Text | Bowang Finance, author | Zhengning
On February 9, a number of media reported that Heytea carried out large-scale layoffs, involving 30% of employees and some departments being laid off. In this regard, Xicha then responded to media reports, saying that the relevant rumors are false information, the company does not have the so-called large layoffs, and a small number of personnel adjusted to normal personnel adjustment and optimization based on year-end assessment. At the same time, the year-end bonuses of employees have also been issued to employees normally before the Spring Festival according to their performance.
Despite this, the news about Xicha has also rushed to the hot search, why has Xicha single-handedly changed the Chinese catering market received so much attention? Since his debut in 2012, Heecha has just turned ten years old. In the past 10 years, Heytea has opened more than 800 stores at home and abroad, and the valuation of 60 billion yuan has also made Nie Yunchen's post-90s worth more than 15 billion yuan, becoming the only self-made "post-90s" rich man on the Hurun Rich List.
Whether it is the company or the founder Nie Yunchen himself, the speed of its successful wealth creation is undoubtedly fast compared with other industries and other entrepreneurs, not to mention in the chain operation, which involves more management factors in the business model.
Although it is happy to lay the foundation and create success, it is obvious that sitting in the country and managing the enterprise needs a longer test, food safety, product development, store management, employee management, supply chain management, etc. are always testing the wisdom and ability of managers. The frequent food safety accidents and the decline in the growth rate of Heytea in the past two years can't help but make people think: Is it necessary for the rapidly expanding Heytea to slow down and make up for the management class?
01 The leader has less "middle" homework
After surviving the difficulties of the early stages of entrepreneurship, in early 2016, Nie Yunchen renamed the original imperial tea to Xicha and opened its store to major cities in the Pearl River Delta. In June of that year, Heytea obtained the first round of external financing of 100 million yuan, with the first-mover advantage in financing, Heytea began to go out of Guangdong, expand to the whole country, and opened stores in first-tier cities such as Beijing, Shanghai and Guangzhou, completely taking a wild step, and also began to open a gap with competitors of the same era.
Compared with other entrepreneurs, Nie Yunchen, the founder of Xicha, is a low-key person, which is rarely seen in the media, and some "interview" articles are basically interviews in the form of text.
In the media reports on Nie Yunchen, the most displayed is still his early entrepreneurial deeds. Nie Yunchen once said, "I only do the biggest things and the smallest things." The biggest thing is the brand-related thing, and the smallest thing is the details. ”
For example, the details to even a few words on the store fire hydrant, all stores must be unified; the logo, design, decoration style, etc. of the storefront in the early stage are all made by himself on the computer; the promotional materials are also personally checked, and the typos and even the movement of a pixel must be strictly determined; for example, the formula can be adjusted 6 times a day and not tired, and even an extra gram of salt can be tasted in the ingredients...
As a founder and manager, there's nothing wrong with a focus on detail, but it's clearly not enough. Because the daily management and operation of the company is an indispensable and important joint that is connected between the "biggest thing" and the "smallest thing".
When an enterprise develops to a certain size, it not only tests the entrepreneur's financing ability, team recruitment and operation ability, but more importantly, the ability to build a management system. In fact, for any enterprise manager, managing more than 800 stores and tens of thousands of employees is not an easy task, which not only requires professional ability, but also needs to accumulate management wisdom in practice.
02 When management issues become the label of hi tea
In August last year, the Shanghai customers who were concerned by the media were mistakenly given "samples" by Heytea, resulting in gastric lavage.
Ms. Chen of Shanghai ordered a bottle of double-squeezed carambort and a cup of roasted brown sugar Bobo milk tea. The bottle of double-squeezed carambola citrus that Ms. Chen drank was later recognized by the Xicha clerk as an inedible "sample". Subsequently, the store staff accompanied Ms. Chen to the hospital for medical treatment, and carried out a series of examinations and medical treatment. When Ms. Chen went to the hospital for examination, when asked by the doctor about the ingredients of the sample, the Staff of Heytea was unable to provide accurate information at the first time.
Later, during the consultation, the Xicha clerk contacted the supplier and verbally relayed that the liquid in the sample was "n-ethane" and non-toxic. The emergency department doctor believes that since it is impossible to determine the composition of the sample, it is impossible to confirm whether the ingredient is poisonous or not, and it is recommended to wash the stomach.
When Ms. Chen was preparing to wash her stomach, Heytea said that she had received a report from the supplier that the liquid component of the sample was "n-hexane". Ms. Chen speculated that the previous "n-ethane" should have been a store clerk who misread "n-hexane" as "n-ethane".
That night, Heytea employees said that they communicated verbally with the supplier again, and the composition of the sample was not "n-hexane", but "dimethicone" and "cyclomethicone", but Heytea did not provide a test report.
On the second day of Ms. Chen's discharge, she was told by Xicha that the sample was "liquid silicone" that did not contain toxic and harmful substances...
What exactly is the ingredient, and is it toxic or not? The successive reversals and various god oolong replies have exposed the imprecise management of Xicha and the neglect of the management of the safety production process.
