What does the most expensive coffee bean poop story have to do with franchise news?
Luckin Coffee has reopened new retail partner recruitment in 41 cities across nine provinces, including Anhui, Henan, and Heilongjiang. No franchise fee is charged, but partners cover deposits, design, renovation, and equipment, roughly 350,000 to 370,000 yuan upfront. All listed cities already have joint-operation stores, just at low density, and applications from other cities are still accepted.
Joint-operation store revenue rose 116.1% year on year in the third quarter of 2022, making that model a growth engine. Cities on the list mostly have fewer than ten such stores each, such as six in Datong, two in Yuncheng, three in Yulin, and one in Xinzhou. Headquarters support covers in-store trainers, holiday promotion planning, and online platform building for less experienced partners.
Luckin Coffee recently announced the restart of its new retail partner recruitment, initially targeting 41 cities in 9 provinces including Anhui, Henan, and Heilongjiang. The company stated that no franchise fee is charged, but franchisees must bear upfront expenses such as security deposits, design fees, renovation, and equipment, totaling approximately 350,000 to 370,000 yuan. The cities opened this time are all areas that already have franchise stores but with low density, and Luckin hopes to accelerate market penetration through the joint operation model. The Q3 2022 financial report showed that revenue from joint operation stores increased by 116.1% year-on-year, becoming an important engine for performance growth. For inexperienced franchisees, the headquarters will provide support such as in-store guidance, event planning, and online operations.
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Luckin Coffee recently announced that it will launch a new round of new retail partner recruitment. According to official introduction, this round of recruitment mainly targets 41 cities in nine provinces: Anhui, Henan, Heilongjiang, Jilin, Liaoning, Inner Mongolia, Shandong, Shanxi, and Shaanxi.
Luckin stated that the above targeted cities are within the priority recruitment scope, and cities not on the list can still submit materials normally. The company will open cooperation channels irregularly based on recruitment progress in various regions.
Partners with relevant business experience can apply for independent operation; while inexperienced franchisees can receive greater support from the headquarters, such as launching emergency plans when business revenue is abnormal, arranging trainers to provide offline guidance, and assisting with holiday promotion planning and online platform construction.
It is reported that these 41 key cities have all previously opened franchise stores, with the common feature that franchise stores are not densely distributed, and most cities have no more than 10 stores each. For example, Datong and Yuncheng in Shanxi have 6 and 2 respectively, Yulin in Shaanxi has 3, and the least, Xinzhou in Shanxi, has only 1.
According to the latest disclosed Q3 2022 financial report, Luckin Coffee's total number of stores nationwide has reached 7,846, covering more than 230 cities, with app registered users exceeding 100 million. Luckin adopts a parallel store opening strategy of "self-operated + joint operation," and the two models are highly complementary, driving accelerated store layout across the country.
Public information shows that this franchise business was launched as early as 2019. Luckin explained that it was suspended in 2020 due to "the impact of the pandemic." It was not until early 2021 that the group decided to resume franchising. On August 22 this year, Luckin Coffee once again stated that partner recruitment was suspended at the current stage, and the opening time would be subject to official announcements. It was not until December 5 that Luckin issued a notice through its WeChat public account, announcing the restart of a new round of partner recruitment.
According to Luckin Coffee's publicly disclosed recruitment plan, the new retail partner program does not charge any franchise fees, while providing supporting services such as marketing support, all-domain traffic support, and digital operations.
Although joining Luckin Coffee requires no franchise fee, to ensure normal operations, franchisees still need to pay a 50,000 yuan security deposit, a 5,000 yuan design fee, renovation costs between 110,000 and 130,000 yuan (in bare-shell condition), and equipment costs of about 190,000 yuan. Taken together, the initial investment is approximately 350,000 to 370,000 yuan. After that, franchisees also need to continuously bear expenses such as employee salaries, rent, utilities, and raw material procurement.
The franchise business is crucial to Luckin Coffee. Among the 7,846 stores, 5,373 are self-operated stores and 2,473 are joint operation stores. Compared with the same period last year, Luckin had 5,671 stores in Q3 2021, including 4,206 self-operated and 1,465 joint operation stores. It is not difficult to see that joint operation stores are growing faster than self-operated stores.
The rising number of joint operation stores has also brought more revenue to Luckin Coffee. Financial report data shows that in Q3 2022, revenue from joint operation stores reached 899.1 million yuan, accounting for 23.1% of total net revenue, an increase of 116.1% from 416.1 million yuan in the same period of 2021. Compared with other new consumer brands, Luckin still has considerable room for store distribution and regional scale expansion, and this reopening of franchising may be intended to rapidly expand penetration.
At Luckin Coffee's Q3 2022 earnings conference, Chairman and CEO Guo Jinyi said that the company will continue to maintain a "competitive" pace of new store expansion.
Image source: Internet
The above content is compiled by CoffeeHunters, a coffee news website.
