Rui Xing does have a mad run, but it is not blindfolded.
文丨曹倩 Cecilia Xu
Crazy is the most stubborn label nailed to Rui Xing.
In the second quarter of the past, Rui Xing seems to reinforce this label – a net loss of 680 million yuan (unit: RMB, the same below) reached a record high, and the loss has more than doubled compared with the same period last year. Although the loss situation is being controlled, the loss rate has been narrowing, and many indicators such as revenue, new stores, accumulated trading users, monthly users, and store operations have continued to improve. However, the market is still very sensitive to Ruixing’s losses. , Continuous losses have become the shackles of Rui Xing’s Achilles.
Wall Street is quite “slow” compared to extremely sensitive market sentiment. Before the release of the earnings report, a document submitted by Rui Xing to the US SEC showed that Wall Street’s top hedge fund Point72 increased its holding of Ruixing Coffee, holding more than 5%.
The public opinion is negative, but the power of capital is radical. Is it just a perceptual cognition when people say that it is “scarred”? Ruixing’s business, how much do you understand?
Residents in madness
If Ruixing is crazy, then its madness is mainly reflected in two aspects. One is that the expansion of the store is faster, and the other is the subsidy measure without cost. It still falls on the state of loss. Due to the huge losses, Ruixing’s actions were nailed to the crazy label.
However, through the second quarter earnings report, we can see that the crazy Rui Xing seems to have a trace of reason.
-
More rational “expansion”: store growth is expected to slow down
Obviously, Ruixing is now more inclined to the former in terms of whether it wants to grow or profit. Throughout the second quarter of the entire stock market earnings report is not difficult to find, in the current environment, everyone is shrinking, trying to cut costs and increase profits. In this context, Rui Xing does not seem to put profits (loss) in mind, and is still focused on expansion.
Rui Xing, who hastily rushed to the road, set himself a radical goal of more than 4,500 total stores by the end of 2019. As of the end of 2018, the number of stores in Ruixing was 2,073, which means that to complete the New Year’s goal, Ruisheng needs to open 2,427 new stores in 2019.
The timeline has been dialed for half a year, but Ruixing has fewer than 900 stores. In this regard, Ruixing management said that it still maintains the guidance of reaching 4,500 stores by the end of the year, which means the whole lower half.Ruisheng needs to open 1537 new stores.
Source: Ruixing, Zhisheng Research Institute (as of August 23, 2019)
However, overall, although the number of stores opened in the second half will continue to increase, the pace of expansion is slowing. The Zhisheng Research Institute estimates that the number of new stores opened by Ruixing in the third and fourth quarters will reach 639 and 898 respectively, corresponding to a year-on-year growth rate of 13% and 2% respectively. Compared with 78% in the second quarter, Ruixing’s expansion speed seems to be gradually slowing down.
It can be seen that, even in the period when everyone turned their attention to profit, Rui Xing still placed its expansion in an important position. Fortunately, while expanding, Rui Xing still retains a sense of reason, otherwise it is true. It became a “scarred eye”.
-
More sensible “burning money”: subsidy efficiency improvement
Rui Xing’s “infinite scene” strategy is achieved through crazy burning of money, “free drink” can almost be called the first slogan for Ruixing to open the market. Affected by this, the high market expense rate once became the number one killer that dragged Ruisheng’s profit performance.
However, it is also the money, and Rui Xing’s money is gradually no longer blind. Rui Xing’s rationality in spending money is reflected in the reduction in customer costs and the increase in subsidy efficiency.
From the first quarter of 2018 to the first quarter of 2019, the acquisition cost of each new user of Ruixing dropped from 103.5 yuan to 17.0 yuan. Although it has increased in the second quarter of this year, the main reason is that Ruixing Tea, a new tea brand launched by Ruixing, is in the promotion period, resulting in a temporary increase in advertising costs.
Overall, Ruisheng’s user acquisition costs have been controlled, and subsequent follow-up will be key.
Data Source: Rui Xing (as of August 23, 2019)
In fact, “free drinking” is the reason why Rui Xing started to leave a crazy impression on everyone. However, the free subsidy vouchers, as the most direct way to get customers, shows a positive trend.
The data released by Ruixing shows that the first-time free subsidy fee for each new customer in the marketing expenses component is becoming less and less. In the second quarter of 2019, the product subsidy fee for a single user (free product promotion fee/additional user) was only 6.5 yuan, compared with 11.8 yuan last year, a decrease of 0.4 yuan from the previous quarter.
