Producer | He Xi typesetting | Ye Yuan
The just-released Q2 financial report shows that Ruixing Coffee’s revenue in the first half of this year reached 10 billion, and its total number of stores also exceeded 10,000, establishing its leading position in the fast-moving tea industry.
There are multiple indications that after completing the scale expansion and operation upgrade of the domestic market, Luckin Coffee will go overseas in the next step, starting from Southeast Asia, to open a higher-level road to internationalization of operations.
01
Luckin Coffee’s Q2 Financial Report Highlights
On August 1, Ruixing Coffee announced its financial report for the second quarter of 2023. Data show that Ruixing Coffee’s total revenue in the second quarter of this year was 6.201 billion yuan, an increase of 88% year-on-year. It is worth noting that Starbucks, which has always been regarded as Ruixing’s benchmark brand by the industry, recorded revenue of US$822 million in the third fiscal quarter of 2023 in the Chinese market as of July 2, equivalent to less than 6 billion yuan. In other words, Ruixing Coffee has finally achieved quarterly revenue surpassing Starbucks for the first time in history, which is of great significance.
Looking back on the development in the past two years, since Guo Jinyi took over as chairman and CEO of Ruixing Coffee, it has indeed described an upward path that can be called "rebirth from the ashes". Luckin Coffee in 2020 is still struggling to survive the "delisting turmoil", but by the end of 2021, the company has achieved a total revenue of 7.965 billion yuan, a year-on-year increase of 97.5%. By 2022, driven by the new management team's efforts to launch new products, expand stores, and attract new customers, Luckin Coffee will achieve annual revenue exceeding 10 billion for the first time. After entering 2023, this rising momentum will be even more rapid. In just half a year, it has achieved a revenue of 10 billion yuan and turned losses into profits year-on-year. As Guo Jinyi has repeatedly emphasized, "Ruixing Phoenix Nirvana, reborn from the ashes."
It can also be seen from the financial report data that Ruixing Coffee not only continues to expand its operating scale, but also further improves its profitability. The data shows that Ruixing’s net profit attributable to the parent in the second quarter was 999 million yuan. Compared with the loss of 115 million yuan in the same period last year, it has turned losses into profits in one fell swoop. According to U.S. accounting standards (GAAP), Ruixing Coffee’s operating profit for the first half of the year was 1.173 billion yuan, with an operating profit margin of 18.9%, more than double the level of 7.3% in the same period last year, and a record high.
The increase in profit margins first comes from the significant increase in Luckin’s sales capabilities. In the second quarter, Luckin Coffee’s sales revenue from products reached 4.716 billion yuan, a year-on-year increase of 87.0%. Among them, the net income of ready-made beverages was 4.235 billion yuan, accounting for 68.2% of the total net income. While revenue is increasing, Luckin’s cost control capabilities are also improving. The ratio of Luckin Coffee’s total operating expenses to net income in the second quarter dropped from 92.7% in the same period last year to 81.1% in this quarter, showing that the company has achieved higher operating efficiency relying on scale growth and technology-driven. Stronger sales capabilities and higher operational efficiency have also attracted more customers to Luckin Coffee. Statistics show that as of the second quarter, Ruixing Coffee’s average monthly transaction customers reached 43.07 million, an increase of more than 46% from the 29.49 million in the first quarter of this year. The number of consumer users also exceeded 50 million in June, and the cumulative number of consumer customers exceeded 170 million, setting another new record in the fast-moving tea industry.
02
Ruixing Coffee's "comprehensive advantages" are highlighted
In addition to the total revenue and profit indicators, Ruixing Coffee has another important data in its operation in 2023, which has attracted widespread attention in the industry. Ruixing has become a rare "Wandian" brand in the domestic tea industry. According to the financial report, Ruixing Coffee currently has a total of 10,836 stores, including 7,188 self-operated stores and 3,648 joint-operated stores. In fact, the precise time when Ruixing broke through the threshold of "ten thousand stores" was June 5. On this day, Luckin Coffee's 10,000th store officially landed in Xiamen. With a total area of more than 600 square meters and an exquisite layout on the upper and lower floors, it provides customers with coffee and meal services.
The scale of 10,000-level stores has brought Ruixing a comprehensive advantage that has attracted the attention of the industry. First of all, judging from the quarterly financial report data of Ruixing Coffee since 2021, the ever-expanding store system has brought higher revenue capabilities and also helped the brand push various innovative "popular" drinks to the distance. Generations of consumers are within a closer distance, thus bringing more and more users to the surrounding area. And more consumers, in turn, will further enhance Ruixing Coffee's advantages in raw material procurement, directly improving the efficiency of Ruixing Coffee's supply chain, which forms a positive virtuous circle. It is precisely under the support of this "ten thousand store system" that integrates brand advantages, scale advantages, supply chain advantages, and efficiency advantages, Ruixing surpassed its old rival Starbucks for the first time in the key indicator of quarterly revenue and entered a new era. stage of development.
