the three stores will not even exceed 100 meters, but only 100 meters of business is actually enough for many coffee stores.
Yang Guo told the Titanium Media APP that when the two brands are next to each other, it depends on whose category products do better. Therefore, after a series of adjustments, Xiaoca's main strategy for products this year is to invest in the creation of tea and coffee products.
In terms of more efficiency, the usual standard of the barista industry is that it takes at least one month of training time from operation management to product production, and the time for Xiaocai employees to complete product production training is three days.
For Xiaocai Coffee, the product is replicated from the R&D room to the store, and the automatic tea and coffee machine also plays an efficiency role in the production of store staff, which brings direct data transformation is to increase the efficiency of dining by 50%, reduce training costs by 80% and reduce labor costs by 50%.
One detail is that, like many chain coffee brands, the transparent cup of small coffee will also be marked with a scale mark, which is more convenient to add the amount of different raw materials such as ice, milk, and syrup.
Yang Guo believes that in the past year, Xiaocai has taken a detour. Last year, Xiaocai did a lot of marketing activities, but the market did not respond much. This year, Xiaocai Coffee changed its thinking, spent a lot of marketing investment in the fields of games, music, and sports, and found the Honor of Kings to jointly find the head IP to break the circle. This matches the current situation of Xiaojia - most of Xiaocai's stores are still opened in universities and colleges, and a large number of young players of King Glory are also the most important consumer groups of Xiaojia at present.
At present, the most important thing for Xiaocai Coffee is that the store scale will first rush to more than 1,000 stores. Yang Guo told the Titanium Media APP that among the 1,000 new stores to be opened by Xiaocai, 40% will be opened in commercial shopping malls, and the proportion of large stores will not be very high, with an area of 50~80 square meters; 40% of them are opened in office buildings and commercial parks, with an area of about 50 square meters, and 20% are opened in universities. The area of office buildings and university stores will be smaller, concentrated in 30~50 square meters. The overall unit price of the product is around 15 yuan.
From the profit and financing funds of self-service coffee machine equipment, Xiaocai, which is mainly based on the franchise model, plans to allocate 300 million yuan for store subsidies to support the brand side and the operation side, of which the store operation subsidy is 100 million yuan. In terms of the layout of stores across the country, the focus is on preparing branches in East China, Southwest China, North China and other regions. This also means that in the future, a lot of energy needs to be devoted to the profitability and support of franchisee stores.
Titanium Media APP learned that Xiaocai will add at least 500 new employees this year, and all employees will hold shares. This Internet-style play was influenced by the Meituan from the core team executives in the early days of the team.
Little Coffee didn't want to hide its ambition to speed up. Zhu Baoju, the founder of Xiaoca, announced the brand's ambitious store opening plan at this year's brand strategy upgrade conference and partner conference, and there is a clear timetable for each stage.
Co-founder Yang Guo told Titanium Media APP that this year, the main positioning of Xiaocai is to be on the table, first rushing to more than 1,000 stores, and then to impact the first echelon of the coffee track. And next year, what this pony wants of itself is to grow quickly.
Therefore, 2024 will be a year for small coffee to explode. However, the way of accelerating, fast-paced, and forming a scale also means certain risks, which will test the management ability of the founding team even more.
Opportunities and challenges go hand in hand. Under the foreseeable broad incremental coffee track, Xiaocai, a pony who wants to speed up and run fast, will also meet more challenges in an increasingly involuted market environment. (This article was first published on Titanium Media APP, author | Liu Dafang, editor - Fang Yu)