Is Cotti Coffee Franchise Reliable? Differences Between Cotti Coffee and Luckin Coffee

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The Rise and Fall of Cotti Coffee's Pricing Strategy

Since the first Cotti Coffee store opened at the end of October last year, the brand has been promoting some drinks at 9.9 yuan per cup, attracting significant consumer attention.

This initial ultra-low pricing inevitably brings to mind early Luckin Coffee, which offered first-time customers a free first cup plus 50% off coupons. Similar strategies have led many to speculate about the connection between the two brands.

Although promotional activities during trial operations have become common and effective for many brands, Lu Zhengyao and Qian Zhiya didn't introduce any "new methods" this time, instead adopting conventional sales approaches. Consequently, many have speculated that Lu Zhengyao aims to replicate the success of Luckin Coffee.

The End of the 9.9 Yuan Era

However, this ultra-low price war didn't last long. On April 1st this year, the brand officially bid farewell to the 9.9 yuan era. According to the latest price list, individual coffee products increased by 2-7 yuan. Analysts have commented that Cotti Coffee's comprehensive price increase confirms that their original marketing strategy was difficult to profit from, suggesting that price wars are not sustainable.

Why Cotti Coffee Failed to Build a Stable Customer Base

Based on Cotti Coffee's product menu and customer feedback on product quality, while low prices attracted curious customers, the outdated products and inconsistent quality failed to convert these visitors into loyal customers. It's worth noting that Cotti Coffee's product line closely resembles Luckin Coffee's—almost as soon as Luckin launches a new product, Cotti introduces a similar one, failing to achieve product differentiation.

Secondly, product quality has been a point of complaint among many consumers. The rapid expansion of stores combined with inconsistent staff training has resulted in different stores producing the same product with varying quality. For example, a netizen recently shared the production process and final product of Cotti Coffee's Pistachio Cheese Latte. The staff member was seen using incompletely thawed cheese topping ingredients, forcefully squeezing them into the coffee. The final product not only lacked the desired cheese topping effect but was also very sparse. Despite this, it was still served to customers.

When products resemble those of Luckin but lack consistent quality, consumers will naturally choose the original brand.

The Purpose and Pitfalls of Price Wars

The goal of a low-price strategy is to encourage consumers to try a brand's products through favorable pricing, converting them into long-term customers after a satisfactory first experience. This approach builds consumer trust over time and makes investors optimistic about the brand's future.

However, continuing the 9.9 yuan promotional price while operating at a loss would only deepen the company's financial deficit. Now, with the brand's product price increases, it may become even more difficult to attract consumers to choose their products.

Why Lu Zhengyao Couldn't Create a Second Luckin

Unlike Luckin Coffee's initial public offering, which had substantial investor support for "loss-making operations," today's coffee market is no longer like it was in 2017, when the low-price coffee market was largely empty.

For Cotti Coffee, unlike Luckin's early days with capital support for prolonged subsidy wars, there have been no news of financing or IPOs. Without hit products and losing the price advantage, all that remains is the founder's story. However, this story cannot escape the shadow of Luckin's fraud scandal, making investors cautious about both the brand and its owner.

Meanwhile, consumers have become accustomed to low coffee prices over the past few years, and the appeal of 9.9 yuan promotions has diminished. At similar price points, more people choose established chain brands with more innovative and stable products.

Luckin's success came from halting rapid expansion after the scandal, focusing entirely on product development, and identifying and stabilizing their customer base. Lu Zhengyao failed to grasp this lesson, persisting with store expansion. According to recent reports, Cotti Coffee opened 102 stores within 7 days.

However, continuously expanding without a stable customer base is essentially spending recklessly to make the brand appear larger, while lacking genuine support. Combined with recent price increases, this presents a dangerous challenge.

Perhaps Lu Zhengyao's ultimate target isn't customers but coffee franchisees. Expanding the franchise network and using their capital to grow the market might be Lu's actual goal.

Image source: Internet

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