Luckin Coffee may have a new operation. The next step is to go to Hong Kong for IPO?

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preface

I've never met anyone who opened a coffee shop so fast as Lucky!

On December 25, just past Christmas, Ruixing Coffee, which has been "out" for less than one year, announced that it had completed the layout of 2000 stores in advance, adding an average of 5.5 stores every day, covering 22 cities across the country.

Starbucks, the world's largest coffee chain brand, has been deeply cultivated in China for 17 years before opening its stores to 2000.

3 million dollars a day, still within the "expected range"

Thanks to the huge and fast-growing coffee retail market in the Mainland and abundant funds, Ruixing Coffee has become a unicorn in the industry in a short time.

On July 11, lucky coffee official news said that the company completed a $200 million Series A financing, after the completion of financing, the platform valuation reached $1 billion.

On December 12, Ruixing Coffee announced the success of Series B financing, raising another $200 million. After round B, Lucky's valuation has reached $2.2 billion. Not only did it double its valuation, but it also left Costa, which ranked third in the industry, far behind and became the industry unicorn after Starbucks.

Under the background of capital winter era, Ruixing Coffee, as a company established less than one year ago, can complete financing on schedule and quickly occupy the market, which can be said to be "very dazzling".

All of this is thanks to Lucky Coffee's "using Internet thinking and speed to make coffee."

Different from Starbucks 'strategy of always seizing the central CBD, Ruixing Coffee is mostly in some "corners" plots, and they are more good at "grabbing users' eyes" by means of Internet:

The price of Ruixing coffee is usually very close to the people, coupled with the preferential activities that have always existed, the conversion of each cup of coffee does not exceed 20 yuan. During the "Double Eleven" period, it set a sales record of 18.2 million cups in 7 days.

In addition, Ruixing coffee is online APP payment, but also provides delivery services. This not only reduces the cost of getting customers, but also does not give people the feeling of "drinking coffee tall", so that people can really relax themselves when drinking coffee.

Of course, such rapid expansion, as well as large-scale "burning money" subsidies, doomed to Ruixing coffee's financial data is not good: in the exposed B round financing plan, the company accumulated net losses of 860 million yuan, daily losses of nearly 3 million yuan.

However, Ruixing Coffee reacted calmly, saying that everything was in line with expectations, that it would insist on subsidies and that it would continue to expand the number of stores in 2019.

No, Lucky's biggest rival is not Starbucks.

The rapid rise of Chinese local coffee brands has brought more intense competition to the coffee industry.

"Beat Starbucks" has become an elusive goal for the coffee industry. In recent years, there have been more than a dozen new brands coming one after another to capture this mountain, all of which ended in failure.

As an emerging brand, Ruixing Coffee has rapidly expanded its market by virtue of its new retail model of "online + offline" and substantial subsidies, becoming the second largest chain coffee brand in China.

To be able to do this, in the final analysis, is to "burn money." When financing problems arise, or the capital chain begins to break, will consumers choose to give up, or even throw themselves into Starbucks 'arms?

It can be said that the success of Lucky Coffee does require "money to burn", but this has nothing to do with Starbucks, or that Lucky's biggest rival is not Starbucks.

As far as the whole industry is concerned, in 2017, the per capita coffee consumption in the mainland market was 0.003 cups/person/day, which was far from the United States (0.931 cups/person/day). Even in South Korea and Japan, coffee consumption reached 0.329 and 0.245 cups/person/day, respectively. From the perspective of growth rate, the annual growth rate of coffee in China is about 10%, much higher than the growth rate of 2% in the global market.

In other words, the domestic coffee industry is still in its infancy and will experience compound growth rates of more than double digits per year for the next few years. For Ruixing Coffee, the current market size and number of stores have not yet reached the requirements of a mature coffee chain.

In this way, the key to future development lies in Ruixing Coffee itself.

Although there is a lot of room for market development, too fast store expansion will also lead to idle resources and soaring costs. Considering Ruixing's existing subsidy mechanism and expansion strategy, the actual cost pressure may be greater. Once the capital chain and company expansion are out of balance, Ruixing Coffee will inevitably embark on the "old road" of sharing bicycles.

The next wave of operations: IPO listing in Hong Kong?

Within less than one year from its establishment to the completion of the national layout of 2000 stores, the market valuation of Ruixing Coffee reached US $2.2 billion, which shows that both capital and market, everyone still recognizes Ruixing's operation mode.

In Hurun Greater China Unicorn Index in the Third Quarter of 2018 released by Hurun Research Institute, among 34 newly promoted unicorn enterprises, Ruixing Coffee has the shortest establishment time, with a valuation of RMB 7 billion yuan, becoming the leader among unicorns.

Nevertheless, rapid opening of stores, consumer subsidies, marketing... all require capital to support them. However, Ruixing has completed two rounds of financing and pulled Tencent into the bureau. The flow and capital have a solid foundation. Whether the IPO will be listed in the future has become the most concerned topic in the market.

According to foreign media reports: Ruixing Coffee has put IPO matters on the agenda, is in preliminary discussions with overseas investment banks, and may eventually list next year, the most likely listing destination is Hong Kong or New York.

Through online enterprise certification information inquiry, we can see that Ruixing Coffee has registered Ruixing Coffee (Hong Kong) Co., Ltd. overseas. It can be said that Ruixing Coffee is ready for IPO listing in Hong Kong, or even accelerating.

If Lucky Coffee succeeds, can it beat Starbucks?

conclusion

Under the background of "capital winter + consumption upgrading", the marginal effect brought by pure burning money is decreasing. In addition to cheap, high cost performance has become the first choice for consumers. How to improve the taste and consumption experience of coffee and innovate the service mode at the same time of various subsidies may be the place where Ruixing Coffee should consider and work hard for it.

After all, the biggest uncertainty in Ruixing's development is not capital, not Starbucks, but its own strategy and products.