This article is from WeChat official account: Hongshi.com, author: Hongshi.com Editorial Department, editor: Wang Xiuqing, original title: "Lose 100 million yuan! Only 11 stores are left for online red coffee, and once called" 3 years of super luck "
The story of T97 is a sample that all food and beverage brands that rely on traffic to start their business should take a look at.
Do you brew coffee or not, brew it, brew it –
In 2022, this magical shout made T97 coffee become popular all over the internet overnight. The number of viewers in a single live broadcast room soared to over 10 million, and the monthly exposure exceeded 500 million. Founder Li Xiao is full of energy and boasts of "surpassing Luckin in 35 months" and "opening 1001 stores in a year".
Five years later, the bold words are still in our ears, but reality has changed. Li Xiao recently admitted to the media that the brand has accumulated losses of over 100 million yuan in the past five years, and currently only 11 stores remain nationwide.
From nearly 500 million monthly exposures to only 11 stores remaining nationwide, a brand that relied on traffic to take off ultimately failed to soar higher.
Nearly 500 million views, unable to make a good cup of coffee
The story of T97 began in 2021. Founder Li Xiao is a serial entrepreneur who has previously founded platforms such as "Global Catcher" and "Zebra Member". In April 2021, T97 launched its e-commerce platform and opened its first offline store in Tianmuli, Hangzhou in November of the same year.
In terms of brand positioning, Li Xiao initially aimed for being the "number one brand of fat reducing coffee", but later abandoned this self limiting positioning and instead focused on meeting the daily needs of coffee drinkers as the core. T97 divides its products into two categories: basic models and innovative models, and updates them based on comprehensive factors such as hotspots, city characteristics, and solar terms. The product price range is concentrated between 15 and 35 yuan, with an average selling price of around 20 yuan for popular products.
△ Image source: screenshot from Xiaohongshu
What really made T97 famous was a live broadcast in September 2022. The anchor Big Mouth Girl, accompanied by addictive music, repeated brainwashing rap while exaggerating and twisting. The phrase "Do you want to rush coffee? Rush, rush, rush" quickly exploded on the internet. The co production video initiated by Big Mouth Girl has been used by over 137000 people, and the # Coffee, Rush # single topic has reached 480 million views.
The traffic data is astonishing. At that time, according to data from New Douyin, T97 Coffee had a total of 31 live broadcasts within 30 days, with a cumulative view count of 193 million. The highest concurrent online viewership was over 280000, and the highest viewership was 18.02 million. In September alone, the official flagship store of Tiktok rose nearly 900000 fans. Li Xiao once exposed that the 800 yuan cost leveraged over 6 million people into the live streaming room.
Traffic brings ambition. One month after the viral live broadcast, Li Xiao boasted, "We opened 1001 stores in a year, surpassing Luckin in 35 months! We originally planned for 36 months, but now Big Mouth Girl has become popular. After strict calculations, our team has decided to advance the progress by another month
The store decoration of T97 was designed by Hong Kong Zhengzhong Design Firm CCD, creating a coffee consumption scene in a minimalist style. The locations mainly include office lobbies, universities, CBD commercial complexes, and popular streets.
Li Xiao claimed that although there were only over 70 stores at that time, "the daily revenue exceeded 3000, and 90% of the stores were profitable". Later, at the peak of its development, T97 signed over 500 stores and actually opened more than 200 stores.
But beneath the noise, hidden dangers have long been buried.
Although the traffic data is impressive, the actual sales of the store are not optimistic. At that time, Meituan data showed that T97 Coffee's first takeaway store in Hangzhou had a monthly sales volume of 1318 cups, while other stores had monthly sales of only a few hundred cups.
On platforms such as Tiktok and Xiaohongshu, a large number of evaluation bloggers and netizens reported that "it is not good to drink", "it is too greasy, it is not as good as Ruixing", "it tastes like cream, not like coffee". Consumers remember the melody of 'whether you brew coffee or not', not the taste of T97 coffee.
Using e-commerce thinking to make coffee,
Every step of T97 has been thunderous
The sudden change of the external environment further accelerated the bursting of the T97 flow foam.
