Recently, takeaway platforms have staged a subsidy war, and coffee prices have continued to roll up to new lows. “Market Elephant” observed that under the full subsidy of Meituan Takeaway, Ele.me (Taobao Flash Sale), and JD.com Takeaway, a large number of “2 yuan to drink Luckin” and “2 yuan to drink Cudi” related content appeared on social media. In this case, many consumers rushed to buy it, and some users piled up coffee in the refrigerator.
For brand management, the takeaway war is good for the brand. Coffee has been under pressure for a long time in China, and with the east wind of the food delivery platform subsidy war, ready-made coffee is entering thousands of households.
But for the front-line employees of the chain coffee stores, the recent takeaway war is a nightmare.
“Every day the soles of my feet have to be broken.” Luckin employee Sun Shao sighed to “City Elephant”: “I made 50 cups in half an hour, and sometimes a person has to make 300 cups in the morning.” Some Luckin employees also said on social media that when they were talking in their sleep at night, they were shouting that there was no ice and they were shoveling ice.
Previously, Luckin had just experienced a change of chairman. On April 29, Luckin Coffee announced that Guo Jinyi would no longer serve as the chairman of the company, and Li Hui, chairman and CEO of Dazheng Capital, the largest shareholder of Luckin Coffee, rejoined the board of directors and assumed the position of chairman.
This does not mean that Luckin Coffee’s strategic direction will change. After the change of seniority, Guo Jinyi continued to remain as CEO and director of the company, and Li Hui said after taking over: “I am honored to rejoin the board of directors and serve as chairman at this important moment for Luckin Coffee. We will be committed to executing our current strategic initiatives and driving the next phase of our growth.”
However, many first-line store employees said that they hope that Luckin’s new chairman can be more Buddhist, stop involution in the direction of new product research and development, working hour assessment, etc., and bring Luckin back to the culture of the early stage of entrepreneurship.
01 New product anxiety
Luckin Coffee is famous in the industry for its many new drinks and fast frequency of new drinks. According to Luckin’s announcement, last year, Luckin achieved brand linkage 36 times and released new products 30 times, and encountered three problems in the process of linkage – insufficient event stocking estimate; the product is sold out, the product removal and return cycle is too long; Too many new choices on high frequency are not enough.
In Luckin’s view, linkage activities and new product marketing are quite popular, and the effect on attracting new repurchases is significant. After star items such as raw coconut latte, thick milk latte, and raw cheese latte, the light milk tea and butter latte launched last year all showed a popular temperament.
But this does not mean that Luckin’s new products can satisfy everyone.
At the end of September last year, Luckin Coffee and Thailand’s IP Butter Bear jointly released a new product butter series of coffee, including small butter latte and small butter American. Luckin said that the small butter latte is the brand’s blockbuster new product of the year and ranked first in the closed beta.
This product is known to have a popcorn aroma, and it quickly became popular as soon as it was launched, achieving sales of 13.33 million cups in the first week, second only to raw coconut latte in the fourth quarter of last year, becoming the second most popular single product of Luckin Coffee.
In February this year, Luckin announced an upgrade to the formula of the small butter latte, and the raw material of the product was changed from New Zealand butter to French imported presidential butter. However, a large number of user feedback shows that the small butter latte has a serious lamb odor recently, and the taste is so big that it is “difficult to swallow”.
Some consumers said that Starbucks cold brew time is 14 hours, Luckin only 18 minutes, and even the taste can’t be tasted: “It’s better to call coffee powder cold water”.
Luckin barista Li Ming has a deep resentment towards cold brew: “Luckin’s prefabricated tea bags will be brewed for a long time, and now there is an 18-minute cold brew coffee, Luckin has made a lot of non-coffee drinks, I want to learn everything, I will learn from Bawang Chaji and Starbucks for a while, that is, I am getting farther and farther away from coffee.” ”
Li Ming told “City Elephant” that Luckin’s innovation is more of a renovation – changing a little detail to become a new product. For example, the big watermelon raw coconut cold brew is just a new product with coconut milk added to the summer watermelon cold brew. Luckin’s beer ice shake and Tengyun American, which is co-branded with Black Myth Wukong, have obviously failed to innovate, and store sales have been dismal.
The tea brewing machine launched in the store in March was the focus of employees’ complaints. In the publicity caliber, Luckin hopes to create a high-quality tea beverage image that replaces tea powder with tea bags. But in Li Ming’s view, the tea brewing machine is not only very easy to rust and takes a long time to make, but also occupies a lot of store space if you are not careful.
02 The “old people” leave Luckin
Not everyone is opposed to Luckin’s new product development. Luckin franchisee Wang Qing told “Market Elephant” that compared with the price, young consumers pay more attention to the product itself, Luckin’s main products have obvious advantages for consumers to repurchase, as soon as Luckin is opened, dozens of products can be chosen, which will dazzle people, which is Luckin’s obvious advantage over other brands.
Zhao Cai, former manager of Luckin Coffee, expressed a similar view on “Market Elephant”: “Luckin has been relatively strong in research and development in recent years, and basically there are new products every week. ”
What really worries Zhao Cai is the large-scale exodus of old employees: “In recent years, store managers have been under more pressure than in the past, old employees have left one after another, there are fewer employees in the store, but there are more assessment items, and the store manager has to use less manpower to complete more indicators.” ”
In Zhao Cai’s view, the more products and machines Luckin stores have, the more complex the production process, and the more dependent the store relies on skilled employees. These baristas have learning tasks every week, to learn to make product back recipes, cope with new product exams, and also be responsible for cleaning, duty, inventory, ordering, video inspection, quality control, etc., and they can’t even care about eating and going to the toilet when they are busy: “In fact, the old employees are important, they know the store and consumers better than the new employees.” ”
Li Ming deeply agrees with this: “Many of the old people around me who have struggled together for 18 years have left, which is really a pity. In his view, affected by the launch of cold brew products and AI scheduling, the working environment of Luckin Coffee has repeatedly deteriorated, and it is difficult to recruit and retain people.
