On August 3, Starbucks disclosed its third-quarter results for the fiscal year 2022 ended July 3, 2022, showing that during the reporting period, Starbucks' total revenue reached US$8.15 billion, higher than market expectations.

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Recently, the two giants in the coffee track disclosed their second quarter financial reports one after another.

However, in the Chinese market, has seen a 40% decline in revenue in the single quarter due to the impact of the epidemic on offline business formats.

Five days after Starbucks' financial report was released, that is, on the evening of August 8, Chinese coffee chain giant Luckin also released its second quarter financial report for 2022.

financial report shows that Luckin Coffee 's quarterly total net income in the second quarter increased by 72.4% year-on-year to RMB 3.2987 billion; Non-GAAP net profit was RMB 267.5 million, far higher than 92 million in the same period in 2021.

, one went downward, and the revenue in a single quarter fell by 40%; the other went upward, and the total net income in a single quarter increased by 72.4% year-on-year. Does this mean that in this increasingly fierce coffee war, the young Luckin Coffee is going to catch up with 51-year-old Starbucks?

1 "Mercury retrograde" Starbucks and "Gaofei" Luckin

More than 20 years ago, Starbucks probably wouldn't have thought that the first thing to "abandon" it would be the Chinese market it educated itself.

In January 1999, as an important part of the Asia-Pacific development plan, Starbucks opened its first store in Beijing Guomao. It caused a huge crowd. In the past twenty years since then, mainland China has been Starbucks' "fastest-growing market" and is also Starbucks' second largest market.

As the "godfather" of the Chinese coffee market, Starbucks' influence in China can be imagined.

But this situation seems to have started to change since 2021. With coffee brands such as Luckin, Manner, and Nova re-education of the coffee market, Starbucks' performance in the Chinese market has begun to decline and the range continues to widen.

Fiscal Year 4, 2021 to 2022Q2, same-store sales in Starbucks Chinese market fell by 7%, 14%, and 23% year-on-year respectively. In the second quarter, Starbucks China's same-store sales fell to 44% due to a 43% decline in passenger flow and a 1% decline in average customer unit price.

Specifically, Star in the second quarter of the year, Buck's Chinese market revenue was US$540 million, equivalent to about RMB 3.636 billion . is only about 300 million more than Luckin Coffee, and plummeted by 40% year-on-year.

In terms of new stores, Starbucks' store opening speed is not as fast as that of domestic brands.

Yilan Business statistics show that in the first half of 2022, the number of new stores of Luckin Coffee, Luckin Coffee and Nova Coffee all exceeded Starbucks. , especially Luckin Coffee, has opened almost 5 times more than Starbucks.

Starbucks also lost its advantage in terms of total number of stores.

According to data from Yilan Commercial statistics, as of July 4, 2022, the total number of Starbucks Coffee stores was 6,594, nearly 500 stores less than Luckin Coffee.

In terms of store operations, Starbucks has frequent negative news, and its reputation has been falling again and again.

In the first half of the year, Starbucks has frequently become hot searches for "driven away police officers who eat near their stores", "netizens drink foreign objects in brand products", and "punished for selling foods that exceed the shelf life", causing controversy among netizens.

For Starbucks' failure in the Chinese market, Schultz interprets it as being affected by new crown , "This is mainly due to 's restrictions related to COVID-19 in China, and the impact of foreign currency conversion from China."

However, the same store focuses on Beijing, Shanghai, Guangzhou and Shenzhen. After experiencing a severe epidemic environment, Luckin Coffee turned threats into opportunities, grew against the trend, and delivered an unexpected revenue answer.

According to Luckin's second quarter financial report, Luckin's Non-GAAP net profit was 267.5 million yuan, far higher than the 92 million yuan in the same period in 2021. Among them, the sales growth rate of self-operated stores same-store is 41.2%, and the profit margin at self-operated stores is 30.6%.

Coconut Cloud Latte alone sold more than 24 million cups, with a total store revenue of 400 million yuan. At the membership level, Luckin added more than 10 million new users in the second quarter, the public account fans have now exceeded 30 million, and the private domain users have exceeded 28 million.

At the same time, the historical problems caused by Luckin's fraudulent financial reports have also been basically solved.

