Today, Luckin announced that they are going to begin Franchising Stores.
Not sure if this is good or bad?
On the Bad Side.....This could mean they are running out of cash and do not want to go raise more in the open market or issue more debt.
On the Good Side....They could be looking to expand outside of China. I keep seeing rumors of expansion to Europe and the Middle East....but they are only rumors.
As you know, SBUX doesn't franchise but DNKN does. The fastest growing coffee chain in the US right now is Dutch Bros. They do franchise but only if you have worked at the company....same as Domino's Pizza Model.
also....grabbed this off of a social media website...some info from a Chinese consumer...
Luckin has been extremely successful for the past year in china, any people who’ve been to china in 2020 should be able to tell it. It’s basically the Uniqlo of the coffee industry, however with much less competition and a huge under-developed market (in fact I don’t think they have any competitor of the same scale in china)
Search disposable income per capital in china and you will understand why starbucks 40rmb cup coffee is only targeted to a small consumer market. the business model and target customer are completely different from luckin and I do believe they will co-exist as the coffee market grow double digits every year
Check the most recent C round valuation for Nayuki tea??, heytea?? and Mixuebingcheng ???? you will understand why luckin is severely under-valued. All of the 3 mentioned above operate in the bubble tea market.
From my personal research, the average price for luckin has been around 10rmb in 2019, and now roughly around 13-15 per cup (no solid data), lots of new products being pushed out in 2020 and people love it, Luckin is now selling more premium coffee costs 18-20 per cup after discount. To me, that’s smart business model and good management execution
Also ask yourself, do you seriously believe they inflate revenue on the JLP report, again? You can calculate the # of cups sold in 2020 and compare that figure with starbucks china, it’s catching up very quickly
PRICE IS TRUTH
HOPE IS NOT A STRATEGY
DEFY HUMAN NATURE...DO THE WORK YOURSELF
