Rui Xing, who you thought was already “not good”, was unexpectedly okay

After being unable to “white prostitute”, how is Ruixing’s development now?

Recently, Lu Zhengyao , the former chairman of Ruixing Coffee , added a new consumption restriction order, restricting his high consumption and consumption behaviors that are not necessary for life and work, including the familiar restrictions on taking airplanes, soft sleepers on trains, and going to hotels above stars. Consumption etc. 

As the original chairman of Ruixing Coffee, the news that Lu Zhengyao was restricted from high consumption caused many people to pay attention to the recent development of Ruixing. Luckin once created the fastest IPO myth in history. From its establishment to listing on NASDAQ in the United States, Luckin took only 18 months, and its highest share price reached 51.38 US dollars per share. At that time, Luckin’s scenery was infinite, and in the eyes of many people, it became the representative of Chinese coffee against Starbucks . 

Rui Xing, who you thought was already "not good", was unexpectedly okay

But the good times didn’t last long, and what Ruixing had to face after the scenery was a ” storm ” triggered by financial fraud . At the beginning of 2020, Ruixing was exposed to financial fraud, and its stock price plummeted, and its market value fell from 12 billion US dollars at its peak to hundreds of millions of US dollars. After being questioned by many parties, Ruixing was suspended by Nasdaq at the end of June 2020. city. It took 13 months from the listing to the delisting of Ruixing, which is faster than the time from establishment to listing. After experiencing the trough of high mountains, how is Ruixing now developing? 

Increase income and reduce expenditure, cater to young consumers

When Luckin delisted, as ordinary consumers, we were most concerned about whether Luckin’s stores would continue to exist and whether we could drink cheap Luckin coffee again. At that time, the Ruixing official blog posted that Ruixing Coffee’s more than 4,000 stores across the country will operate normally and continue to provide users with high-quality products and services. After Luckin’s delisting, it did not take the step that we didn’t want to see. We can still use the coupons that have not been used up before and enjoy the cheap and affordable small blue cup of coffee. 

As ordinary consumers of Ruixing Coffee, our attitude towards Ruixing’s delisting is slightly different from that of the capital market. Many consumers did not lose trust in Ruixing because of Ruixing’s financial fraud, but instead blew up on the Internet. Luckin cuts the stems of leeks abroad. The reason is that Luckin Coffee’s low prices and preferential policies are deeply rooted in the hearts of the people. Luckin’s billions of billions of financial fraud are too far away from ordinary people, and it does not involve food safety and other key factors that affect consumers’ purchases. We naturally There will not be too much resistance to Ruixing after the delisting, which also gives Ruixing the opportunity to continue business.

Rui Xing, who you thought was already "not good", was unexpectedly okay

After the delisting, Ruixing adjusted its development strategy. In addition to slowing down the speed of opening stores, it also adjusted its product preferential strategy, product development and marketing. Ruixing, which has experienced rapid listing to rapid delisting, has returned to a relatively “rational” development path. 

In terms of product discount strategy, Luckin has changed its previous large discounts, and even now it is issuing discount coupons, but compared with the past, it has reduced product discounts and the number of discount coupons, allowing the prices of many products to at least maintain the “lower limit.” , So that stores can continue to operate in a healthy manner, after the introduction of this measure, 60% of stores will achieve profitability, and the effect is immediate, but we can no longer “white prostitution” as happily as before. 

In terms of product development and marketing, Luckin has launched popular new products such as raw coconut latte to capture the hearts of users with unique flavors. In marketing, Luckin signed last year’s draft contestant, Lei Lu Xiu, which made Luckin gain a high degree of attention on Weibo and Station B. Rui Xing also catered to the mentality of young consumers who like to play tricks and launched the first Lilu Xiu. Commercial “Luckin YYDS! 》, to promote summer drinks such as meteorite latte, ice thick milk latte and grapefruit ice extract. The video received nearly 2 million views on station B. Some users commented: “A brand that doesn’t want to make money finds someone who doesn’t want to make money. “The spokesperson at work” allows users to approach Ruixing in the game and increase brand stickiness. 

