Will Ruixing Coffee, which burns money and subsidizes, lose money after all? Why is Lucky Coffee a scam?

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Since the opening of the first store in October 2017, Ruixing Coffee has been born for only one year and five months.

For a business, one year and five months is not long. However, in this short period of time, consumer users reached 12.54 million, 2073 stores covered 22 cities across the country, Ruixing Coffee handed over enough excellent report cards. However, this is only the beginning, and its latest "small goal" is to "open another 2500 stores and surpass Starbucks in stores and cups by the end of 2019 to become China's largest chain brand coffee."

Ruixing coffee put forward such a "small target" seems to have enough gas, at least the reporter saw with his own eyes during the Spring Festival holiday, several stores lined up in front of a long line, many consumers also self-mention Ruixing "small blue cup."

However, it is still in this not a long time, Ruixing coffee huge losses, only the first nine months of last year's net loss as high as 856 million yuan. Its growth model of burning money subsidies has caused a lot of controversy, and both cheers and bad songs fly together.

Is there a huge loss in Ruixing Coffee? To answer this question, we must first find out whether the mode of Ruixing Coffee burning money subsidy is correct or not.

Some data show that the average number of coffee cups consumed per person in China is still hovering in single digits, far from the level of 200 to 400 cups in developed countries. Such a gap not only shows the great influence of China's traditional tea culture, but also indicates the huge potential of coffee consumption market. Coffee is a drink that can get loyalty very much. Once the habit is formed, it often accompanies a lifetime; many of China's "post-90s" and "post-00" are "smelling coffee and growing up", and the habit formation has been completed. From this point of view, lucky bet on the coffee market is not wrong.

On the other hand, competition among enterprises in the era of mobile Internet is essentially competition for user traffic and user time. The so-called "world martial arts, only fast not broken","burn money" can quickly accumulate users, seize the market, so Ruixing coffee "heavy subsidies, develop user habits, gather traffic" Internet play is not wrong.

Next, calculate the problem of losing money.

Statistics show that China's per capita coffee consumption in 2018 has increased significantly compared with the past. Among them, Ruixing Coffee has contributed a lot, and its founder's goal of "spending 1 billion yuan to 'educate the market'"has been initially realized. Considering that once the market is cultivated, it has its own long-term significance, Ruixing Coffee's current book loss is not actually "loss".

In addition, Ruixing coffee "indiscriminate bombing" also affected coffee giant Starbucks. Starbucks 'net revenue rose 10 per cent year-on-year in fiscal 2018, but operating margins fell for the first time in nine years in China, where it had high hopes, and same-store sales in China fell 2 per cent year-on-year, according to the data. Starbucks has also abandoned the "third space" theory that it has always adhered to, launched takeout services, started promotional activities, and tried to respond with "new retail coffee" play. In this way, Lucky Coffee is not "losing" now.

As for the future "loss or not", it depends on Ruixing coffee "burning money" at the same time, in improving the quality, shaping the brand determination is not big, action is not fast. A good product is the starting point of any business model. Ruixing Coffee firmly believes that every penny it spends can be exchanged for users. But what happens when subsidies stop? If consumers stop buying at that time, it can only mean that the users they spend a lot of money to cultivate are only coffee users, not Ruixing coffee users. At the same time, those paragraphs circulating on the Internet about the poor taste of Ruixing coffee are actually reminding it that it should make great strides in quality improvement and excavate unique positioning in brand building.

From this point of view, Ruixing Coffee's opponent is not others, but itself.

Source: Economic Daily

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