Produced | Typesetting by He Xi | Ye Yuan
Ruixing Coffee has entered the era of "ten thousand stores".
On June 5, Ruixing Coffee announced on social media that the number of domestic stores exceeded 10,000. At the same time, Ruixing Coffee officially released a new brand proposition "lucky in your hands". Ruixing Coffee, which has more than 10,000 stores, has also become the fifth domestic chain brand with 10,000 stores.
From the first store to the 100 millionth store, Ruixing Coffee's experience is more exciting than the novel.
01
Luckin Coffee's "Wandian" Story
On October 28, 2017, the first Luckin Coffee store opened for trial operation in Beijing Galaxy SOHO. Ruixing Coffee said that the meaning of the Milky Way also represents their expectations for the sea of stars.
In May 2018, after more than half a year of running in products, processes and operating systems, Luckin Coffee, which has 525 stores, announced its official opening on May 8.
On December 25, 2018, Luckin Coffee Shanghai New World Daimaru Department Store officially opened, announcing the birth of the 2,000th store.
On April 23, 2019, Ruixing Coffee submitted its IPO prospectus in the United States. According to the prospectus, as of March 31, 2019, the number of Luckin Coffee stores has reached 2,370, of which 2,193 are cache stores, and self-pickup stores account for 91.3%, with a total of more than 16.87 million transaction customers and monthly active users. The volume exceeds 4.4 million. At that time, Ruixing Coffee had become the second largest and fastest growing coffee chain brand in China in terms of the number of stores and the number of coffee cups sold.
On May 17, 2019, Luckin Coffee successfully landed on Nasdaq in the United States. From the first trial store to landing on Nasdaq, Luckin created the fastest IPO speed. This "fastest speed" has two meanings: one is that Ruixing Coffee took a total of one year and seven months from the establishment of the company to the completion of the Nasdaq IPO; the other is the IPO of Ruixing Coffee itself , From the submission of the IPO application to the US Securities and Exchange Commission (SEC) on April 23, 2019 to the ringing of the Nasdaq opening bell, it took a total of 24 days.
In the past 5 years, Ruixing Coffee has experienced highlights and "misfortune".
On January 31, 2020, the Muddy Waters Agency of the United States suddenly released an 89-page short-selling report, pointing out that Luckin Coffee’s data was falsified. Subsequently, regulatory agencies in China and the United States urgently intervened. On April 2, Ruixing Coffee voluntarily admitted the "fraudulent incident", pointing out that then COO Liu Jian and some employees forged performance of 2.2 billion yuan. As soon as the announcement was made, the stock price plummeted by 80%.
The "data falsification" incident has caused great damage to the goodwill of Ruixing Coffee, and it has plunged Ruixing Coffee into turmoil. On June 26, 2020, Ruixing Coffee’s official website announced that the board of directors decided to request Lu Zhengyao to resign as director and chairman. On June 27, Ruixing Coffee issued a statement stating that the company will suspend trading on Nasdaq on June 29 and file for delisting. On June 29, Ruixing Coffee officially suspended trading and filed for delisting.
From listing to delisting, in just over a year, the capital market's confidence in Ruixing Coffee fell to the bottom. After the financial storm, Ruixing Coffee closed more than 1,700 stores one after another.
Just when people thought that Ruixing Coffee would be "finished", Guo Jinyi, who was ordered in the face of danger, stabilized the turbulent and chaotic situation of Ruixing Coffee.
The pragmatic Guo Jinyi not only stabilized the turbulent and chaotic Ruixing Coffee, but also reshaped Ruixing Coffee, leading him to a new height.
On March 2, 2023, Luckin Coffee released its financial report for the fourth quarter and full year of 2022. According to the data, Ruixing Coffee’s total net income in the fourth quarter was 3.695 billion yuan, a year-on-year increase of 51.9%. The total net income in the 2022 fiscal year is 13.293 billion yuan, a year-on-year increase of 66.9%, exceeding 10 billion yuan for the first time; under the US Accounting Standards (GAAP), the operating profit is 1.156 billion yuan, and the operating profit margin is 8.7%, turning losses into profits for the first time.
On May 1, 2023, Luckin Coffee announced its financial report for the first quarter of 2023. The financial report shows that as of March 31, 2023, Ruixing Coffee’s total net income in the first quarter was 4.4367 billion yuan, a year-on-year increase of 84.5%.
On June 5, 2023, Luckin Coffee announced on social media that the number of domestic stores exceeded 10,000, officially entering a new stage of development of "ten thousand stores".
02
Behind Ruixing Coffee's "Wandian"
From the high light to the bottom, from the closure of more than 1,700 stores to over 10,000 stores, Ruixing not only achieved a new life, but also completed a reversal. What happened behind this?
In 2020, Ruixing Coffee, under internal and external troubles, can be said to be on the verge of extinction. Internally, the financial storm has doubled the pressure on the management, and some teams have panicked. Many people have left Ruixing because of the financial storm. The internal management is turbulent, chaotic, and a mess. Externally, some suppliers began to question Ruixing's model. At the same time, the sudden epidemic brought the entire social economy to a standstill.
On July 5, 2020, Ruixing Coffee held an extraordinary general meeting of shareholders. The meeting voted to pass the motion to remove directors Lu Zhengyao, Li Hui, Liu Erhai and Sean Shao. On July 14, Ruixing Coffee announced the result of the reorganization of the board of directors: Guo Jinyi succeeded Lu Zhengyao as the new chairman.
