According to the latest news on May 30, the 3,000th store of Cudi Coffee opened in Beijing.
From October to April 2022, 2,000 stores will be opened in half a year. From April to May, it was even more exaggerated, opening 1,000 stores in one month.
This is the speed of Cudi, the offline expansion is crazy, and the online is not idle.
Today, in Douyin's local life best-selling list, you can see that Cudi Coffee has long occupied the top spot in more than 20 cities such as Guangzhou, Hangzhou, and Fuzhou.
Photo/Kudi ranked No. 1 in many cities on Douyin’s best-selling list
Randomly select coffee shops around you, Cudi Coffee’s main product, 36 types of summer ice drinks, choose 18 yuan and 8 carnival coupons, and sell 2.07 million+ tickets within 30 days, ranking first.
Among the top 5 products sold in 30 days, 80% of the products are new products of Cudi coffee.
Photo/Kudy Coffee dominates the single-product sales list
"Low price" is no longer a staged marketing strategy for Cudi Coffee, but has become its new normal.
Cudi’s goal is to have 10,000 stores in three years. The last time this story was told was Luckin Coffee.
Under the full siege of Cudi, on May 29, Ruixing announced the official opening of the "franchising with stores" model. Ruixing will soon become the first 10,000 stores in the Chinese coffee industry.
The two brands have a long history, and Cudi’s core founding team is the former chairman and CEO of Luckin. So some people say that the original brand story of Cudi is Ruixing.
One is a mature brand with an established moat, and the other is a fledgling young brand. There are actually many ways to attract franchisees to choose Cudi.
First, Cudi does not charge franchise fees in the early stage, and will draw gross profits when the store is profitable.
The affiliates look for a store, and after the decoration, Cudi will send a special store manager, barista, etc. to be responsible for the daily operation of the store, and there is no need to worry about daily purchases. The manpower salary is also customized by Cudi, which is equivalent to the affiliate entrusting the store to Cudi , and Cudi Coffee will charge a certain service fee according to the gross profit of the store.
Photo source/Kudy Coffee official website
For example, to open a Kudi store-in-store requires an investment of 115,000 to 143,000 yuan, plus a deposit of 30,000 yuan; a slightly larger cache store and a standard store need to invest 225,000 yuan and 290,000 yuan respectively, while brand stores invest It reached 510,000 yuan.
If the franchisee's monthly gross profit reaches 20,000 yuan, Cudi will start charging service fees, ranging from 10% to 25% of the gross profit based on the monthly gross profit.
Second, the official will cover the bottom line for franchisees, and will subsidize losses.
Promotional activities are not money-burning activities, they can actually be sustained.
Photo source/Kudy Coffee official website
Let me do the math for everyone. The cost structure of coffee is relatively certain. There are only 4 parts, raw materials, rent, labor, utilities and miscellaneous expenses.
The cost of raw materials for a cup of Cudi coffee is 5.5 yuan. Based on the daily average of 400 cups per cup, the cost of rent is about 1.25 cents per cup. The labor cost is about two yuan, and then about two cents for water and electricity miscellaneous fees.
Under the scale effect, the cost of coffee should be less than 9 yuan, and the price of 10-15 yuan has a reasonable profit margin for the associates.
Although 9.9 yuan coupons are being sold everywhere, not all consumers will use the coupons, and some customers buy them at the normal underlined price on the mini program because of rigid needs and convenience.
Calculated in this way, during the summer ice drink season, the average income per cup of the store should be between 11 and 12 yuan, which is also within the reasonable price range above.
Moreover, Cudi officially promised that under certain conditions, if the store loses money, "Cudi will make up for the gap in losses."
In addition, the equipment purchased by investors in Kudi can be depreciated and recovered according to a certain percentage, and the doors and counters can be recovered according to the actual valuation.
Third, collect trillions of traffic on Douyin, and the government pays to promote it
Ruixing's online advantage comes from the operation of private domain users. Yang Fei, one of the founders, is very good at traffic operations and is the author of the book "Traffic Pool".