In the second half of 2023, Kudi Coffee will enter the market strongly, and a comprehensive coffee price war will break out. For players with weak foundations like T97, the prolonged "strangulation" formed by the alliance of top brands is almost devastating. Since then, T97 has rapidly shrunk, with the number of stores reduced to around 90 by September 2024; As of today, there are only 11 stores left nationwide.
△ Picture source: screenshot of Li Xiao's Tiktok
But the price war only accelerated the decline of T97, the real problem lies within the brand.
Firstly, there is an issue with the traffic itself. The popularity of T97 is essentially about "content going viral" rather than "product going viral". Consumers remember the enchanting melody of "whether you can brew coffee or not", rather than the quality of T97's coffee. When the popularity of live streaming fades, the brand leaves nothing that can continue to attract consumers, traffic comes and goes, and brand assets are almost zero.
The deeper issue is that Li Xiao is using e-commerce thinking to create physical chain stores. He has previously worked on platforms and achieved success in the field of e-commerce retail. But he also admitted that "unlike the overnight sales of millions in e-commerce retail, offline physical chains rely on cup by cup, day by day accumulation," and he clearly underestimated the complexity of offline business.
Analysis has pointed out that Li Xiao uses the logic of "success learning" to attract investment – not talking about the profit model of individual stores, not talking about product selling points, not talking about site selection logic, only talking about how to follow and get rich. Among the over 500 franchisees who signed contracts, more than half ultimately did not open a store. After paying the intention deposit to occupy the pit, franchisees found that the single store model was unclear and the market reputation was average, and ultimately chose to actively "abandon the project".
This also leads to another fatal mistake of T97: opening up franchising on a large scale without a clear and replicable profit model to support it. At the same time, T97 has also launched a "one-year store closure refund" policy, which provides full refunds for store closure management fees and service fees, and equipment is collected at a 50% discount. The original intention of this policy was to reduce the risk of franchisees, but the result was that some profitable stores chose to close their stores early to cut losses, accelerating brand shrinkage.
△ Image source: screenshot from Xiaohongshu
Li Xiao himself also reviewed four major mistakes, in addition to the overly loose franchise policy, there were also——
The flagship store burned over 8 million yuan. At that time, under the influence of traffic, I thought we needed to open a flagship store to create momentum. I opened a store in top tier commercial districts such as Tianmuli and IN77 in Hangzhou, and the annual rent for one store alone was in the millions. But only after opening did I realize that the explosive popularity of the flagship store did not provide much help to the standard store;
The team is overloaded, and the labor cost is unbearable. When there were only a few dozen stores, the T97 team had already reached 150 people, including nearly 20 people in the R&D department alone. The overloaded team lacks offline chain experience, resulting in millions of manpower costs per month. Li Xiao's review: "If we hadn't recruited so many people at the beginning, but gradually increased manpower as the number of stores increased, perhaps we could have saved 50 million in costs;
The cost of site selection has turned from 'free' to 'wasteful'. Four site selection teams have been established within the brand, adopting a policy of "free site selection", which provides franchisees with free on-site inspection and site evaluation services. The site selection team incurred a monthly travel cost of over 800000 yuan, and the most exaggerated thing is that they only landed at 2 stores after 50 business trips to Guizhou.
In fact, the various mistakes mentioned by the founder lie in the fact that the brand has not yet achieved the single store model, and is eager to use traffic to leverage scale. As a result, the larger the scale, the faster the blood loss.
Li Xiao once said, "From the first day I decided to go offline, I aimed for the Wandian brand." The starting point of this goal may be correct, but the foundation of the Wandian brand is not traffic, but supply chain, single store model, organizational ability, and sustained cash flow.
And T97 has almost failed in every of these basic skills.
But Li Xiao did not withdraw from the coffee industry at this point. He said in an interview that he still has a positive outlook on the Chinese coffee market. The new brand has already opened more than 100 offline stores, and the store model is still being polished. This time, I entered the new brand through investment and assigned resources and funds to a professional team to operate
From personally managing the market to stepping back to investing behind the scenes, from "surpassing Luckin in 35 months" to "the store model is still being polished", Li Xiao's posture has noticeably decreased. Five years and a loss of one billion, in exchange for a deeper understanding of the coffee industry.
I just don't know if this' professional team 'can do a better job in the coffee business.