It is reported that after successfully completing the debt restructuring in the first quarter, Luckin Coffee has made substantial progress in handling class action lawsuits for overseas shareholders. Currently, Luckin Coffee's US federal class action settlement has recently been finalized by the U.S. federal court.

Obviously, compared with Luckin's performance, which is also in the Chinese market, Starbucks CEO completely lets the Omickron virus epidemic and foreign currency conversion costs "take the blame".

Moreover, it is worth noting that Luckin Coffee's second coffee roasting factory (Kunshan factory) has signed and completed an investment agreement in the second quarter, with a designed production capacity of 30,000 tons, and is planned to start construction by the end of this year; at the same time, Luckin Coffee has become one of the most important buyers of Yunnan coffee green beans.

In other words, Luckin is constantly accelerating investment in the coffee supply chain. The improvement of and supply chain system will further enhance Luckin’s resistance to global inflation and rising raw materials.

In addition, the Luckin Coffee Board has approved the establishment of the Sustainable Development Committee, which will make suggestions for the board of directors related to Luckin Coffee's sustainable development measures, policies and disclosures. Dazhen Capital Partner Chen Weihao and Guo Jinyi and jointly serve as co-chairs of the committee.

According to Luckin Coffee's plan, it will release relevant reports on corporate governance in the fourth quarter of this year, systematically reviewing the transformation of Luckin Coffee in corporate governance, cultural values ​​and other key issues in the past two years, so that the outside world can better understand Luckin's unremitting efforts in historical cutting, governance improvement, and internal control compliance.

Compared with Starbucks' "sluggish growth", the young Luckin Coffee, which has removed the "carrot", seems to have stronger explosive power.

2 Starbucks counterattack and Luckin Coffee

However, Starbucks is still Starbucks. As a veteran coffee brand that travels through multiple economic cycles, Starbucks' strength cannot be underestimated.

This strength comes from Starbucks' profit growth in other markets, mainly in the United States.

It is reported that in the United States, the largest market, has revenue of US$5.62 billion, a year-on-year increase of 13%. has benefited from an average average customer price increase of 8% and a 1% increase in customer flow, and its same-store sales increased by 9%.

It is obvious that despite the impact of the epidemic, American consumers have not reduced or reduced their spending on coffee.

Moreover, according to the " Times ", in the face of the uncertain and increasingly fierce demand prospects brought by the epidemic, Starbucks is planning to sell all its business in the UK and is currently looking for external consulting companies to cooperate.

All of this provides the possibility for Starbucks to "continuous blood transfusion" in the Chinese market.

Starbucks China Chairman Wang Jingying previously stated that the total number of Starbucks stores in China in the 2022 fiscal year will reach 6,000. Although it may not be able to achieve the goal, it can still be seen Starbucks' determination to continue to expand the Chinese market.

In addition, Starbucks is also constantly "seeking scriptures" from Luckin and defeating magic with magic.

Starbucks has launched its digital transformation , with an Fast concept store that combines efficiency, service, quality and digitalization, directly targeting Luckin’s core cache store model.

It is reported that Starbucks' coffee-fast concept store is divided into three parts: First, the ordering table , which has some baked goods and has full-time service;

Second, the "Star Tavern" is added, and the service staff can help customers take out drinks and food from the store's self-pickup cabinet, or complete on-site orders. Third, a simple horizontal table is placed facing the floor-to-ceiling windows, and is equipped with eight chairs for customers to dine in.

Although I don’t know the total number of Starbucks fast cafe stores, there are nearly 10 such stores in Shenzhen alone.

In the future, with the nationwide layout of Starbucks' "Kafa" model in core business districts and transportation hubs, Luckin's core business model, which mainly focuses on self-mentioned delivery, will face considerable challenges.

At the same time, Starbucks' online sector has also started the acceleration engine. In March this year, Starbucks China opened an official flagship store on JD , mainly selling Starbucks coffee cups, coffee utensils, various gift cards and coupons, and expanded its "Coffee Quick" business to the WeChat platform.

At the same time, Starbucks has set its sights on the hottest channel for catering at present - new retail for catering.

