Luckin Coffee announced the completion of 10000 stores by the end of 2021, and the cost per cup has been reduced to 13.3 yuan.

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Luckin Coffee (Nasdaq:LK) Global Partnership Conference and Global Coffee Industry Development Forum was held in Xiamen today. Luckin Coffee joined hands with France Louis Dreyfus, Switzerland Schaerer, South Korea CJ, Japan UCC, France MONIN, DHL and other top suppliers of the global industry chain to establish a blue partnership alliance based on high quality. Meanwhile, the company's founder and CEO Qian Zhiya announced at the meeting that Luckin Coffee will build 10000 stores by the end of 2021.

10000 stores completed by the end of 2021

At the meeting, Qian Zhiya made a comprehensive and in-depth introduction to the company's business model and development strategy. She pointed out that Luckin Coffee's business model is to fundamentally change the transaction structure of the original coffee industry and significantly reduce transaction costs through transaction model innovation and the application of advanced technology; at the same time, through in-depth cooperation with top suppliers in various fields, to provide customers with high-quality, cost-effective and convenient products. Its essence is to build a most efficient sales channel and circulation platform between customers and suppliers.

While developing rapidly, Luckin Coffee attaches great importance to product quality and user experience, and insists on selecting only the top 10% of suppliers in the industry to cooperate to build a global supply chain alliance for the high-quality coffee industry. At present, Luckin Coffee has established in-depth strategic cooperation with famous domestic and foreign enterprises, such as France Louis Dreyfus, Switzerland Schaerer, Switzerland Franke, France MONIN, Japan UCC Group, Korea CJ Group, DHL, SF Group and so on. At the meeting, Qian Zhiya, on behalf of the company, issued the Luckin Coffee Global Blue Partnership Certificate to them and nearly 200 partners.

At the meeting, Qian Zhiya also announced the company's strategic goal of building 10000 stores by the end of 2021. She said: "Luckin Coffee's development is indeed very fast, but it is based on advanced technology system, strong team capability and adequate resource preparation. We use technology to control the flow of every order and every product." ensure the quality of service in the rapid development. At the same time, our customer satisfaction reached 99.7%. "

Cai Shijie, a senior expert in the global consumer industry at Frost & Sullivan, said at the forum, "according to the survey, only about 26% of consumers in China are willing to buy a cup of freshly ground coffee at a price of more than 30 yuan, and the high price limits the development of the freshly ground coffee market. The new retail coffee headed by Luckin Coffee, especially in the form of cache stores, saves costs, provides consumers with high-quality coffee at preferential prices, and promotes the popularity of coffee consumption. " According to its survey, 86% of consumers think that Luckin Coffee's taste is similar and better than that of competitive products, while 86.1% of consumers have increased their consumption frequency after buying freshly ground coffee for the first time. "

Ruixing actually wants to sell 16-17 yuan for a single cup of coffee priced at 24 yuan.

Qian Zhiya said that Lucky's goal is to further reduce single cup costs by improving economies of scale and operational efficiency. In terms of pricing, the price of a single cup of coffee is 24 yuan, and the actual target price is about 16-17 yuan. As Luckin Coffee's cost per cup is much lower than that of traditional coffee shops, 16-17 yuan can still achieve a considerable profit level. The price of 16-17 yuan is still about 45% lower than the average retail price of high-quality freshly ground coffee in China, according to Sullivan.

When it comes to Luckin Coffee's business model, many people understand it as "take-out coffee". Qian Zhiya explained, "Lucky actually focuses on the 'cache' mode rather than the delivery service." A lot of people don't understand our model. "

The advantage of delivery is convenience, but the problem of delivery is the high cost, 9-10 yuan per order. She believes that Luckin Coffee actually builds the store directly to or near the lobby of the office building through a dense cache store, and provides customers with the same convenient service as delivery at a lower cost.

Delivery is a very important phased strategy in Luckin Coffee's early stage. With the increase in the density of cache stores, customers reduce the demand for takeout. She said that Luckin Coffee accounted for only 27.7% of outgoing orders in the first quarter of 2019, down significantly from 61.7% in the same period last year.

Luckin Coffee CEO Qian Zhiya: 10,000 stores will be built by the end of 2021. Luckin Coffee's cost per cup has fallen from Rmb28.0 in the first quarter of 2018 to Rmb13.3 in the first quarter of 2019.

Running is real, but it's not blindfolded.

At the Global Coffee Industry Development Forum held today, Lu Zhengyao, chairman of Luckin Coffee, responded to questions about Ruixing's development, saying, "A word commonly used by Luckin Coffee is' blindfolded running'. In fact, I would say that galloping is true. But it's not blindfolded." He said that every step of Luckin Coffee has gone through careful consideration and precise calculation.

He revealed that as early as the beginning of 2016, Ruixing's founding team began to refine the business model and build financial models, including single-store model and single-cup model, and the sand table deduces strategies to deal with various competitive situations. the system calculates the capital requirements and financing rhythm needed for business development. "from the beginning of 2016 to today, it has taken more than three years, and from this point of view, Luckin Coffee is not fast!"

Regarding Luckin Coffee's development, Lu Zhengyao joked, "at the company meeting a few days ago, I joked: 36 tricks, except beauty tricks were not used, the rest were used." Yang Fei, our CMO, said that the beauty trick has also been used. Tang Wei is just a beauty trick. Lucky is that it has developed rapidly in the past and will be even faster in the future! "

For IPO, Lu Zhengyao said that despite experiencing many major market adverse factors, Luckin Coffee still received nearly 20 times the high-end price subscription. "investors include almost all the top long-term investors in the world and many national sovereign funds."

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