Because of 9.9, Ruixing, which was praised as "Ruimen" by consumers, brought another big surprise to the market.
On August 1, Ruixing Coffee (OTC: LKNCY) announced its financial report for the second quarter of 2023. The financial report shows that Ruixing Coffee’s total net income in the second quarter was 6.2014 billion yuan, an increase of 88.0% year-on-year; the operating profit under US accounting standards (GAAP) was 1.1728 billion yuan, and the operating profit margin was 18.9%, a record high.
Looking at the coffee market, amidst the sound of "Ruimen", Ruixing's current financial report revenue surpassed Starbucks China's revenue in the same period for the first time: Starbucks Q2 financial report shows that its revenue in the Chinese market in the current quarter was 822 million US dollars, a year-on-year increase 51%, but based on the real-time exchange rate, it is about RMB 5.96 billion, which is lower than Ruixing’s performance in the current period. From the perspective of income indicators, Ruixing has won the "No. 1" position in the Chinese coffee market.
From the perspective of store operations, Ruixing Coffee’s self-operated store revenue in the second quarter was 4.4953 billion yuan, an increase of 85.2% from 2.427 billion yuan in the same period in 2022. Profit at the self-operated store level in the second quarter was 1.3075 billion yuan (180.3 million U.S. dollars), with a profit margin of 29.1%, compared with 689.8 million yuan for the same period in 2022, with a profit margin of 28.4%. Revenue from associate stores was 1,485.8 million yuan ($204.9 million) in the second quarter, an increase of 91.1% from 777.5 million yuan in the same period in 2022.
In the income structure, Ruixing’s self-operated business is still the main force of performance, while the growth of store revenue and profit shows that on the one hand, with the help of the 9.9 strategy and new product research and development, the store has further attracted more consumers. On the other hand, it shows that There are enough potential repurchases to contribute to the healthy development of the store's overall business model.
In short, the store density is getting higher and higher, but the store performance is still strong, which shows that Luckin's multi-line market penetration strategy in the general direction, and the calculation and planning of the market consumption ability in the specific store location selection process are very good. In place, the market expansion space is still vast.
In contrast, Starbucks’ financial report shows that although its Chinese market achieved a year-on-year growth of more than 45% in store revenue and transaction volume in this quarter, considering the same period last year and even the whole year of 2022, Starbucks’ same-store sales in the Chinese market, The transaction volume has fallen by more than 20%, the base is low, and since the unit price of customers in fiscal year 2022 fell by 3% year-on-year, it fell by 1% year-on-year again in this quarter. The growth of Starbucks is obviously due to more preferential measures, which affects its earnings. .
Compared with the level of profit achieved by Ruixing's 9.9 strategy, Ruixing is in a relatively obvious market growth range as a whole, and Starbucks is facing the pressure of price reduction and promotion.
In line with revenue growth, the scale of Luckin Coffee’s stores further expanded in the second quarter, with 1,485 net new stores opened, and the total number of stores increased by 15.9% quarter-on-quarter. As of the end of the second quarter, Luckin Coffee had a total of 10,836 stores, including 7,188 self-operated stores and 3,648 joint-operated stores. Luckin Coffee became the first chain coffee brand in the Chinese market with more than 10,000 stores.
During the same period, Starbucks China stores reached 6,480, a year-on-year increase of 12%, and a net increase of 237 stores from the previous month. Considering the difference in the main positioning of the two parties, the number of stores may not be the key to the direct competition, but after taking the financial performance of the stores into consideration, the value of new stores and the expectation of how much growth can be brought by continued expansion in the future, Already at a glance. In particular, Ruixing's joint stores are becoming a strong force in its deep-rooted and sinking markets. The same-store performance and the growth of the number of stores are expected to form a "double-click".
As Luckin Coffee has entered the "era of ten thousand stores", not only the revenue growth in the second quarter was strong, but also the profitability was significantly improved, and the scale effect appeared. Continuously launched innovative products and marketing activities have been continuously recognized by consumers, which has promoted the growth of single store sales and the substantial increase in the number of average monthly consumption users.
According to the data, the average monthly number of trading customers of Ruixing Coffee in the second quarter was 43.07 million, a year-on-year increase of 107.9%. In June, the number of Luckin Coffee’s trading customers reached 50 million, a record high.
9.9 contributed a lot. In order to thank hundreds of millions of consumers for their support, Ruixing Coffee has confirmed that the "9.9 yuan" gratitude feedback activity will be carried out on a regular basis. A stronger sense of urgency and coercion.
Guo Jinyi, chairman and CEO of Ruixing Coffee, said: "In the second half of 2023, we will continue to increase investment, focus on customer value, and transform scale advantages into long-term feedback to consumers. At the same time, we will also be committed to accelerating China's The education and development of the coffee market will expand Luckin Coffee’s market share and brand influence, and promote sustainable overseas expansion, so that the world can enjoy the high-quality products and services of Chinese coffee brands.”
When Luckin sweeps more regions with the new values of Chinese coffee, "Ruimen" will be given more meaning by consumers. With the support of proactive strategies, Ruixing has formed a comprehensive cost advantage integrating brand advantages, scale advantages, supply chain advantages and efficiency advantages, and will also be able to maintain its leading position in future market competition.