The no.0001 Ruixing coffee shop, located at the headquarters of Ruixing in Beijing, saw employees coming to work at 8:00 a.m. and by 8:30 a.m., the orders had reached more than 400. There is a slogan on the wall of the aisle at one side of the store: entrepreneurship is a marathon without an end. We will adhere to the principle, move forward steadily and run forward in accordance with the rhythm. This day is April 3, 2020. It looks like business as usual.
Ruixing store no.0001
Just the night before, Ruixing coffee "exposed" 2.2 billion yuan of financial fraud. The news ferments. Ruixing's shares in the U.S. market broke five times in the session, eventually falling by 75.5%, and the market value evaporated $5billion overnight. In addition, Ruixing will also face investigation and punishment from regulators, litigation and huge compensation from investors. In the eyes of many people at that time, the only thing waiting for Ruixing was bankruptcy.
On May 24, two years later, Ruixing coffee announced the results of the first quarter of 2022, with an operating profit of 16.1 million and an operating loss of 364million in the same period of 2021. Ruixing's first quarterly operating profit became positive. It is amazing that a company that was sentenced to "death" two years ago realized profits against the background of domestic economy in the first quarter of 2022. Ruixing built high-rise buildings with Ruixing speed, collapsed buildings with Ruixing speed, and then "revived the dead" with Ruixing speed. If we go back to Ruixing no.0001 store on April 3, 2020 to tell all this, I'm afraid even the employee who said "everything is OK" would not believe this story.
From listing to delisting, Ruixing Nasdaq's 13 months
"There is no particularly sexy target for coffee." In 2016, an investor felt that there was a lack of valuable subject matter.
A year later, Qian Zhiya said: "the market is so large, but we have so few choices when we want to drink coffee. This is unreasonable." "Starbucks is not the only coffee market in China." Ruixing coffee was established in a high profile.
Before Ruixing was founded, Qian Zhiya served as the right-hand man of luzhengyao, the chairman of the company. Some people called her "luzhengyao disciple". On the day of graduation, a teacher is willing to contribute. Luzhengyao sent an internal letter to all employees of the company, saying sincerely: "I sincerely understand her decision to start a business and am willing to help her with all my strength."
Qian Zhiya makes Ruixing coffee. Lu Zhengyao is an important person asking for money. He even has the office space. The Ruixing store no.0001 is opened at the headquarters of Ruixing in Beijing, and it is also the headquarters of China Youche or baowo automobile.
That sentence of "helping each other with all our strength" is not empty talk. How far can we help each other? Ruixing's early operating capital came from luzhengyao's investment and self raised by the team. Among them, the company controlled by luzhengyao, Qian Zhiya and Chen Min respectively provided 94.7 million, 50 million and 10 million interest free loans to Ruixing coffee. Ruixing has successively received 550million investment, of which 400million came from luzhengyao's good capital partner. At the time of listing, the prospectus showed that luzhengyao held 30.53% shares, his sister held 12.4% shares, and founder and CEO Qian Zhiya held 19.68%, which helped him become the chairman of the board.
As for the relationship between luzhengyao and Ruixing, Qian Zhiya explained: "I came out to start my own business. President Lu not only invested in us, but also lent me money. I am not good at capital. As chairman of the board, President Lu can help us check our strategy and capital. Now the company is running very fast, so I can focus more on business and operation."
In the hottest years of venture capital, there was a popular script: Star founders telling stories - financing - burning money for expansion - listing - cash out. The key is "fast". Qian Zhiya said "the company runs very fast".
Ruixing, which has been running very fast, registered on NASDAQ on may17,2019. It took 18 months from the official opening of the SOHO store of Beijing Galaxy to its listing in the United States, creating the fastest IPO record in the world, which is the listing speed of Ruixing coffee.
According to the prospectus when Ruixing coffee was listed, in the first quarter of 2019, Ruixing coffee had a net loss of 550million yuan; The net loss in 2018 was 1.6 billion yuan, of which marketing expenses accounted for 749million yuan; As of december31,2017, the net loss was 56.37 million yuan. From the establishment to the eve of listing, a total of 2.2 billion yuan was burned, which is the speed at which Ruixing burned money.
Soon after, Ruixing's false prosperity foam was punctured. In january2020, muddy water, which is famous for its stock concept in the air, claimed to have received an 89 page anonymous short selling report, which directly pointed to the fraud of Ruixing data and caused an uproar. In the future, this report will become a model for due diligence.
On April 2, 2022, Ruixing announced that after the audit of the 2019 annual report found problems, the board of Directors established a special investigation committee and found that the company forged the transaction volume of RMB 2.2 billion from the second quarter to the fourth quarter of 2019, and the related costs and expenses also increased correspondingly. This means that all the public performance after listing is false, and the growth myth created by it has been completely broken.
Subsequently, Ruixing said in May that it had received a notice from NASDAQ Exchange requesting it to delist from Nasdaq; In June, Ruixing was officially suspended and delisted for filing. In this way, Ruixing has set the record of the fastest delisting of NASDAQ Chinese companies. It took 13 months from listing to delisting, which is the delisting speed of Ruixing coffee.
On the second day after admitting to making a fake, luzhengyao posted a Ruixing poster in his circle of friends, with the text "today, we should be full of vitality, young friends, come on!" However, unlike President Lu, who was full of vitality, the consensus of the outside world at that time was that "luck should be cool".
Screenshot of luzhengyao's circle of friends
Surprisingly, Ruixing is starting to make a profit
The year 2020 is the darkest time for auspicious luck. However, Lao Tzu says, "misfortune brings good fortune, and good fortune brings evil." The financial fraud storm has pushed Ruixing from the superficial prosperity to the bottom. However, from the current results, the management changes brought about by this storm may become a turning point for Ruixing.