At the 2024 Catering Industry Conference, Guo Jinyi said: “Store employees play a key role, they are the ‘real heroes’ who convey brand promise and customer experience through every cup of coffee.” ”
The reality is that the brand’s vigorous innovation has strengthened the front-line workload, and the brand’s timely rate requirements have also made employees anxious. Since cold brew coffee needs to be pre-made 18 minutes in advance, employees have to come to the store early to prepare. Luckin employee Zhang Hua told “City Elephant”: “Cold brew is really troublesome, I work 6 days a week, and I have frozen shoulder for more than a year, and now I am struggling with whether to leave.” The regional manager told us to leave as soon as possible if there is a good place. ”
Since the beginning of this year, Luckin’s AI scheduling requirements have made employees even more dissatisfied. Luckin employees rely on working hours to calculate benefits, while the system ignores the actual working hours of employees and automatically excludes rest time from working hours. “I was prostituted by the system for up to four and a half working hours a day.” A Luckin employee said.
When arranging work, the scheduling system often only considers the number of people according to the actual amount of cups, such as a certain period of orders is small, arrangements are made to reduce the number of employees on duty to save costs, ignoring the actual work of employees such as cleaning, handling, and proofing. As a result, employees often need to do a lot of “unpaid work” in addition to effective working hours.
Luckin employee Hu Yun told “City Elephant” that after a day’s work, the effective working hours are less than 70% of the total time. Zhao Cai revealed that in the past, Luckin’s store managers and deputy store managers could focus on management, and as Luckin gradually reduced manpower, store managers had to work on the front line of the store.
03 Where does anxiety come from?
From a disruptor in the coffee market to a highly sophisticated efficiency machine, how did Luckin Coffee get to this point?
Zhao Cai told “City Elephant”: “The price war launched by Cudi has had a certain impact on Luckin Coffee, but this is not the core reason, after the departure of Lu Zhengyao’s team, Luckin’s new senior management introduced a new data accounting system, which led to great changes in the past two years. ”
Li Ming believes that Luckin has expanded too fast after the epidemic, and the recovery pace of the consumer market is not as fast as expected, so it chose to pass on the cost to the front line.
In 2024, Luckin Coffee turned from profit to loss, with same-store sales in self-operated stores falling by 16.7% year-on-year for the whole year, compared with a 21% increase in 2023. Luckin CFO Jing Jing said at the earnings conference that the decline in profit was largely due to price wars and rising store rents, labor and material costs.
Behind it is Cudi’s strong attack. In just two years, Cudi has achieved more than 10,000 stores worldwide, and has reduced costs to the extreme by placing stores in convenience stores and other scenarios.
The coffee subsidy war below 10 yuan is also getting more and more fierce. On May 7 this year, it was announced at the Cudi Coffee Joint Dealer Conference that the current store subsidy policy would be extended to December 31, 2028, and the scale of new store subsidies would be increased to more than 14 yuan per cup.
The impact of Luckin’s accelerated expansion is equally significant. Guo Jinyi said at the first quarter of 2024 earnings conference that Luckin’s performance pressure is affected by many factors in the consumer market and competitive environment, but it is the result of Luckin’s active choice. At present, Luckin Coffee takes market share as its main strategic goal, accelerates the pace of store openings, and seeks to further distance itself from competitors.
At present, Luckin has entered an accelerated expansion cycle, and the financial report for the first quarter of 2025 shows that Luckin Coffee added a net of 1,757 stores in a quarter, of which 1,007 self-operated stores increased, while in the fourth quarter of last year, Luckin only opened 997 new stores.
At the same time, in the face of multiple pressures such as market price wars, rising material costs, and increasing pressure on same-store sales growth, reducing costs and increasing efficiency has become Luckin’s natural choice.
Luckin’s way of reducing costs and increasing efficiency is not complicated, and it will cut whatever the cost is high. According to the statistics of the growth black box, in a cup of Luckin Americano for 12 yuan, labor costs account for 34%, store rental costs account for 20%, coffee bean costs account for 16%, and equipment depreciation, disposable consumables, and water and electricity costs account for 14%, 9%, and 6% respectively.
At present, Luckin is opening up and reducing expenditure in several directions at the same time. In terms of products, Luckin’s discounts are shrinking, and the original 9.9 products have returned to 10+ gears. Under the discount offensive of less than 5 yuan for a cup of coffee in Cudi, Luckin no longer carries the price war; In terms of manpower, employee expenditure is limited through the AI scheduling system; In terms of products, Luckin accelerated the transformation of milk tea, accelerated the search for more consumer groups, and increased same-store sales.
Judging from the financial report for the first quarter of this year, Luckin has come out of the downward anxiety, with revenue of 8.865 billion yuan, a year-on-year increase of 41.2%, a profit of 737 million yuan compared with last year, and self-operated stores achieving same-store sales growth rate of 8.1%, and open source and throttling have achieved initial results.
But at the same time, the negative feedback on the efficiency of Luckin rolls has also appeared, affected by work pressure, it is difficult to retain new employees, and old employees have left one after another. Although high-level executives and consumers hope that Luckin will be faster, first-line Luckin people hope that Luckin can slow down. (The interviewee in the article is a pseudonym)
