The actual effect of the multi-category attempt, the second quarter earnings report gives an answer.
Editor’s note: This article is from WeChat public account “Retail boss internal reference” (ID: Lslb168), author Yang Yafei.
On the afternoon of August 14, Ruixing Coffee disclosed the second quarter earnings report for the 20th quarter ending June 30, and handed over the first transcript after the listing.
First, let’s look at a core set of business data: In the second quarter of 2019, Ruisheng’s revenue was 909.1 million yuan, with a net loss of 681.13 million yuan; of which net income was 870 million yuan, up from 109 million yuan in the same period last year. 689.4%; store operating loss of 55.8 million yuan, down 31.7% from 81.7 million yuan in the same period last year.
The cumulative number of trading users increased rapidly from 2.9 million at the end of the second quarter of last year to 22.8 million, of which 5.9 million trading users increased in the second quarter of 2019, and the average number of monthly users was 6.2 million, an increase of 410.6. %.
The rapid growth in the number of trading users is directly related to the rapid expansion of Ruixingmen Store. As of the second quarter of 2019, the number of Ruixing coffee stores has reached 2,963, an increase of 374.8% year-on-year, approaching the number of 3,600 stores in Starbucks China (according to official website data); in addition, the current average number of merchandise sold by Ruixing is 27.6 million, Growth of 589.7%.
According to previous data, as of the end of 2018, Rui Xing nationwide The number of stores is 2,073, which means that in the first half of this year, Ruisheng net added 890 stores. At the beginning of this year, Ruixie founder and CEO Qian Zhiya revealed that Ruixing had opened 2,500 new stores in 2019, making the total number of stores more than 4,500. From this point of view, in the second half of the year, Ruisheng’s pressure on opening a store is not small, and it needs a net increase of 1,610 stores.
But according to Ruisheng CFO and Chief Strategy Officer Reinout SchakIn the conference call after the disclosure of earnings, el stressed that the growth trend of the number of stores in the third quarter is consistent with its full-year outlook, and new stores will continue to open, the progress is consistent with the previous announcement.
For this financial report, Qian Zhiya said that with the company’s economies of scale and the increase in bargaining power, the efficiency of technology-driven operations, and higher single-store sales, Ruixing coffee shop operations The loss has now fallen sharply. In the future, we will continue to invest in brands and technologies, enrich product lines, and strengthen supply chain management to achieve the 2019 annual strategic goal and become China’s largest coffee chain brand.
The low-cost expansion of the store, “traveling the wire” is still another way?
There is still no way to expand the store’s expansion topic – this may be the strongest weapon of the small blue cup front pk Starbucks. According to the different scenarios and service capabilities, Ruixing has four types of stores, namely, take-away kitchen shop, cache shop, Youxiang shop, flagship store.
However, Ruixing’s overall store is mainly based on simple decoration and low-cost cache. (usually a coffee bar + simple table and chair combination, which is widely used in white-collar gatherings such as commercial buildings and office buildings.) The latest financial report shows that The proportion of category stores in the total number of stores is still rising.
As of the second quarter of 2019, among the 2,963 stores that Ruixing had opened, there were 2,741, 123, and 99 kitchen stores, respectively; The proportion of total stores reached 92.5%. In the previous four quarters, according to the time series, the ratio of cache stores to total stores was 57.1%, 75.9%, 87.4%, and 91.3%, respectively.
China’s freshly ground coffee is still in the growth stage, and it needs to invest in cultivating user spending habits, and it depends on the stimulation of business social needs. From this perspective, Ruixing lacks the support of the store experience, but shifts the brand pressure more to the product itself, which is a bit “tread of the wire”.
Over the past year or so, Ruixing’s product structure has changed significantly. From the initial coffee series, there have been a combination of light food, juice, snacks, boss lunch, deer tea, bread and other related products. In the form of boxing, tap the incremental space of user consumption. Rather than saying that Rui Xing is playing the “infinite scene”, it is better to be more accurate than “unlimited products.”
So, what is the actual effect of Ruixing’s multi-category experiment?
