In the food delivery war, does Cotti get its fill?

Author | Zhong Yixuan

Editor | Qiao Qian

The battle among food delivery platforms is still raging, but the first beneficiaries have emerged - Cotti Coffee franchisees.

Long before JD.com sounded the horn for food delivery subsidies, the platforms had already quietly started issuing coupons and providing subsidies. The tea and coffee categories, which feature high frequency and low decision - making costs, have always been the primary battleground for food delivery subsidies, and this time it's Cotti Coffee's turn. Chen Xing, a Cotti Coffee franchisee in Beijing, noticed that his JD.com orders suddenly reached the first peak in mid - March, which subsequently drove the total sales volume up.

"Taking April 24th as an example, compared with the performance on the same day last month, the daily cup volume increased from 260 cups to over 500 cups, with an increase of more than 100%," said Chen Xing.

Chen Xing's store is not the only one experiencing a surge in orders. A Cotti Coffee multi - store franchisee in Jiangsu told 36Kr that since April, among all his stores, the one with the highest daily sales can reach 800 cups, and the less - performing ones can still sell 400 - 500 cups, far exceeding the level of the same period last year.

Most of these surging orders come from JD.com food delivery. Another Cotti Coffee franchisee in Beijing, Liu Ping, said that half of the cup volume in his existing stores comes from JD.com orders.

Since JD.com entered the food delivery battle, it's no longer a secret that you can buy cheap Cotti Coffee on JD.com. Open JD Flash Delivery, and the coconut latte with a minimum discounted price of 3.9 yuan has attracted a large number of bargain - hunters to place orders. As of today, the total food delivery sales volume of Cotti Coffee on the JD.com platform has exceeded 30 million orders.

But how much money can a Cotti Coffee franchisee actually get for a coconut latte that costs only 3.9 yuan after the discount?

The backend data that Liu Ping showed to 36Kr indicates that in Beijing, for a coconut latte order, after adding the packaging fee and delivery fee, the user actually pays 5.9 yuan upon receipt, and his final receivable is about 9.2 yuan. Coupled with Cotti Coffee's headquarters subsidy policy for food delivery orders, "franchisees usually get about 10 yuan per cup."

The cost of materials (including milk, coffee, and packaging materials) for a single cup of Cotti Coffee is about 5 - 6 yuan. "Calculated this way, our gross profit margin on JD.com food delivery is basically around 45%, which is a normal level," said the franchisee.

This also means that for franchisees, the real benefit of JD.com's food delivery subsidies is not the gross profit per cup, but the increase in sales volume.

As a coffee brand with a fixed price of 9.9 yuan since its inception, store sales volume and operating expenses have always been the two most important profit assessment indicators for Cotti Coffee franchisees. "Generally speaking, even if the gross profit per cup doesn't increase, if the order volume is large, the raw material loss will decrease, and in turn, the profit can also increase," said Liu Ping.

However, some franchisees expressed different opinions. Chen Xing told 36Kr that in the long run, franchisees' income still depends on in - store orders. Currently, the subsidy line for his in - store orders is about 12 yuan, but food delivery orders are diverting his in - store customers. "Many customers, even when they are at the store entrance, will choose to place orders on JD.com to get the bargains and pick them up by themselves," he said.

In addition, the large influx of food delivery orders has exceeded the capacity of some stores. On JD Flash Delivery, the popular coconut latte in some stores runs out of stock in the afternoon. The aforementioned Jiangsu franchisee also said that besides the impact of stock - outs, the overcrowded orders will inevitably lead to a higher customer complaint rate. "There have been frequent cases recently where delivery riders pick up the wrong orders."

It's also unknown how many of these price - sensitive customers who come specifically for the food delivery bargains will ultimately stay after the subsidies disappear.

From the perspective of the Cotti Coffee brand, this cooperation with JD.com has achieved a complementary effect - after all, the former needs order volume, and the latter needs traffic. Moreover, the low - price strategy has always been Cotti Coffee's comfort zone. Compared with other coffee brands in the mainstream price range, Cotti Coffee doesn't have many concerns about this. In addition, the daily coffee consumption of a single user is limited, with a maximum of 1 - 2 cups. Whoever seizes the opportunity first has the possibility of cultivating users' consumption habits.

Moreover, as a low - margin business, Cotti Coffee also desperately needs a sales boost to boost franchisees' confidence. In the just - past winter, due to the unpopularity of the in - store - within - a - store model and the decline in cup volume during the off - season, the sales of some Cotti Coffee franchisees were dismal. However, since February this year, the co - branding with Nezha and the entry of JD.com food delivery have led to a significant increase in the average cup volume of franchisees. "The daily order survival line for my store is 300 cups. It was always around 200 cups last winter, and I was in the red. Since March, it has doubled," a Cotti Coffee franchisee told 36Kr.

However, this sales boost relying on platform subsidies is destined to involve more than one player. On a broader battlefield, Meituan has quietly tilted its traffic towards the tea and coffee categories, and Ele.me has also followed suit by issuing low - price brand coffee coupons. It's the familiar game again. Summer hasn't arrived yet, and the real peak season is still to come, but the coffee price war has already quietly begun.

(The franchisees Chen Xing and Liu Ping in this article are aliases.)