The original title of Feng Chenqing’s cartography:
Ruisheng coffee lost more than 800 million yuan: with large-scale subsidies to attract visitors to question the profit model is still uncertain?
Because of the recent completion of the B round of financing, the financial data of Ruisheng Coffee has also been exposed by the media. In the first three quarters of
this year, the total sales revenue of Ruisheng coffee was 375 million yuan, with a gross profit loss of 433 million yuan and a net loss of 857 million yuan.
The loss data has surprised the outside world, and Ruisheng coffee has also been questioned for its large-scale
subsidization of customers. Over the past few years, in Internet entrepreneurship, a large number of companies have
emerged to cultivate consumer habits through subsidies, but the model has proved unsustainable, because there is no profitable model.
However, Ruisheng coffee did not disclose specific financial data details to reporters. Surprisingly, Ruisheng Coffee seems to be quite calm about the loss
data. It told reporters, “It’s certain that we will lose much more in the whole year than that. It is our established strategy to
quickly occupy the market through subsidies, and the losses are in line with our expectations.
It is reported that in less than a year since the trial operation in January this year, 12 million consumers have sold more than 85 million cups. Therefore,
in the B round of financing, Ruisheng Coffee received another $200 million from the same group of investors, with a post-investment valuation of $2.2 billion.
It is worth noting that after this round of financing, the book cash of Ruisheng Coffee still has more than 400 million dollars, which is ample.
In just five months, the post-investment valuation from Round A to Round B doubled, and the rapid expansion of
Ruisheng coffee made the industry stand out. Whether we can find a suitable business model and how to make profits has become the main observation direction of the market.
Not long after the announcement of round B financing, Yang Fei, co-founder of Ruisheng Coffee, launched a circle of
friends. Among them, it explained the model of Ruisheng coffee: “profit model
(every single profit), subsidy model (first blog then contract), marketing model (own flow pool) think very clearly.”
An insider also told reporters that the reason why Ruisheng coffee would lose money was largely due to the initial
subsidies and the large amount of cash consumed by opening stores. From the background of Ruisheng Coffee,
executives from the Shenzhou Department are familiar with the pattern of robbing users with subsidies, crawling and rolling in the Internet industry,
which is the most competitive in China.
An important criterion for judging whether Ruisheng coffee will continue to lose money is whether subsidies will decline in the follow-up market behavior.
Generally speaking, spending huge sums of money to subsidize the market is considered to foster consumption habits. But the habit of drinking coffee has
become very popular in the first and second tier cities, and it is not as new as
online car appointment and sharing bicycles. Therefore, some people question the necessity of Richter’s coffee subsidy.
Qian Zhiya, the founder of Ruisheng Coffee, once said that user subsidies are
an established strategy to occupy the market in the short term. It will take a long time to adopt the subsidies strategy in the future, but it will adjust its
strength moderately. Yang Fei also said in the aforementioned circle of friends
that the new retail coffee meets more “gentle” competitors than bicycles, online dating cars and other cruel
competitive environment, so from the amount of subsidies, it is far less exaggerated.
Secondly, the sales of coffee shops are diversified. In addition to coffee, they also include dessert, light food and other product lines. While selling coffee, they can also create more revenue growth points.
At the same time, many outlets of
Ruisheng coffee are smaller and
more intensive, and the cost of
opening a shop is relatively low.