The wind of new consumption will not blow

Image source @ Visual China

Text | Most talked about FunTalk, by | Ma Sophie, Editor | Wang Fangjie

Rumors such as Heytea's "30% layoffs" and "no year-end bonus" are rapidly fermenting on the Internet. Although the company told the media that there is no so-called major layoffs in the company, the netizens labeled "Heytea Employees" on the pulse responded with a response, saying that their year-end bonus was only 0.4 times (original).

People are not surprised by this, the new consumption track represented by Xicha has been straight up in the past year or two, and now it seems that it is time to turn a corner.

Recently, an insider in the baking industry told "The Most Talking" that the monthly sales of the local Internet red dim sum brand Mo mo dim sum bureau in Changsha have recently declined continuously, reaching 1 million when they first opened, and now the monthly sales of a single store are only more than 300,000, and the Hutou Bureau is also facing the same dilemma, single store sales are declining, and the Changsha base camp is currently losing money.

The twist of the story seems to have come too quickly, the Tiger Head Bureau and the Momo Dim Sum Bureau were established in 2019 and 2020 respectively, and have been playing the role of "sweetheart bomb" until then, whether it is calories or commercial operations. According to media reports, the Changsha Guojin Street store, the base camp of the Mo mo dim sum bureau, has set a surprising record of one million + monthly sales of a single store.

After entering the new year, it is difficult to say whether the Chinese baked two sons who are blown on the air outlet will be further blown up or whether they will be further enlarged. But the layoff storm that broke out of the new consumer benchmarking company Xicha this time is certainly not good news for these two young companies.

According to "Most Talk", Hutou Bureau has begun to contact investors years ago and is eager to seek a new round of financing, with the goal of finalizing the agreement in March this year. But so far, there has been no further news.

01 A store is valued at 100 million

In the first half of 2021, investment in the consumer track is thriving and the momentum is very strong.

If 2020 is the first year of new consumption, then the past 2021 is undoubtedly the first year of new consumption "infrastructure".

According to CBN Data, a total of 550 institutions invested in 470 consumer projects in 2020, with an average investment amount of 105 million yuan per project. In the first half of 2021, the number of consumer investment and financing has reached 333, with a total financing of more than 50 billion yuan, which is higher than the total financing in 2020.

If the high point of consumer investment in July 2021 is taken as the critical point, the money in the first half of the year is mainly invested in brand marketing, and the money in the second half of the year is mainly focused on the supply chain.

With the influx of capital, various categories on the new consumption track, not only roasting, coffee, pasta, tea, etc., have set off an investment boom, even if the valuation of some head brands has risen sharply, there are still a large number of investment institutions to submit letters of intent to invest (TS), and even the tenth-ranked start-up brand can also get investment, "rather than wrong investment, not to miss." A consumer industry investor sighed.

This capital chasing madness is also reflected in the expectation of the valuation of a single store.

Qing Yong, the founder of Tomato Capital, who participated in the incubation of Thermomy Dim Sum Bureau, publicly revealed a set of data in May 2021: "In 10 months, its valuation has increased by 500 times, and the turnover is about six or seven squares to achieve 2 million." ”

At that time, the internet celebrity dim sum brand had just been established for less than a year, and there were only 14 stores in Changsha.

In April 2021, after being recommended, Today's Capital Xu Xin killed in Changsha, and Wang Yuxiao had a similar personality, a hit, immediately decided to invest in this project, and since then, basically every month, Xu Xin and Wang Yuxiao will meet regularly to talk about each other's recent situation, as well as about brand building, product research and development, and supply chain construction.

In September, Meituan Dragon Ball Capital exclusively bet on the Mo Mo Dim Sum Bureau for hundreds of millions of yuan, and its founding partner Zhu Yonghua went to several stores in Changsha many times and punched in the circle of friends to share. The scene of walking into the Mo Mo Dim Sum Bureau store for the first time reminded Zhu Yonghua of how he felt when he first saw the Xicha store in Shenzhen a few years ago.

According to statistics, in the past year, Mo mo dim sum bureau has completed 5 rounds of financing, and the valuation of a single store has exceeded 100 million. This is almost a valuation level that is beyond common sense.

A set of data comparisons can be revealed. In the new tea drink track, which is also highly sought after by VCs, as of February 6, Heytea has 886 stores, with a single store valuation of about 67.72 million yuan according to the valuation of 60 billion yuan. Naixue's tea, which has been successfully landed (city), has 857 stores, the current market value is about 12.7 billion yuan, and the valuation of a single store is about 14.78 million yuan.

Of course, among the national tide dim sum brands, Mo Mo Dim Sum Bureau is not the only lucky one that is popular with capital.

