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

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Recently, Luckin Coffee officially announced the launch of a new recruitment plan for new retail partners. According to the introduction, this recruitment 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 above designated cities are priority cities for open recruitment. Cities not within this scope can still submit applications normally, and Luckin Coffee will periodically open partner recruitment based on the investment progress in each city.

Experienced franchisees can request independent operation, while beginners will receive greater support. For example, if there are abnormal business operations later, the headquarters will provide emergency response plans, offline guidance from store mentors, assistance with holiday activity planning, online platform setup, and more.

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

According to the latest released Q3 2022 financial report, Luckin Coffee currently has a total of 7,846 stores nationwide, covering over 230 cities with over 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, accelerating the national layout of stores.

According to public information, this franchise business was launched as early as 2019. According to Luckin's statement, it was suspended in 2020 "due to the impact of the pandemic." It wasn't until early 2021 that the group decided to resume franchising. On August 22 of this year, Luckin Coffee once again issued a statement indicating that partner recruitment is currently suspended, and the opening time will be subject to official announcements. It wasn't 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 recruitment 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, to ensure operations, they need to pay a security deposit of 50,000 yuan, a design fee of 5,000 yuan, and 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 continue expenses for staff salaries, rent, utilities, and raw material costs later on.

The franchise business is a very important part for Luckin Coffee. Among Luckin Coffee's 7,846 stores, 5,373 are self-operated stores, and 2,473 are joint operation stores. Compared to 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's not difficult to see that the growth rate of joint operation stores is faster than that of self-operated stores.

The growth in the number of joint operation stores has also increased revenue for Luckin Coffee. Luckin Coffee's financial report data 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 to 416.1 million yuan in the same period of 2021. Compared to other new consumer brands, Luckin still has great potential in terms of distribution and regional scale expansion. This reopening of franchising may be for rapid market penetration and expansion.

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

Image source: Internet

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