The comprehensive advantages of Ruixing Coffee are more clearly reflected in the level of store operation. Since Guo Jinyi presided over Ruixing, he has been vigorously promoting the "direct operation + joint operation" store system. In the system, directly-operated stores strengthen their competitiveness in first- and second-tier cities, while joint-operated stores quickly sink in third- and fourth-tier cities to expand their market share. Under the efficient operation and management of the new team, this system has developed quite rapidly. From an external point of view, the store network combining direct sales and joint operations allows Ruixing to achieve continuous expansion at a lower marginal cost, thereby occupying an increasing share of the market. From an internal point of view, the system has a more comprehensive cost advantage, helping Ruixing to achieve a good effect of a decrease in average cost and a rapid increase in revenue, which directly supports Ruixing's overall rapid turnaround.
Taking the second quarter financial report data as an example, Ruixing Coffee’s revenue from self-operated stores in the second quarter was 4.495 billion yuan, an increase of 85.2% year-on-year, and the same-store sales growth rate of self-operated stores also reached 20.8%. During the reporting period, the store operating profit of self-operated stores reached 1.3075 billion yuan, double that of the same period in 2022. At the same time, the store operating profit margin was 29.1%, an increase of nearly one percentage point over the same period in 2022. Revenue from associate stores in the second quarter was 1.4858 billion yuan ($204.9 million), a 91.1% increase from 777.5 million yuan in the same period in 2022.
Obviously, Ruixing Coffee, supported by comprehensive advantages, has accumulated stronger potential energy for future development.
03
Luckin Coffee further expands its overseas market
So far, Luckin Coffee's brand LOGO has become a representative of new fashion and taste in the minds of young consumers in hundreds of large and medium-sized cities across the country, and even small towns below the third tier. However, Ruixing is obviously not satisfied with such achievements, but has already started the "sea" journey to the world market. On March 31 this year, Ruixing Coffee announced the opening of two stores at the same time in Singapore's most prosperous business district. This move marks the official opening of Ruixing's "going to sea" journey that has received much attention in the past six months. By the end of the second quarter, the number of Ruixing stores in Singapore had reached 7, adding 5 new stores on the basis of the first quarter, and its performance continued to improve.
The decision-makers of Ruixing have made up their minds and will continue to strengthen their layout in overseas markets in the future. In this regard, Guo Jinyi has already made a detailed explanation to the media after the financial report. He said: "At Luckin Coffee, we are never satisfied. As we enter the second half of 2023, we are focused on delivering value to our customers and taking advantage of our scale. In the long run, this will best leverage our The cost advantage is given back to consumers, which not only directly benefits them, but also increases our market share and brand awareness. We are committed to accelerating the education and development of China's coffee market, and continue to expand our global footprint so that the world can enjoy Luckin Coffee high-quality products and services.”
Judging from Luckin’s decision to make Singapore its first overseas stop, its next international layout will most likely focus on the Southeast Asian market. As the most economically developed trading port in Southeast Asia, Singapore has a long-term habit of drinking coffee. Coupled with its high per capita income, Singapore is an excellent choice for chain coffee brands to go overseas. But Ruixing’s vision will definitely not be limited to Singapore, a city-state with a limited area. You should know that Singapore has not only been an important center for coffee-related raw material trade and chain coffee brand operations in history, but also a trade hub in Southeast Asia, with strong radiation capabilities to Indonesia, Malaysia, the Philippines, Singapore, Thailand, etc. , and the coffee consumption in the above markets in 2019 has exceeded 6.5 billion US dollars, and it is still growing at a high speed.
Such a booming market environment in Southeast Asia undoubtedly means an opportunity not to be missed for Luckin, a brand that is still in a rapid rise. The author believes that after gaining a firm foothold in Singapore, Ruixing will use this as a starting point to start a new round of expansion towards Southeast Asia. Looking back on the development of these years, the biggest change Ruixing has brought to the industry is to reshape the entire chain coffee track with brand-new Internet digital technology. At the initial stage when the Ruixing brand was just known to young people, the domestic chain coffee market was still dominated by traditional brands represented by Starbucks. It has been subverted by the revolutionary concepts such as social fission led by Luckin Coffee, explosive gameplay, and digital technology background.
The author believes that with the development of Ruixing Coffee, its overseas market will further expand, and its influence will become greater and greater. Ruixing is making steady progress towards the goal of "world coffee brand".