With the double buffs of “peak season + free”, why are Cudi’s sales still not ideal?

This article deeply analyzes the challenges faced by Kudi Coffee, explores how it can find a breakthrough in the fierce market competition, and how to balance the relationship between low-price strategy and brand reputation. For readers who are concerned about the development of the chain coffee industry, this article provides valuable industry insights and thoughts.

With the arrival of the summer peak season, the price war in the chain coffee industry has begun to heat up sharply.

On June 6 this year, Lucky Coffee released a big price move and launched the "66 Lucky Season" event, including a full range of products such as fruit coffee, latte, fruit tea and super cups. Except for the Lucky Ice series, all drinks are capped at 6.6 yuan.

As the "instigator" of the price war, Kudi Coffee, which has lowered the average customer spending to single digits, was not willing to lag behind and chose to catch up quickly.

After purchasing new products of the tea season in April and sharing product experience information on WeChat Moments and Xiaohongshu to receive 0-yuan designated product redemption coupons, Kudi recently launched the "Million Big Shots" evaluation plan. That is, from June 17 to 23, forwarding Kudi's Weibo or participating in its Fruit Coffee Season product voting will participate in the draw for 5,000 Kudi 0-yuan trial coupons.

The discounts are unprecedented and the money is spent lavishly. But can "spending money" really create Cudi's future?

1. Why are free tastings unpopular among consumers?

Judging from the feedback from many franchisees, the “Millionaires” evaluation program has obviously not had an ideal effect on increasing cup volume and reputation.

On the one hand, although the discounts offered by the event are very large, the problem of regular out-of-stock situations has lowered consumers’ reputation.

On social media platforms such as Xiaohongshu, many consumers said that "several drinks are always sold out" and "muffins are always sold out"... Some consumers also complained that when they asked about three drinks, the Kudi clerk said they were sold out. When asked what was not sold out, they had to scan the code to check on the mini program themselves.

Image source: Xiaohongshu

The shortage of products reflects the shortcomings of Kudi's supply chain. In fact, Kudi has made efforts to achieve this. Its first supply chain production project, Kuyi Packaging Project, held a production ceremony on January 30, and Kudi Anhui Supply Chain Base was officially put into production at the end of April. However, the shortage situation has not been improved to this day.

In the long run, in addition to directly affecting store sales and generating transaction losses, it also seriously affected the consumer experience. This is not a good signal for Kudi's survival in the fierce and involuted chain coffee industry.

On the other hand, even if you are lucky enough to order the drink you want, there are still many "risks" that will discourage consumers.

For example, some consumers complained that the paper cups used to hold iced tea at Kudi would be soaked by the water from the melted iced tea. Not only could they not hold the cups, but they also felt like the cups were going to break when they drank from them. Some consumers directly pointed out that Kudi's drinks were unpalatable, saying that the Sunshine Green Grape Lemon Americano tasted like syrup and that after swallowing it, it tasted like gasoline. Some consumers were disappointed and said that the taste of the Pampas Blue Latte was different every time they drank it, and it was getting more and more bland.

Poor packaging, unstable production and unremarkable drinks will discourage consumers who were originally attracted by the low prices, and their patience will gradually be worn out.

In addition, many consumers bluntly stated that they did not receive the 0-yuan trial coupons for the first round of the "Millionaires" evaluation program.

Image source: Xiaohongshu

Some people filled in their numbers, but the money didn’t arrive in their accounts for several days. They contacted the mini program customer service, who then asked them to contact Weibo customer service, but in the end, they couldn’t even get through on the phone. Others said that not only did the coupons not arrive in their accounts, but Cudi has not yet given any substantive solution to the problem…

Although the second round of activities has already begun, the 0-yuan tasting coupons for the first round have not yet been distributed, and no after-sales solution that satisfies consumers has been provided. This inevitably makes people feel that Kudi "can't afford to play", which not only affects consumers' enthusiasm for participating in the second round of activities, but also damages Kudi's brand reputation to a certain extent.

Overall, if Kudi wants to achieve long-term growth by relying on low prices, it still needs to settle down.

2. How long can the franchisee who is about to be "plucked bald" continue to "play" with Cudi?

Now, after all the operations, the benefits brought by the "Millionaire" evaluation plan may be limited. For the franchisees of Kudi who have finally made it to the peak season after suffering the off-season, the expectation that Kudi can produce a high-value-added hit product to achieve profitability may be dashed again.

Just recently, a blogger named "Report Fish" spent 14.5 hours stalking a Kudi's cache store and found that the store only sold 243 drinks in total in one day, including 108 for dine-in, 38 for the store's own mini-programs, and 97 for takeaway platforms.

According to the blogger's description, the initial investment of this cache store, excluding the transfer fee, was a total of 225,000 yuan. Adding the first-year rent cost of 118,000 yuan, the conservative cost of the store is around 350,000 yuan.

After deducting the operating costs, the store's total daily profit is about 1,314 yuan. After deducting labor, water, electricity, and rent, the daily net profit is only 248 yuan. With this profit level, it will still take 1,411 days for the store to break even. This does not include Kudi's commission, depreciation and amortization, and the franchisee's own time cost investment.

Such data is only considered average in the industry. However, with the dual buffs of "summer peak season + free tasting", this result seems a bit "unappetizing".

Xiaohongshu user "Bajuete" once analyzed that it is difficult for Kudi franchisees to make a profit, but one of the important reasons why some people are willing to support it is that the peak season for tea drinking is approaching, and many franchisees expect to increase the number of cups during the peak season.

However, faced with such dismal sales, the confidence of franchisees has obviously been hit again: if the peak season is like this, how can they support the off-season? As a result, more and more franchisees see no hope and begin to have the idea of ​​quitting. Posts about the transfer of Kudi on social platforms from all over the country are also increasing.

Image source: Xiaohongshu

What is coming is a long off-season. If Kudi still chooses to stick to low prices without filling the gaps in the supply chain, improving consumer satisfaction, and effectively solving problems such as the difficulty of franchisees making profits, then the possibility of it being abandoned by franchisees and consumers and going the same way as the tongue hero will greatly increase.