What's the matter with lucky subsidies for three to five years? Focus on coffee or whole industry development? Many friends don't know yet. On the evening of May 17, lucky coffee successfully rang the bell on NASDAQ with the stock code LK and the issue price of $17. Let's take a look with sihai.com.
How does lucky coffee continue to subsidize for 3 to 5 years?
Since its establishment, the industry has different opinions on lucky coffee. It thinks lucky is dancing on the edge of the knife. The company's high subsidies and crazy money burning mode make the industry think that lucky coffee is hovering between didi and ofo. If it succeeds in money burning, it will become an indispensable product for consumers. If it fails, it will end up like ofo.
The industry believes that lucky coffee's rapid landing on the capital market, through savage expansion, high subsidies and other means, has indeed temporarily established itself in China's coffee market, and lucky coffee has also snatched part of the market from Starbucks to some extent, because Starbucks' performance in China has shrunk before. After the listing, lucky coffee needs to consider how to get rid of the mode of subsidizing customers and the future development direction.
Listed in loss
On the evening of May 17, lucky coffee successfully landed in the US capital market. It is understood that lucky coffee issued 33 million ads, each priced at $17. Earlier, lucky coffee's updated prospectus showed that lucky coffee set its IPO price range at $15 to $17 per American Depository Share.
Successful listing is also a double-edged sword for lucky coffee. Although it can obtain more financing and help, it will also bear more pressure, because from the data, lucky coffee is still in a state of huge loss and has not realized profit.
Previously, Yang Fei, co-founder and CMO of lucky coffee, said: "we will not consider this issue now, and we will talk about it in three to five years. That is to say, for a long time after the launch of lucky coffee, lucky coffee may be in a non-profit state.
However, some people in the industry pointed out that for lucky coffee, profit must be considered after it is listed, because after it is on the stage of capital market, the enterprise needs to be responsible to shareholders and investors, and if it does not have enough brilliant performance or sustainable business model, it will attract fewer and fewer investors.
However, investors in the market have shown the opposite attitude. In June 2018, lucky coffee received US $200 million in round a investment, US $200 million in round B investment on December 12 of the same year, and US $150 million in round B + investment on April 19, 2019.
In the first two rounds of investment, Dazheng capital, which frequently appeared, was found to be connected with Shenzhou car rental, the old owner of Qian Zhiya, the founder of lucky coffee.
According to the data, Li Hui, executive director of Dazheng capital, was the vice chairman of Shenzhou Youche before, and now the chairman of Shenzhou Youche strategic committee. Lu Zhengyao, the chairman of Shenzhou Youche, is also the chairman of Shenzhou car rental, which shows that his old boss gave great help to Qian Zhiya when he started his business.
On April 18, 2019, on the basis of round B financing completed in November 2018, lucky coffee obtained an additional new investment of US $150 million, including a private fund investment of US $125 million managed by BlackRock with a post investment valuation of US $2.9 billion. It is understood that BlackRock is also a shareholder of Starbucks.
People who have long been concerned about the coffee industry market told reporters that BlackRock's practice is undoubtedly optimistic about the ingredients of lucky coffee, but it may also be that if one side rises in the future development, and the other side is weak, it can make up for each other, or both sides are good in the future, then we can get a win-win situation.
The sequelae of savage growth: the decline of store growth and the quietly tightening of subsidies
According to the prospectus, the net income of lucky coffee Rui in 2018 was RMB 840 million and the net loss was RMB 1.62 billion; as of March 31, 2019, the net income was RMB 480 million and the net loss was RMB 550 million.
Although the performance is poor, the growth of the number of stores of lucky coffee is completely opposite to the performance. As of March 31, 2019, lucky coffee has a total of 2370 Direct stores. It is worth mentioning that Starbucks has developed in China for many years, and so far there are only more than 3700 stores.
According to frost Sullivan, by the end of 2018, lucky coffee ranked second in the Chinese market in terms of the number of stores and the number of cups sold. However, this is not satisfied with the rush to market lucky coffee. In its development goals for 2019, lucky coffee said that it will build more than 2500 new stores in 2019, with a total number of more than 4500 stores, and claimed that it will become the largest chain coffee brand in China.
