Luckin Coffee Reopens Franchise Opportunities! Initial Investment Starts at 350,000 RMB!!

Recently, Luckin Coffee officially announced the launch of a new recruitment plan for new retail partners. According to the company, the plan focuses on covering 41 cities across 9 provinces, including Anhui, Henan, Heilongjiang, Jilin, Liaoning, Inner Mongolia, Shandong, Shanxi, and Shaanxi.

Luckin Coffee's official statement indicates that the designated cities are priority cities for open recruitment. Cities outside this scope can still submit applications normally, and Luckin Coffee will periodically open partner recruitment based on investment progress in each city.

Experienced franchisees can request independent operation, while beginners receive greater support. If business operations run into trouble later, for example, headquarters will provide emergency response plans, offline guidance from store mentors, help with holiday activity planning, online platform setup, and more.

According to reports, the 41 cities mentioned above all already have franchise stores. These cities share a common characteristic: franchise stores are not dense, with distribution generally not exceeding 10 stores per city. Datong and Yuncheng in Shanxi, for instance, have 6 and 2 stores respectively, Yulin in Shaanxi has 3 stores, and Xinzhou in Shanxi has the fewest, with only 1 store.

According to the latest Q3 2022 financial report, Luckin Coffee currently has a total of 7,846 stores nationwide, covering over 230 cities with more than 100 million registered app users. Luckin Coffee adopts a store strategy of "self-operated + joint operation" advancing simultaneously, with the two models forming highly complementary relationships and accelerating the company's national store layout.

According to public information, this franchise business was launched as early as 2019. By Luckin's account, 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 of this year, Luckin Coffee issued another statement indicating that partner recruitment was again suspended and that the opening time would be subject to official announcements. It was not until December 5 that Luckin Coffee published a notice on its official WeChat account announcing the restart of a new round of partner recruitment.

Luckin Coffee's publicly announced partner recruitment plan shows that the new retail partner plan does not charge any franchise fees and also provides marketing support, comprehensive traffic support, digital operations, and more.

Although new partners join Luckin Coffee with 0 franchise fees, they need to pay a security deposit of 50,000 yuan, a design fee of 5,000 yuan, renovation costs of 110,000-130,000 yuan (for bare shells), and equipment costs of around 190,000 yuan. Calculating this, franchisees need to invest 350,000-370,000 yuan upfront, and will need to keep spending on staff salaries, rent, utilities, and raw materials afterward.

The franchise business is a very important part of Luckin Coffee. Among Luckin Coffee's 7,846 stores, 5,373 are self-operated and 2,473 are joint-operation stores. Compared with the same period last year, Luckin Coffee had a total of 5,671 stores in Q3 2021, including 4,206 self-operated stores and 1,465 joint-operation stores. It is not difficult to see that joint-operation stores are growing faster than self-operated stores.

The growth in the number of joint-operation stores has also increased Luckin Coffee's revenue. Luckin Coffee's financial report shows that in Q3 2022, joint-operation stores generated revenue of 899.1 million yuan, accounting for 23.1% of total net revenue, an increase of 116.1% compared with 416.1 million yuan in the same period of 2021. Compared with other new consumer brands, Luckin still has great potential in terms of distribution and regional scale expansion. This reopening of franchising may be aimed at rapid market penetration and expansion.

At Luckin Coffee's Q3 2022 performance meeting, Luckin Coffee Chairman and CEO Guo Jinyi said the company will continue to maintain a "competitive" pace of new store expansion.

Image source: Internet

FrontStreet Coffee Recommendation

Opening coffee shops and scaling a franchise both come down to the same question: which beans can deliver a consistent cup at a workable cost? For operators and newcomers alike, FrontStreet Coffee suggests starting with the beans it recommends to beginners. The FrontStreet Black Cocoa Blend combines Yunnan small-bean coffee with Brazilian Red Bourbon: the Brazilian component supplies mixed-nut aroma and a balanced cup, while the Yunnan coffee brings chocolate and citrus, so the resulting Americano is balanced across sweet, tart, and bitter with a nutty, brown-sugar sweetness, and a latte comes out smooth with almond and cream.

If you want a single-origin to round out a menu, FrontStreet's Brazil Cerrado is a classic Brazilian lot. It comes from Cerrado, a region known for high-quality beans, uses the locally common Red Bourbon variety, and is processed semi-washed. Roasted medium, it shows cream, peanut, chocolate, and toffee, and it suits pour-over, moka pot, home espresso machine, French press, siphon, and steeped brewers alike.

For a fruitier signature drink, FrontStreet's natural-process Huakui is grown near Guji Hambela at close to 2,300 meters, where the wide day-night temperature swing lets the cherries build aroma slowly; the natural process dries the fruit with the skin and pulp intact, so the beans develop tropical fruit notes akin to guava, strawberry, and dried mango with a black-tea finish. It is friendly enough to serve by pour-over or drip bag, and it also shines as cold brew, French press, or smart-dripper coffee.