Born in Changsha in 2019, Hutou Bureau was also chased by capital to "stuff money", and in 2021, it received angel round financing including Sequoia China, Challenger Capital, etc., and nearly $50 million of A round financing from star institutions such as GGW and Sequoia China.

"The first generation of Internet celebrities" Master Bao and the popular Luxi River in Nanjing were exposed to start financing in 2021; previously, there was more news that Master Bao's valuation had reached 10 billion yuan, and he held several TS.

After leaving Changsha, the pace of expansion of Hutou Bureau has accelerated, and it has successively entered 5 cities such as Guangzhou, Shanghai, Beijing, Wuhan and Shenzhen, covering a number of first-tier cities, and as of now, there are 43 existing stores. The Mo Mo Dim Sum Bureau has 69 stores in Changsha, Wuhan and Beijing, of which Beijing is its first-tier market.

In addition to roasting, coffee, pasta, fried skewers, hot brine, and new restaurants have won large amounts of financing. Manner completed four rounds of financing in just half a year, with a valuation of $2.8 billion; three and a half tons of financing, with a valuation of 4.5 billion yuan. According to incomplete statistics, in the past two years, more than 40,000 new consumer brands have been born.

At present, whether the new brand can catch up is another dimension of the problem.

02 The wind is blowing fast

The queue for several hours was once a tireless powder sucking method for new consumer brands, with tea and tea in the front, and tiger head bureau and ink mo dim sum bureau in the back.

Relying on Changsha's internet celebrity geographical advantages, many new consumer brands have completed the initial original accumulation here.

But now the wind is shifting.

In the second half of 2021, capital began to withdraw. An institutional investor who mainly invests in consumption told "Most Talk" that their investment team that looks at consumption is also adjusting the valuation and expectations of consumer projects. "The cold investment in the consumer track began in the second half of the year, and several friends turned to the metacosm and consumer technology investment, such as small household appliances, waiting for the change of the country's major policies." The wind was gone, and the swelling stopped. The virtual fire is too strong, and reality will extinguish it. ”

This situation is not surprising, the investment has a cycle, almost every three years, five years, there will be a number of consumer brands to replace. Perhaps in the next two or three years, the secondary market will usher in a number of consumer enterprises, and their performance will be returned to the primary market.

Bubble Mart and Nai Xue's tea debut is the peak performance, once let the VC recognize the virtual fire of this batch of new consumer investment, excessively raise the project valuation, the institution is smart money, eat a long and wise, natural investment in the field of consumption will become cautious.

After completing several rounds of financing, both Mo Mo and Hutou Bureau revealed the news that they wanted to start a nationwide expansion. This is the confidence that capital gives to Internet celebrity brands, and it is also the only way for Internet celebrity brands to cash in returns to capital.

The new Chinese pastries represented by Hutou Bureau, Mo Mo Dim Sum Bureau, and Luxi River have been sought after by the market and capital since 2020, and they are running in the country, often causing a queuing effect everywhere they go, and some netizens said that it took more than 7 hours to queue up for more than 7 hours to buy dim sum.

At the end of 2021, marked by the opening of the first stores in Beijing of Hutou Bureau and Mo mo dim sum bureau, the new Chinese pastry war ignited in the northern market. The local Chinese pastry brands represented by Beijing Daoxiangcun also compete with "zero shops".

Under the continuous heating up of the market, the new Chinese pastry industry has begun to appear "inner volume": small product differentiation, "Chinese and Western" are difficult to distinguish, homogenization is serious, the influence of Internet celebrities has faded, cultural foundations are lacking, and ultra-long queues have been complained about...

This is obviously not a phenomenon that capital is happy to see, and rational investors want not only a beautiful growth curve, but also a controllable profit-loss ratio.

The first thing is that the national crazy store opening, smashing advertising for marketing, but brand communication is not equal to sales, conversion rate, repurchase rate and a series of indicators determine whether a brand has long-term profitability.

"Over the past two or three years, the infusion of capital has overcooked the industry like a stimulant, deviating from its normal business rules. I think this cooling is a normal correction now, not falling to the bottom. Lv Jianhua, co-founder of Perfect Diary, which also belongs to the new consumption track, said in an interview.

03 Old logic dies, new logic lives

Before the Spring Festival in 2022, Wang Yuxiao, founder of the Chinese baking brand Momo Dim Sum Bureau, sent several circles of friends about the grand queue of Beijing stores in a row, and posted several records of beijing single-store revenue data of more than 100,000 yuan on the first day.

In front of the Xidan Joy City store in Ruocheng, Wang Yuxiao seemed to forget that the monthly sales of the Changsha store were rapidly declining.