Data Source: Ruixing, Zhisheng Research Institute (as of August 23, 2019)
This means that more and more new users are not new to Ruixing because of free subsidy vouchers, either because of the cost of a single cup of coffee, each of Ruixing’s cups is free. The efficiency of subsidies is increasing. The former indicates that Ruixing’s brand influence is increasing, while the latter reflects that Ruixing is gradually gaining the benefits of economies of scale.
From the data point of view, the cost of a single cup is positively related to the free product subsidy fee for each new user. It is speculated that with the emergence of economies of scale, the efficiency of Ruisheng’s free subsidy is also increasing.
Compared to the uncontrollable advertising effect, free product subsidies can get customers more directly on the one hand, and enjoy the benefits of cost reduction brought by the company’s scale operation on the one hand, is not a more What is the way to spend money rationally?
From this point of view, Rui Xing, although burning money, but the money is not blindly burned, the underlying business logic that has been criticized by the outside world for “burning money for traffic” seems to be no longer able to stand up. .
Rui Xing is not “childish”
From creation to listing, Ruixing only took less than two years. For the secondary market, Ruixing’s expansion strategy seems to be too young. However, observing the pace of expansion of Ruixing, we can know that Ruixing is not “childish”, but it has actually changed itself.Business model to make the company more mature.
Continuously closing the kitchen store, reducing the store, and putting more energy into the cache store is a key measure for Ruixing in the past two quarters. As of Q2 2019, the proportion of cache stores increased from 29% in the first quarter of last year to 93%.
Data Source: Rui Xing (as of August 23, 2019)
Comparing the functions of the three stores in Ruixing, you can find that the the first selling of kitchen shops is mainly based on the business model of the self-reporting store, which is the essential difference. .
Data Source: Rui Xing (as of August 28, 2019)
The take-away kitchen is the main mode of the early development of Ruixing, and it is also the most cost-effective store type, but it has a lot of limitations in Ruixing’s expansion strategy – high cost of compliance, to attract new User Ruisheng had to pay a high subsidy cost. In the beginning of 2018, the share of take-out courier fees accounted for 42% of total revenue. This shows that the delivery fee is a drag on the company’s profitability.
To this end, the adjustment of the store structure has become the main method to solve this problem. Since the store is mostly laid out in the corner of office buildings and commercial buildings, on the one hand, it can reduce the proportion of take-out orders by self-reporting, save the distribution fee, and on the other hand, it is closer to the consumption scene, and can promote brand promotion and promotion to a greater extent.
Data Source: Ruixing, Zhisheng Research Institute (as of August 23, 2019)
By using the self-extracting agent, Ruixun’s pressure on distribution costs continued to decrease until the first quarter fell to 20%. The proportion of take-out orders in the second quarter fell to 19.8%, and the single-distribution subsidy dropped to 0.8. yuan.
Data Source: Rui Xing (as of August 23, 2019)
By adjusting the structure of the store, Ruisheng not only effectively reduced its own profit pressure, but also continuously cultivated new consumption habits. Since the beginning of the prevalence of the take-out, almost all the goods such as supermarkets and flower shops have been fashionablely delivered to the home. The consumption habits of users have changed from “going to shopping” to “buying back”. Under such a background, Rui Xing is the opposite. In doing so, cultivate the habit of “going to pick up the goods”.
This model is like a courier cabinet. However, compared to the courier of the courier cabinet, the user is relatively tolerant to Rui Xing. From the user’s repurchase behavior, the longer the user spends, the more money he spends on Rui Xing, which may mean that user habits are being developed.
Data Source: Rui Xing (as of August 23, 2019)
Starbucks reverses stealing, and Rui has “paved” for others
Every step of Ruixing’s progress is a bit of a starbucks shadow.
Rui Xing adopts a “down-dimensional strike” approach to accelerate expansion with lower-cost cache stores, and will focus more on the number of stores with Starbucks. But the question is, is the number of Ruixing stores> Starbucks stores equal to Ruixing’s market share> Starbucks market share?
In fact, when Rui Xing used Starbucks as an opponent, it also caused Starbucks to be alert and began to fight back. Therefore, before the answer to the above question was born, Starbucks first tried to make this problem a prerequisite for the establishment of the problem – not being lucky in the store.