In the world of aviation, there is a famous "Hayne's Law" that states: Behind every serious accident, there must be 29 minor accidents and 300 attempted precursors and 1,000 accident hazards. As far as Xicha is concerned, this very serious mistake reflects the serious lack of internal safety production process and management, which is not caused by one thing or one person, but by the lack of systematic and overall management for a long time.
In fact, there have been many food safety problems caused by irregular operations before Heytea: whether it is the poor hygiene of Heytea in Xi'an in 2019, the case of food container cleanliness not meeting the standard in Xiamen, or in 2020, the Nanjing market supervision department detected that there were 8 products of Heytea with excessive colonies and coliform contamination, etc., all of which are serious food safety problems caused by the lack of management and processes.
03 The worry of tea
In recent years, new tea has become the industry outlet, and now, the entire new tea market has been properly a Red Sea market - high-end, low-end are fiercely competitive, and it is lucky to survive.
According to the statistics of the "2020 New Tea White Paper", in 2017, there were about 250,000 new tea stores in China, with 152 million consumers and a market size of 44.2 billion yuan; and in 2020, this data is expected to reach 480,000, 340 million and 102 billion yuan, basically doubling. At the same time, in 2020, more than 130,000 tea shops were closed, closed and cancelled, a proportion of up to 43%.
Customers in first-tier cities may only consider xicha and its kind on a daily basis, but in the vast domestic market, it is the low-end market that occupies most of the tea drinking. Winning the low-end market is a must-win battle for every brand, among which product unit price and store coverage are important considerations.
Therefore, the worry of Xicha lies in how to impress the sinking crowd while not falling into value, and on the other hand, how to greatly improve product coverage in the low-end market.
For the first worry, Xicha pinched the timing and chose to reduce the price. At the beginning of 2022, tea brands such as Xiangpiaopiao and Tea Yan Yueshi have announced price increases due to "rising costs", while Xicha has done the opposite, and has lowered the prices of some products in a high profile.
How can you go against the trend and reduce prices? Heytea official response said that thanks to the brand potential, scale advantages and continuous accumulation in the supply chain and deep cultivation in the upstream, Heytea has the ability to adjust the selling prices of some products without changing the product formula, materials and quality.
According to Guosen Securities, the gross profit margin range of Heytea is 65-70%, higher than The 60-65% of Naixue, and the single-store ping effect of Heytea, whether it is the main store or the GO store, is higher than the standard store and PRO store of Naixue, which may also give Xicha the confidence to reduce prices.
For the second worry, Xicha launched "Xixiao Tea" as an independent brand of Xicha, the unit price of customers was positioned at 6-16 yuan, and "single-digit drinking OfXicha" became a highlight, carrying the expectations of Xicha's customer base.
However, since the opening of the Letoli store in Shenzhen Huaqiang Square in April 2020, more than a year has passed and it is still in a tepid state. According to the "XiXiao Tea First Anniversary Report" released by Xi Tea in May 2021, Xi Xiao Tea opened 22 stores in the middle of the year, mainly gathered in Pearl River Delta cities such as Guangdong and Shenzhen Foguan hui, still staying in the role of local stores, far from entering the national sinking market.
What is more serious is that after experiencing adjusted growth, the current operating situation of Heytea is not optimistic. According to data provided by Euromonitor, the annual sales growth rate of Heytea in 2020 was 18%, far less than the 165% in 2019, although the number of stores expanded significantly, but the average annual sales of a single store fell from 14.41 million yuan to 9.56 million yuan, and the daily sales of a single store also fell to 26,000 yuan.
According to jiuqian consulting data from the middle office, from July 2021, the average revenue of Heytea and stores nationwide began to decline. Taking the data of October 2021 as an example, the average revenue and sales efficiency of Heytea stores fell by 19% and 18% compared with July, and fell by 35% and 32% compared with the same period last year.
These data show that in the growing market share, the improvement of the efficiency of Heytea is not obvious, and its rare high valuation is also easy to cause doubts.
In July 2021, Heytea completed a $500 million Series D financing, and the valuation after the financing was said by the media to be as high as 60 billion yuan, almost five times that of NaiXue's tea.
It is understood that among several other new tea companies, the valuation of Michelle Ice City is 20 billion yuan, the valuation of tea is 13 billion yuan, and the stock price of Naixue's tea has fallen sharply after listing, and the current market value is 12.1 billion Hong Kong dollars. Compared with Nai Xue's tea, from the perspective of the valuation of a single store, Xi Tea is already more than 2 times that of Nai Xue's tea, and the value itself is already much higher.
In fact, the high valuation of Heytea has been questioned in the industry, and even if Heytea is successfully listed in the future, how it will perform after the listing is still a big unknown. The stock price of Naixue's tea broke on the day of listing, and then fell heavily, and now the stock price is different from the one when it was listed, which is a lesson for Xicha.
epilogue:
For the ten-year-old Xicha, management problems have become the crux of its "itch". For an enterprise, management is the soul of long-term development, if management is missing, the consequences are out of control and chaos. For many years, xicha itched and scratched at the same time, treating the symptoms rather than the root cause. Under the blessing of capital, what Heytea lacks now is not high-speed running, but more attention to management, refined operation and strengthening quality control are the most important things that Heytea needs to do now.