However, with the progress of time, lucky coffee's savage growth has begun to slow down.
The reporter found that on April 3, 2018, the number of lucky coffee stores was 308, and at the end of 2018, lucky coffee had more than 2100 stores. Based on 2100 stores, lucky coffee has an average of 224 stores per month in eight months. As of the first quarter of 2019, there are 2370 stores in lucky coffee, which is also calculated according to the number of 2100 stores in lucky coffee at the end of 2018. In the first quarter of 2019, lucky coffee only increased by about 90 stores per month, far less than the development speed in 2018.
Some industry analysts believe that the slowing down of store opening speed has a lot to do with the continuous burning of money of lucky coffee. Due to the continuous high subsidy policy, the profitability of lucky coffee has problems, and the way that the income can't make ends meet also makes the capital chain of lucky coffee nervous. This is also one of the main purposes of lucky coffee's eagerness to go public, because listing means that it can obtain more investment and can be used for reference In order to continue to maintain the money burning business model.
Yang Fei once said for money burning subsidies, "it is very worthwhile to obtain the market scale and speed of this year with moderate subsidies. What is certain is that lucky coffee will continue to subsidize for 3-5 years. We and investors are highly consistent on the subsidy strategy, and they are also worried about our conservatism. '
However, some organizations have questioned the high subsidies. According to media reports, a research report by Bernstein said: 'the key is whether lucky can sell without discount. '
Previously, with the huge benefits, lucky coffee quietly tightened the discount. The original free delivery fee of 35 yuan was increased to 55 yuan, and the preferential activity of charging 5 to 5 was changed into charging 2 to 1. After the change of preferential policies. Some consumers said that 'after the increase of full distribution, one can not meet this rule. In the past, when the charge 5 is increased by 5 and the charge 2 is increased by 1, even now the charge 5 can only get 2, which affects the consumption enthusiasm to a certain extent, because in terms of taste, it's just ordinary coffee, and it will probably reduce the purchase quantity after that. '
Focus on coffee or whole industry development
Zhu danpeng, a researcher at China Brand Research Institute, told reporters how lucky coffee will develop after it goes public. After it goes public, lucky coffee will definitely develop in many categories. In the future, lucky coffee may be positioned as a multi category catering Internet company.
Some people in the industry who do not want to be named also think that lucky is more likely to realize the development of multiple categories, because lucky is currently building a platform, and after it is listed, the platform will be more mature. For example, lucky has launched light food on the platform, and lucky fresh food may be derived in the future.
'another is to focus on coffee and develop upstream and downstream industries, like Starbucks, from planting to opening to selling. This is to compete with Starbucks in the Chinese market. 'the person said.
However, Zhu danpeng believes that lucky coffee and Starbucks do not have many attributes to match, because their scenes, audiences and functions are different. At present, after the expansion of the whole Chinese coffee market, it allows multi brand, multi-channel, multi scene and multi-level coffee brands to enter, because the Chinese coffee market is still an unsaturated competition market.
From Qian Zhiya's "lucky coffee Manifesto" on the listing site, we can also understand the consumption scene and positioning of lucky coffee. Now 91% of lucky coffee shops are pick-up shops, says Qian. Consumers can get coffee quickly without queuing up to improve their consumption experience, and they don't need to pay for high rent and space decoration. At the same time, lucky coffee products will be high-quality, cost-effective and convenient coffee. "Foreign Street drinks don't need to be sold as luxury goods in China. '
Some people engaged in the Internet told reporters that from the current point of view, lucky is indeed losing money, but now lucky is an Internet company and data company in our cognition. It obtains traffic and exposure through smashing advertisements, and obtains data analysis. For example, in which office building lucky is more popular, so from the perspective of data analysis, lucky is more popular It is an Internet company based on coffee. In the future, it can add FMCG data analysis companies to help FMCG enterprises analyze where products are better sold, etc.
'for lucky's subsidies, Didi also launched many discount coupons at that time to obtain the market, but didi has not launched so many discount coupons as before, because it has seized the market and made it a habit for consumers to use them, which has changed the way of life. Some people will think that taking a bus is just a need, while coffee is not, because you are not lucky The main consumers of coffee are white-collar workers working in office buildings. 'the person said.