In Luckin 99. Under the low-price strategy, small brands of coffee have fallen into a dilemma of not being able to survive.
In recent years, Luckin Coffee has risen rapidly with its low-price strategy and has become a major coffee brand in the Chinese market. 9The 9 yuan low price strategy undoubtedly brings convenience and benefits to consumers, but this low price model is a huge challenge for small brands of coffee, making it difficult for them to cover the basic costs and fall into business difficulties. This article will analyze why small brand coffee cannot survive in the low-price business model from the perspective of brand influence, chain management and advantages, rent, labor and other comprehensive costs.
First of all, brand influence is one of the important factors in the success of a coffee brand. Through large-scale advertising and online and offline omni-channel marketing, Luckin Coffee has rapidly enhanced its brand influence and attracted a large number of consumers. In contrast, small brand coffees tend to have limited resources when it comes to branding. They can't invest a lot of money to expand their market share, and they don't have enough resources for branding campaigns to attract as many consumers as Luckin Coffee does. This has led to the relatively weak competitiveness of small brand coffee in the market, unable to form a scale effect, and difficult to compete with large brands such as Luckin Coffee.
Secondly, chain management and advantages are also one of the important factors that determine the success of a coffee brand. Through close cooperation with leading merchants, Luckin Coffee has established an efficient first-class chain system, reduced the procurement cost of raw materials and equipment, and improved efficiency and competitiveness. In contrast, due to its small scale, small brand coffee cannot establish long-term cooperative relations with leading merchants, and it is difficult to obtain lower procurement costs and better chain management. In addition, with its large network of stores, Luckin Coffee was able to minimize logistics costs, further improving efficiency and competitiveness. However, for small brand coffees, the logistics costs are relatively high due to the limited number of stores, which becomes a major problem for them to cover the basic costs.
In addition, rent is one of the important costs of running a coffee shop. Through large-scale store expansion, Luckin Coffee has been able to work with landlords for a long time, resulting in lower rents. In contrast, small brands of coffee are too small to build long-term relationships with landlords and struggle to get lower rent concessions. In addition, with the entry of big brands such as Luckin Coffee, the rental cost of coffee shops is also corresponding, which is undoubtedly worse for small brand coffee. The high cost of rent makes it impossible for small brands to effectively control costs, and thus cannot cover the basic costs, resulting in business difficulties.
Finally, labor costs are also one of the important factors affecting the operation of coffee shops. Luckin Coffee has effectively reduced labor costs by introducing automated equipment and improving employee efficiency. In contrast, small brands are too small to make significant investments in automation equipment and maximize staff efficiency like Luckin Coffee. In addition, with the rise in labor costs, small brand coffee cannot afford the exorbitant labor costs, which further exacerbates the business difficulties.
To sum up, the small brand coffee is in Luckin 99. The dilemma of not being able to survive under the low-price strategy is mainly due to the combination of factors such as insufficient brand influence, lack of first-class chain management and advantages, high rent costs and rising labor costs. At present, the actual situation is niche, the daily turnover of unknown coffee brand franchisees may not even be able to cover the rent, let alone the return of profits, more and many franchisees have sold equipment, tears out, therefore, do not join small brand coffee, franchisees need to keep their eyes open. To avoid being deceived, we also need to innovate in the business model and enhance our competitiveness, such as attracting consumers through characteristic products and services, establishing stable cooperative relations with leading merchants, reducing costs, and improving brand influence through accurate brand promotion and market positioning, so as to stand out in the fierce market competition and achieve sustainable development.