From the moment Guo Jinyi took over, Ruixing Coffee began to usher in a new life. If Ruixing Coffee after the financial storm is compared to a terminally ill patient, then Guo Jinyi is a great doctor who brought the dead back to life. After taking over Ruixing Coffee, Guo Jinyi not only quelled the internal turmoil, stabilized the suppliers, but also saved Ruixing Coffee's dying body.
Guo Jinyi not only cured Ruixing Coffee’s terminal illness, strengthened his “body”, but also reshaped his development philosophy, allowing Ruixing Coffee to complete the reshaping from body to spirit.
In 2021, the new management headed by Guo Jinyi will reorganize the company's entire operating management structure. The new organizational structure cancels the regional management structure. The new organizational structure focuses more on products, stores and users, and is more effective.
In addition, Guo Jinyi also reshaped the corporate culture and values of Ruixing Coffee. After Guo Jinyi took over as the chairman, he took seeking truth from facts as one of the core values of the company, and continued to strengthen it. In addition, Ruixing Coffee under the leadership of Guo Jinyi has become more pragmatic. It no longer uses crazy money-burning subsidies to acquire customers, and no longer blindly expands and grows wildly. It has begun to accelerate the launch of new products and lead the beverage trend. Ruixing's pace has slowed down, but it has gone more steadily; in terms of operational thinking, Ruixing Coffee's Internet thinking has also transformed with changes in the market, and its marketing model has changed from the previous fission marketing to the community's refined operation Retention, pull users into the private domain traffic pool, continuously activate existing users through community operations and precise preferential subsidies, and increase user repurchase rate and activity. This will not only lower marketing costs and higher efficiency, but also benefit The cultivation of user brand loyalty is of great help.
In addition to the above aspects, Guo Jinyi and his management have been promoting the comprehensive reshaping of Ruixing Coffee. On February 5, 2021, Ruixing Coffee announced in the US Securities and Exchange Commission (SEC) that the joint provisional liquidators of Ruixing Coffee filed an application with the US Bankruptcy Court. Court provisional winding-up proceedings. 2021 is coming. On March 16, Ruixing Coffee announced on its official website that it has signed a restructuring support agreement (RSA) with most holders of US$460 million convertible senior bonds due in 2025.
On April 11, 2022, Ruixing Coffee Company announced that its financial debt restructuring was successfully completed, and the company officially ended the bankruptcy protection process as a debtor. Ruixing Coffee said that since then, Ruixing Coffee has fully resolved the problems left over from history and returned to the normal state of the company.
It was Guo Jinyi who gave Ruixing Coffee new life.
03
The next step of "Wandian" Luckin Coffee is to tell the world the story of China's milk coffee
After Wandian, Ruixing Coffee's next development goal has become a topic of great concern. So, what is the next development goal of Ruixing Coffee?
In Xi Ge’s view, Ruixing Coffee’s next step may be divided into domestic and international lines of development. Domestically, Ruixing Coffee will focus on the brand to create a high-quality supply chain and a larger store ecosystem. Overseas, Luckin Coffee will rely on its own high-quality supply chain ecosystem, integrate resources, and tell the story of China's milk coffee to the world.
Since Guo Jinyi presided over Ruixing, Ruixing has vigorously promoted the "direct operation + joint operation" store system. Among them, directly-operated stores have strengthened their competitiveness in first- and second-tier cities, while joint-operated stores have achieved rapid penetration in third- and fourth-tier cities and expanded their market share. Under the efficient operation and management of the new team, this system has developed quite rapidly. Judging from the 2023 Q1 financial report data released by Ruixing Coffee, a reasonable store system has brought higher revenue capabilities and also helped the brand push various innovative "popular" drinks closer to the younger generation of consumers Within a distance, it directly boosted the growth of revenue and profit.
Recently, Ruixing Coffee has also launched a new model of "joining with stores". Merchants can apply to join Luckin Coffee as long as they meet the following basic conditions:
① There are shops in operation during the lease contract period, or shops with self-owned property rights
② Shops are located in shopping malls, street shops, office buildings, universities, hospitals, transportation hubs, and scenic spots
③Construction conditions of existing shops must meet: voltage 380v, electricity 40kw, upper water 25mm, lower water 75mm, area ≥ 40 m², door ≥ 4m, distance from pollution source ≥ 30m
④ Independently apply for business license and food business license
Undoubtedly, under the new "Joining with stores" model, the number of Luckin Coffee's stores will increase significantly. The larger store scale will further promote the user growth of Ruixing Coffee. And more consumers will further enhance Ruixing Coffee's raw material procurement advantages and enhance the ecological momentum of Ruixing Coffee's supply chain. This is a positive cycle system.
The domestic market is the foundation, and the foreign market is the future. In the era of "10,000 stores", Luckin Coffee will tell the story of China's milk coffee to the world.
On March 31, 2023, Luckin Coffee opened two stores at the same time in the most prosperous business district in Singapore. This move marks the official opening of Ruixing Coffee’s widely-watched “sea-going” journey.
Regarding Luckin Coffee’s move to Singapore, Guo Jinyi, chairman and CEO of Luckin Coffee, said in Luckin Coffee’s 2023 first-quarter earnings conference call that opening a store in Singapore is an important first step for Luckin Coffee to enter the international market , is the starting point of its internationalization strategy. By setting up a foothold in Singapore, Luckin Coffee aims to fine-tune its entire IT and operating system and test its business model in overseas markets.
"Our goal is to enable global consumers to enjoy Luckin Coffee's high-quality coffee by leveraging our brand's professional, young, fashionable and healthy image and our new retail coffee business model."
For Ruixing Coffee, the milestone of "10,000 stores" is also a new journey.
In the next step, how Luckin Coffee will tell the world the story of China's milk coffee is very worth looking forward to.