In June this year, Starbucks China launched a new mini bottled Frappuccino tea drink. Currently, Starbucks ready-to-drink has been sold in more than 400 cities and 29,000 distribution points, covering convenience stores, mid-to-high-end supermarket channels and e-commerce platforms.

is almost foreseeable. After Starbucks' omni-channel operation channel is opened, Luckin's traffic advantage may be repeatedly weakened by . Luckin and Starbucks are no longer the two major sectors of Internet retail and traditional retail. The two major brands will turn to open a head-on battle under the omni-channel.

At the same time, according to Starbucks' current chief strategy officer Frank Britt, Starbucks will reimagine stores in the future, including new bar configuration, patented coffee technology, novel store types and other innovations, can also reconnect with consumers, and remember that it is necessary to provide each consumer with a unique and personalized experience that is unified across channels.

Moreover, Starbucks has been criticized for not seeing new products in recent years, and it seems that the status quo of Starbucks is changing.

In June this year, the Bingzhen Concentrated Series landed in China for the first time, and soon became the most popular ice coffee product among young people. However, in January, Starbucks launched its selected product, the whiskey barrel brewed coffee series, and 11 drinks.

Compared with Starbucks' continuous "speed-up counterattack", Luckin has focused more on marketing and popular product strategies.

From the endorsement of Valley Ailing and Coconut Cloud Latte at the beginning of the year, to the "Leak You" Plum Latte launched in July this year, and to the recent Chinese Valentine's Day, Luckin Coffee took advantage of the "Chinese Valentine's Day, Frog Loves You!" created by Sad Frog , and simultaneously launched Bailey Sweetberry Latte and Warui Strawberry Latte. Luckin has been very popular in the industry.

However, from Naixue's king fried oil tangerine last year to the hard-to-see big hits this year, we should know that the hits are not that easy to make . According to Luckin's financial report, Luckin launched a total of 34 new products in the second quarter of this year, but few of them can really arouse market discussion.

Luckin, with a hit single product, cannot last forever the legend of "escaping from death". Even under the horse racing mechanism, it is almost impossible for Luckin to win the hit product every time it launches a new product.

At the same time, Luckin Coffee is still unremittingly developing the sinking market.

It is reported that throughout the second quarter, Luckin expanded to 14 new sinking cities, and basically adopted the model of joining stores. Today, Luckin has covered 234 cities across the country, and even Inner Mongolia, Gansu, which is known as the "tea desert", is involved.

However, Luckin's expansion in the sinking market is not unhindered.

According to many Luckin franchise store owners, is no longer open to newcomers to franchise, but mainly promotes old franchisees to expand stores, and many areas are already saturated, so it is difficult to continue to expand stores.

Moreover, with the decline of Luckin Coffee, tea coffee is not separated, and its competitors are no longer just Starbucks and Mannar, but Mixue Bingcheng .

Compared with the layout and price advantages of tea brands such as Mixue Bingcheng and CoCo in the sinking market, Luckin, which currently has an average price of 19.4 yuan, it is difficult for to replicate its low-price advantages in the first- and second-tier markets in third- and fourth-tier cities.

Moreover, Mixue Bingcheng is still making efforts in first- and second-tier cities, and is seizing young people with lower-priced coffee products than Luckin.

Not to mention, the coffee brand launched by Mixue Bingcheng, which focuses on low-priced coffee, has grown to 810. It is reported that Lucky Cake has inherited the "cheap" attributes of Mixue Bingcheng. The cheapest cup of hand-misted lemon coffee is only 5 yuan, and the price advantage is obvious. Compared with Mixue Bingcheng, where the stores have exceeded 20,000, Luckin’s downward path may not be able to go very smoothly.

Summary:

China's coffee market has long entered a white-hot fighting stage. According to Meituan online data, as of May 1, 2022, there were 117,300 coffee stores in mainland China. In this hot track, professional players, cross-border players and other bigwigs have entered the game one after another, and the heroes are competing for it, and it is difficult to judge who will lose and who will win.

Perhaps as Zhu Danpeng, senior researcher at China Brand Research Institute, said, who will win the domestic coffee market brand to death, and who will win the battle, may only be known in 2025. It is too early to assert that Luckin will surpass Starbucks.

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Produced | Catering O2O

Author | Susu

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