"No matter how much you love and excel at the industry, whether you have deep user insights, you still can't compete with the business nature of the industry and the most basic development laws of the company." An investor who has long followed the consumer track told "The Most Talked".

It all comes back to square one, product strength, brand recognition, and whether the supply chain moats built are deep enough.

The biggest hit of the Mo Mo Dim Sum Bureau and the Hu tou Bureau is the mochi, it is reported that some of the mo mo products are not ready-made products, but short-term products, which can be saved for 5 days. "Like a cookie." Semi-industrial production ensures a gross profit of 60-70% for TheRmocilla Dim Sum Bureau, as well as timely supply. If each store of the Momo Dim Sum Bureau can explode, the revenue and gross profit space are sufficient.

This is also where capital values.

Because the founders of Mo Mo Dim Sum Bureau and Cha Yan Yue Are very good friends, there is also a style of "sympathy for each other" in the former store expansion strategy - fried CP, that is, crazy opening stores next to the shops with tea and pleasant colors, which allows it to rise rapidly in Changsha.

However, even if the ink mo dim sum bureau starts quickly, the taste of the product is slightly inferior, which may be a hard injury to the future repurchase.

In addition to the taste, many consumer investors are also worried about the Mo mo dim sum bureau is whether it can open stores in cities other than Changsha and push the fire, which is also a common problem of other new consumer brands that have become popular in Changsha.

Tea beauty with the help of the new tea drink explosion and the wind, only in Changsha intensive store can indeed create a good income, support a relatively high valuation, after all, tea is a high-frequency, addiction-like consumption, dim sum is obviously a lot of low frequency.

At present, innovation and strength such as Wen Heyou and tea are pleasant, and the expansion of new stores in cities outside Changsha is facing huge challenges such as a sharp decline in crowds, the withdrawal of merchants, salary cuts and layoffs, etc. Can the Hutou Bureau and the Mo mo dim sum bureau break the curse of Changsha's new brand expansion?

Secondly, the user growth of new consumer brands has been in uncertainty, but the market generally demands a certain path, the money-burning method of mature brands is not suitable for new consumption, and the big promotion of money and top-stream anchors can bring new users but there is a risk of repurchase. New social media, new channels, and new products have been called the troika of new consumer brands, but they haven't always worked.

In the cold start period, new brands need to find a platform and path that suits them, spend a small amount of money to do big things, and build the loyalty of early users through content.

In addition to user growth, new consumption in terms of operations either invests more money in the supply chain to build barriers, or reduces staff and increases efficiency, in short, it is necessary to be prepared for a protracted war.

Wang Weiwei, the managing partner of Huaying Capital, said in an interview that the industry is now more rational, and investors will not blindly look at the company's sales growth, but will pay more attention to which channels the sales come from, whether the product force is sufficiently perfect, and whether the channel and supply chain capabilities are strong enough.

In his view, first of all, we must respect the laws of the industry, "the new consumption track cannot all grow 10 times or even 20 times a year like the Internet."

Of course, a store valuation of 100 million bubbles, only rely on capital can not blow up, high valuation corresponds to the existing store size, but a good enough single store model and ambitious store opening plan. In their view, the single-store model is polished and perfected, and it is not a problem to open thousands of stores.

Daniel Zhang, founder of Haidilao, has also stressed that the catering industry is a traditional industry, the expansion of stores has boundaries, batch replication is not suitable for catering, although it comes with Internet genes and traffic, it is also necessary to maintain a reverence for the market.

Huang Jinfeng, the parent company of Perfect Diary and the founder of Yixian E-commerce, believes that "the entry of capital will quickly enlarge the scale of a company, but if the product is not good and the business model does not run through, these bad products and models are also magnified in front of the eyes of consumers, at this time the entry of capital is a process of accelerated death, and the introduction of capital by the company is tantamount to suicide."

In fact, there is no shortage of internet celebrity brands on the baking track.

In 2014, Uncle Che Si and Grandpa Ruike, who were very popular with cheesecake, have now disappeared; Christine, the "first share of baking" in 2020, has now suffered a sharp decline in stores; in 2021, buoyancy forest, a well-known baking chain brand that has been operating in Hangzhou for 21 years, closed its stores.

Today's baking track is only left with yuanzu, Hollywood, weiduomei, happiness cake and other "old" brands with a market value/valuation of only a few billion, but it also reminds Momo and Hutou bureaus of the urgency of self-hematopoietic ability.

Obviously, in the baking track where it is easy to do fire and difficult to do, Internet celebrity brands still have a long way to go. It's hard to say whether these young brand founders can choose the right choice between indulging in short-term popularity and building long-term capabilities.