Luckin Coffee achieved single-store profitability in July. Will it achieve overall profitability in 2021?

Original title: Luckin Coffee achieved single-store profitability in July. Will it achieve overall profitability in 2021?
On August 10, an insider close to Luckin Coffee revealed to multiple media that Luckin Coffee, which was deeply involved in financial fraud on August 8, held the 2020 Mid-Year National Conference.
During this meeting, Ruixing internally announced some business conditions: as of July, the cash flow of Ruixing Coffee’s single store has been positive; due to the impact of health incidents, there are currently more than 300 university stores that are temporarily closed. Excluding unopened stores, Luckin Coffee has achieved an overall breakeven; based on the current operating conditions, the management expects to achieve overall profitability in 2021.
The Public Relations Department of Luckin Coffee responded to Jiemian News that this is an internal working meeting and relevant information is inconvenient to disclose.
A person in the coffee industry close to Ruixing told Jiemian News that since the exposure of financial fraud in April, Ruixing has begun to strictly control costs in order to make the store profitable, including closing some loss-making and over-rental stores, and cutting redundancy. The staff in the store achieves an average daily sales volume of more than 200 cups. In fact, Luckin has done a good job in peripheral products, marketing methods, and profitability calculations. If it were not for the April blew up scandal, it could still “play better.”
A former Ruixing employee who has just gone through the resignation procedures revealed to Jiemian News that from the end of June, in order to reduce operating costs and expenses, Ruixing has achieved staff reduction in various ways, such as advocating a one-person work system for one store and strengthening working hours. Manage to reduce labor costs, or arrange personnel who may be recruited in the early stage to a distant store, and let them automatically propose to leave. There were nearly 100 people in his work group, and more than a dozen people left at the end of July.
In terms of store expansion, the former employee said that Ruixing still has plans to open new stores, but the number is less than before, and the location of new stores is more rational.
Jiemian News noted that Luckin Coffee’s official WeChat account has not announced the city and number of new stores for 6 consecutive months.
Before February 2020, Luckin Coffee’s WeChat public account will announce the store information that opened in the past week in the “New Stores Weekly” column every week. This column will be renamed “Recommended Beauty Stores” in February and March. The opening of new stores has not been announced.
In May of this year, Jiemian News also reported that Luckin plans to close nearly one-fifth of its stores in Beijing to correct early location overlap errors and stop losses in existing loss-making stores.
On August 11, Jiemian News found that the Ruixing coffee shop near Ciyunsi Bridge in Beijing had closed in July. An SF delivery employee told Jiemian News that there is also a Ruixing in the office building opposite this store, and the users of the two stores are highly overlapping.
The recently closed Luckin Coffee shop. (Picture shooting: Zhao Xiaojuan)
Luckin Coffee refused to disclose the current number of stores. At the end of 2019, Luckin announced the number of stores to be 4509.
On July 21, according to real reports from the media, Luckin Coffee’s CMO and its marketing team said that due to factors such as the epidemic, about 10% of the stores have not opened. This year’s strategy has been adjusted, mainly using the community to stabilize users. “Shut down and transfer” individual stores with poor benefits or overlapping customer coverage. The focus is to increase the retention and frequency of existing users, but good areas will also accelerate store opening.
In fact, Luckin started to use corporate WeChat for community operations in June. At present, more than 9,000 WeChat communities have been established, and free-time discounts have been introduced to boost sales.
According to knowledge reports, the CMO of Luckin Coffee said that almost every group orders more than 4 cups a day. More than 9,100 groups can exceed 35,000 cups a day and more than 1 million cups a month.
In addition to reducing staff, closing stores, and slowing down shop openings, Luckin has also reduced its consumer-oriented product purchase discounts.
The aforementioned former Ruixing employee told Jiemian News that previously Ruixing had cancelled the offer for new users to have a free drink, and the distribution of larger discount coupons has also stopped. At present, the price of a drink at Luckin Coffee is around 15 yuan. Not only Luckin Coffee, but the company has also stepped up its promotion of Xiaolu Tea, which drives the sales of juice and tea, and it is not difficult to balance costs.
The latest action of Luckin Coffee at the product level is the brand alliance, which launched a drink in cooperation with Haagen-Dazs on August 10.