After announcing its high-profile entry into the field of pre-cooked dishes in March, consumer-oriented Chinese technology company Qudian announced on September 6 that it would cut back investment in the project through a series of measures including layoffs, termination of supplier cooperations and inventory clearance.
On September 6, Qudian released its unaudited financial report for the second quarter, showing total revenue of 105 million yuan ($15.0 million), which was halved from the previous month and decreased by 74% compared with last year, hitting a record low.
Non-GAAP net losses attributable to shareholders in the second quarter were 52.8 million yuan, compared with a net profit last year of 283 million yuan and a net loss in the first quarter of this year of 144 million yuan.
As for the firm’s pre-cooked dishes business, Qudian said that after evaluating the current market situation, it now plans to “streamline” these plans. The company expects that the severance payment of employees, termination fees of business partners and inventory clearance will be conducted as a result, which may adversely affect the firm’s operating performance.
Affected by this project, the costs and marketing expenses of the company have risen sharply. The total operating cost increased by 53% to 136 million yuan, while sales and marketing expenses increased by 83% to 53.2 million yuan.
Luo Min, the CEO of Qudian, said in an interview that the company has invested hundreds of millions of yuan in the supply chain of pre-cooked dishes. Attracting web traffic on Douyin (the Chinese mainland version of TikTok), acquiring subsidies and conducting advertisement incurred great costs, which will be reflected in the financial report in the third quarter.
Qudian, which used to operate a campus loan business, has also been resisted by web users even though it is entering the new field. Luo Min announced in July that the company will help 100,000 users open offline pre-cooked dishes stores through providing loans in the future, without charging brand licensing fees. Therefore, some have questioned whether Qudian is really selling pre-cooked dishes, or if it is just providing loans for operators of offline stores.
These doubts have led to the company being blacked out by Michael Dong, a teacher and livestreamer of New Oriental Education, and the two celebrities terminated their cooperation, which severely damaged the brand image. Luo Min changed his Douyin account name on August 2 to “Qudian Pre-cooked Dishes,” and quit livestreaming.
Last month, rumors emerged that Qudian had suspended its pre-cooked dishes project. Some web users also found that its products on major e-commerce platforms were sold out, and that the last Douyin livestreaming session was on August 14. Qudian denied the rumors and said that it was optimizing its business, and its products and livestreaming would return soon.
Less than two weeks after its recovery of livestreaming, two official broadcasting channels on Douyin stopped updating again, although there are still products on sale on the firm’s official WeChat mini program.
Qudian still has 700 million yuan in unpaid cash loans, with an average loan period of two months. The company adjusted its new lending strategy, but predicted that this move will cause its revenue to continue declining in the next quarter.