Rui Xing, who you thought was already "not good", was unexpectedly okay

Luckin knows that its delisting will affect its company’s business and brand image. It will increase revenue and reduce expenditure by slowing down the speed of opening stores, adjusting product preferential strategies and developing new beverages to promote product sales, and then transform the market by focusing on hotspots and stalking marketing methods. The direction of the wind makes itself go to the market and the public with a new brand image . 

Regain the trust of the capital market

At present, coffee still has broad market prospects in China. According to the “2020 Coffee Market Insight Report” released by Aurora Big Data, our annual per capita coffee consumption is still very low, and coffee is still not a daily drink for many people. Domestic coffee optimistic about prospects for the development of the Internet giants, has development potential of the coffee brand investments, such as Tencent investment Tims China and bytes beating investment Manner coffee. 

Rui Xing, who you thought was already "not good", was unexpectedly okay

After the delisting of Luckin Coffee, it has not been directly beaten by investors. On the contrary, Luckin has gradually improved after adjusting its development strategy. According to Ruixing’s 2020 annual report, Ruixing’s debt is 892,373,900 (nearly 900 million), which is a reduction of 2.83 billion from the 3.721 billion in 2019. In April of this year, Ruixing received a total of 250 million US dollars (about 1.617 billion yuan) in financing from Dazheng Capital and Joy Capital. In addition to reducing its debt, how can Ruixing quickly regain the trust of the capital market? 

First, after adjusting its business, Ruixing realized 60% of the profitability of its stores, and avoided a large number of offline stores. After the occurrence of Ruixing’s financial fraud problem, it has not been widely resisted by consumers in China, and it has reversed its brand image through marketing. , Also narrowed the distance between themselves and young people, and they are the future potential customers of the coffee market. It can be said that it has not been widely resisted by domestic consumers, which is the basis for Luckin to adjust its business to continue to develop and regain the trust of the capital market.

Second, after Luckin’s financial fraud incident, Luckin issued an apology and suspended the senior executives involved for investigation, adjusted the company’s management, and Guo Jinyi replaced Lu Zhengyao as the new chairman. Luckin’s intention is obvious. It hopes to separate from the senior executives involved as soon as possible, protect the company as much as possible to reduce losses, and let the supervision and the market see its determination to change.

Rui Xing, who you thought was already "not good", was unexpectedly okay

Third, the domestic coffee market has broad development prospects. As of December 31, 2019, Luckin has 4,507 directly-operated stores. A large number of offline stores are its best bargaining chips. It is difficult for other new brands to be in a short period of time. Achieve transcendence. In the capital market, there may be investment institutions who think that “rather than supporting new coffee brands now, it is better to invest directly in Luckin’s psychology.” On the one hand, Luckin had a history of financial fraud when it went public, and on the other hand, Luckin’s Offline stores have great advantages and have good development potential in the future. Perhaps this is one of the important factors for Ruixing to regain investment. 

Luckin has experienced the delisting of counterfeiting incidents, it is rare to survive, Luckin wants to continue to develop, gaining the trust of the investment market is a way to go, and on this road Luckin seems to have achieved Phased success. 

Concluding remarks

From the birth of Luckin to the listing and delisting, it can be described as wind and wind. Luckin has experienced things that many companies have not experienced in a few years. As ordinary consumers, the reason why we can continue to trust Ruixing is because of its price, its stalk, its convenient offline stores, etc., or perhaps it is that we have directly chosen Ruixing among the many offline coffee shops. Fortunately, consumption habits.

The future coffee market will face increasingly fierce competition. Many coffee chain brands are growing rapidly, opening more stores to seize more markets. At this time, what Luckin can do is to develop steadily, continue to increase its brand stickiness to existing users, and build its own moat before the new coffee chain brand truly grows. 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/rui-xing-who-you-thought-was-already-not-good-was-unexpectedly-okay/
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