In May, 2020, Ruixing coffee announced that Guo Jinyi was the acting CEO. In June, Ruixing coffee (China) Co., Ltd. underwent industrial and commercial changes. Qian Zhiya stepped down as the legal representative, general manager and executive director, and Guo Jinyi took over as the legal representative, executive director and manager.
In July, the results of the special shareholders' meeting of Ruixing coffee showed that luzhengyao was removed from the position of chairman and director, and the shareholders' meeting to "remove the chairman" was actually initiated by luzhengyao himself. Guojinyi, who was born in China, became the chairman and CEO of Ruixing.
Guojinyi
After Guo Jin took office, Ruixing quickly changed its playing style. From the time of Qian Zhiya, "in order to rapidly expand, we have prepared 1billion yuan for Ruixing coffee", to the hope of fine operation, and began to require all stores to make profits. In the words of Guo Jinyi, "Ruixing coffee has completely completed the historical cutting!"
On May 24, Ruixing announced its financial performance for the first quarter of 2022. In the first quarter, Ruixing's total net income was RMB 2.405 billion, an increase of 89.5% over RMB 1268.7 million in the same period in 2021.
Ruixing achieved its first full profit in a single quarter in five years, and its operating profit turned from loss to profit. Considering that the first quarter is a traditional off-season, and the uncertainty of the epidemic, Ruixing's growth is really surprising.
Discussion about Ruixing on social media
Everything has changed except the name
"In the past two years, our strategy, operation, corporate governance, management structure and culture have been fundamentally improved. Except that the company name has not changed, we have been reborn and become a new company." Guo Jin said at the first performance communication meeting in two years.
Expansion and innovation are the key words of Ruixing's business strategy in the past two years, but they are qualitatively different from the previous radical strategy.
First of all, expansion is necessary, but burning money is not.
On February 15 this year, Guo Jinyi issued an internal letter to 20000 employees of Ruixing. The internal letter pointed out that in January this year, Ruixing opened about 360 new stores, breaking the record of Ruixing's total number of stores in a single month. Compared with 2018 and 2019, Ruixing's average number of new stores per month was 172 and 208.7 respectively. Ruixing expanded faster than the most "brilliant" period in the past.
According to its financial report, as of the first quarter, Ruixing had 6580 stores, an increase of about 33% over the same period last year, including 4675 self operated stores, 1905 franchised stores and 556 new stores in a single quarter.
As for Starbucks, which has been benchmarked since its inception, according to the latest financial report, the total number of stores in China by the end of the first quarter was 5557, with 197 stores added in a single quarter and 16 new cities. The total number of Ruixing's stores exceeds that of Starbucks, which is the speed of Ruixing's opening.
In addition, at the time of store expansion, the average number of monthly transaction users in the first quarter also increased by 83% to 16million compared with the same period last year. The growth rate of single store Gmv in self operated stores reached 41.6%, while the Gmv of single store in Starbucks China directly decreased by 23% in the same period.
By the end of March, the revenue of its self operated stores was RMB 1717.7 million (US $270.5 million), an increase of 66.2% over RMB 1031.5 million in the same period in 2021; The revenue of franchised stores was RMB 549.3 million (US $86.7 million), an increase of 239.3% compared with RMB 161.9 million in the same period in 2021, and its proportion in the total revenue exceeded 20% for the first time, reaching 22.8%.
Behind the cries of "Ruixing is back", Ruixing has made great contributions to product innovation.
Ruixing's product list is frequently updated. In the autumn of 2020, Ruixing launched a new "velvet latte". Ruixing wrote on the waistband of the coffee cup: "this cup of velvet latte, which was rolled out from the 23 lattes tested, has become a sincere work of this year. Only nine days after its launch, it has exceeded 2.7 million cups of sales, successfully replaced the raw coconut latte and become a new" hot money ".
In 2020, Ruixing launched a total of 77 new ready-made drinks in the whole year. When Ruixing developed 22 products on average, only one product eventually went to the public. In 2021, Ruixing launched 113 new ready-made drinks in the whole year, and an average of one new product was launched in seven days in two years, which is the speed at which Ruixing launched new products.
And the hot money every quarter has not failed Ruixing. The "raw coconut latte" launched in 2021 has become a real hot product made by Ruixing. As of April 6 this year, the cumulative sales of raw coconut latte has exceeded 100million cups. The popularity of the product once led to the online sales of coconut milk suppliers.
In April this year, another product "Yeyun latte" took over. According to Ruixing, the total sales volume of Yeyun latte was more than 660000 cups on the first day. As of April 17, the sales volume of Yeyun latte has exceeded 4.95 million cups, with a total sales volume of more than 81million yuan.
It can be seen from the phenomenon that Ruixing has "frequently sold out" that compared with the past, Ruixing's product logic has changed. It no longer relies on low prices under high subsidies, but has begun to create public praise among consumers by virtue of innovation in product tastes.
However, for Ruixing, the three popular models in three years can not form an obvious barrier for Ruixing. The easy imitation and follow-up of products make this track very competitive. Zhouweiming, senior vice president of Ruixing and head of Ruixing coffee product line, once said: "the most important task of the R & D department is not to make a certain popular product, but to establish a perfect R & D system." Whether this "R & D system" can help Ruixing form its own "moat" has also become a link to determine whether the current growth can be sustained.
After two years of suffering a heavy blow, Ruixing now shows signs of recovery. After reversing the trend and realizing the first positive quarterly operating profit under the impact of the epidemic, there is no doubt that Ruixing has ushered in a new starting point. There is also a rumor that Ruixing will log on to NASDAQ again. Will the next Ruixing speed shown to you be the speed of returning to the capital market?