Photo/Ruixing co-founder Yang Fei
According to the Internet, it only took one year for Ruixing to turn around and make a profit from being caught in a financial scandal, relying on 20 million+ private domain traffic.
Ruixing divides 20 million private domain users into three levels of large, medium and small to operate. The large private domain mainly comes from Ruixing app users, and the middle private domain mainly comes from the WeChat ecosystem, including small program, official account, video account users, large According to the specific location, the private domain is diverted to the small private domain—store WeChat group and WeChat account for repurchase conversion.
Private domain is good, but it is not suitable for the newly born Cudi.
Just when Cudi was confused, the car of Douyin's local life drove up to him.
At the beginning of 2023, Douyin has entered the local life track, and has been focusing on the combination of low-priced explosive models and shallow discounts.
With a low-price strategy, Cudi has firmly stepped on the local life layout of Douyin. Through the closed consumption loop of "online planting + in-store consumption", the rapid growth of online orders has been achieved.
Photo/Cudi's performance on Douyin's "Heartbeat to the New Day"
In the spring new product season of Douyin, which just ended, Cudi’s two-week payment GMV exceeded 30 million, the number of orders placed exceeded 3.3 million, and the exposure of short videos reached 345 million.
During the period of participating in the Douyin life service "Heartbeat on the New Day", it dominated the Top 1 food list in more than 20 cities, and the number of single-day experts spontaneously brought more than 3,000 people, successfully realizing the accumulation of the brand from 0 to 1.
Photo/Cudi participated in Douyin's "Heartbeating May Day" event
During the "Heartbeat May Day" event, through online brand self-broadcasting and talent live broadcasting, offline stores and music festival scenes penetrated, and finally achieved a cumulative GMV of more than 80 million, and a cumulative sales of nearly 600,000 cups of new products.
Figure/Cudi Coffee’s commission rate far exceeds that of its peers
Why experts are willing to bring Cudi's goods, you will know after reading this commission table.
Compared with Ruixing and Starbucks, whose commission rate is between 1% and 5%, Cudi’s commission rate for Daren is as high as 17.5%. Calculated based on the sales volume of 2.07 million single items on the talent list, the commission for this single product alone to the talent is as high as 3.18 million.
What attracts franchisees the most is that this part of the promotion is all paid by the official, and the income is from all Cudi coffee stores.
The explosive group buying orders on the Douyin platform are not impulsive online purchases, but real sales that have brought business to the store.
"If you participate in Douyin's group buying activities, the average number of orders per store will increase by 10% to 20%. In other words, the average daily increase will be 100 to 200 orders." Cudi Coffee's regional development manager said so.
At present, Cudi Coffee ranks among the top 1 brands in the group buying business of catering, and has reached the top of the "coffee" track ranked by the hot search keywords on the light food related category platform.
While Cudi is frantically attracting new customers on Douyin, he also consciously connects local life orders with private domains.
For example, the Douyin group buying coupons of Cudi Coffee, after the user purchases, will be automatically saved in the Cudi Coffee App or the brand applet, and it is not required to go to the store to verify and cancel, and can be purchased online.
Such an operation directly deposits "unplanned consumer groups" into the brand's private domain.
It can also be seen that Cudi’s current gameplay is essentially exchanging low prices for traffic, hoping to obtain a certain market size, exchanging scale for benefits, and following the path of Luckin.
words written at the end
The market potential of Chinese coffee users is huge. Instant coffee 20 years ago, Starbucks 10 years ago, and now Luckin and Kudi...
It is a good thing to sell expensive coffee, and it is also a good thing to sell cheap coffee. It depends on whether you can get the desired results and continue.
For Cudi Coffee, the key lies in how to make a good reputation among users, quickly improve the supply chain, and steadily improve the production of stores in the process of rushing all the way.
Where will Cudi Coffee go? If you have different ideas, you can leave a message at the end of the article to discuss.
Archeology Plus, a subsidiary of Shushuo Stories, will launch local life service data in July , "no price increase for additional volume". At that time, members of the Archeology Plus flagship version can view data such as group purchases. Stay tuned for more exciting content !