The financial report shows that in the five quarters of Q2 from 20 to 2019 in 2018, the number of products sold by Ruixing on a quarterly basis was 3.74 million, 6.22 million, 13.42 million, 13.08 million, 21.06 million. The growth rate of the period was 66.16%, 115.72%, -2.55%, and 61.01%, respectively; the number of products sold by other products per month was 260,000, 1.54 million, 4.23 million, and 3.2 million, respectively.Of the 6.54 million pieces, the growth rate during the period was 498.48%, 174.46%, -24.32%, and 104.38%, respectively.
You can see the increase in the number of products sold per month. It is relatively stable, although other products are more eye-catching, but the impact of the Spring Festival holiday on the first quarter, the overall growth rate has shown a significant slowdown.
In this regard, it may be more intuitive in terms of weight. In the past five quarters, the monthly average sales of other products of Ruixing has accounted for 6.43%, 19.84%, 23.95%, 19.65% and 23.69% of the total sales. Excluding the impact of the Spring Festival holiday on Q1 in 2019, the proportion of other products in the total sales of goods during the period did not continue to increase in the second quarter.
In the conference call after the earnings report, Reinout Schakel also explained the reasons for the changes in the current series of drinks and other products when asked by analysts.
He said that Rui Xing will balance the growth rate of the two categories, and it is estimated that the growth rate of cooked and non-cooked meat will be flat in the quarter. “Because we will also introduce other non-cooked products.” Reinout Schakel said that Ruisheng hopes to maintain freshness by continuously introducing new products.
And for the proportion of coffee and non-coffee revenue contribution, he stressed that coffee and non-coffee drinks in the last quarter were probably close to half. In addition, due to factors such as the listing of new products, it is expected that half-point results will be achieved by the end of this year.
Sustainability model sustainability behind subsidies
From the performance of the past five quarters, the development of multi-category is obvious for Ruisheng’s performance. Rui Xing also disclosed in the financial report that it is expected that the net income of Ruixing products will be between 1.35 billion yuan and 1.45 billion yuan in the third quarter of this year.
As we all know, the third quarter belongs to the peak season of beverage consumption, especially the Xiaolu tea products, which is expected to become the main “contributor” for the next Q3 performance growth.
However, it should be noted that the transcript that Rui Xing handed over is not so beautiful. One reason is that it is always based on strong subsidies. During the period from March 11 to May 19, 2019, Rui Xing launched a “million cash” campaign, which invested a total of 50 million to stimulate user spending, which improved the sales in the first half of 2019 to some extent.
Including for a long time in the future, Ruisheng may rely on subsidies to ensure performance growth. In addition to the aforementioned cash awards, Ruisheng’s subsidies are more in the form of discount coupons, with the help of WeChat group and friends.Circles and other social splits are issued, and the conversion effect is basically positively correlated with the discount coupon subsidy.
But considering the immediate consumption characteristics of the beverage itself and the price-sensitive consumer groups attracted by the subsidy, there is still a lot of uncertainty about the scale growth ability of the Xiaolan Cup.
Even so, it must be admitted that the subsidy has been exchanged for a considerable number of operating chips for Ruixun: the most direct indicator is the tens of millions of APP installed capacity, as well as the national store network built around the white-collar group.
In the past, these two channels were more than just the role of payment and delivery nodes. However, under the general trend of gradually decreasing subsidies, the role of APP and store network in improving user stickiness and pulling new features will be further highlighted.
The improvement in store operating losses is a good start, and this operational improvement is based on the premise that the number of stores is from 624 to 2,963. In other words, in the past five quarters, the actual operating efficiency of the Xiaolan Cup has increased, and the retention rate has been more clear than expected.
In the earnings conference call, Reinout Schakel also responded to the trend of performance trends. He said that through the formulation of flexible pricing strategies, the increase in effective sales prices in the second quarter was promoted, which ultimately led to an increase in net income. In addition, the proportion of new customers to total consumer customers is decreasing, indicating that the impact of free gifts is decreasing.
Rui Xing did not disclose the retention rate in the financial report, but among all the customer groups, the price per unit of consumption is rising, and the annual consumption per unit user is 70 yuan. In addition, in terms of customer cost, the cost of the first customer experience of the new customer has dropped to 48. “This is mainly the cost of the brand, not the cost of buying customers.” Qian Zhiya stressed on the conference call.