Teas need to do subtraction

Text | Bento Finance official, author | Peaches, edited | Yao Yun

Layoffs are just proof.

On February 9, the Weibo topic "Xicha layoffs 30%" appeared on the hot search, according to Sina Finance, Heytea is implementing layoffs internally, involving 30% of employees overall.

Subsequently, according to the China News Network, Xicha responded to the news of the layoffs that the relevant rumors were false news, the company did 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.

On the other hand, Xicha began to concentrate their firepower on online platforms such as Douyin.

"On Valentine's Day, everyone can go in pairs to shoot."

"If you think milk tea is too sweet and afraid of fat, you can go and shoot the flower tea of Link 7."

"The baby who has just entered the live broadcast room is a little bit of attention and likes, and we have fan welfare ha."

At 6 p.m. on Valentine's Day, Nai Xue's tea vibrato account "Nai Xue's Tea Flagship Store" has been broadcast for one hour. On the desktop of the live broadcast room, there are various kinds of tea bags and gift boxes of Nai Xue, and the female anchor with a slight Taiwanese accent is trying to introduce the products and constantly remind users to like and pay attention.

At the same time, the Xicha Douyin account "Xicha Department Store (Live Room)" has also warmed up the live broadcast of tonight's 20 o'clock in the introduction. It is understood that the official account of Xicha has accumulated 897,000 fans, 6.4 works, and 133 good things in the store.

Behind the parallel of hot and cold, Xicha is trapped: in the rapid development, the cost has increased with the expansion of offline stores, and the current traffic has not ushered in the same proportion of growth. The blindfolded rush that used to be wild became the five-fingered mountain that pressed on Xi Cha's body.

From complaining about the long queue time and scalper purchasing, to the intensive opening of stores, rapid expansion, and now the lament boom has receded. It is understood that in the past year, Heytea has successively slowed down the speed of opening stores, reduced the scale of stores, and declined the profitability of single stores, and food safety problems have also been sent to hot searches twice.

On the other hand, Nai Xue, who is also the first echelon of Xicha, did not make a good start for the new tea drinking track: preemptively listed, but broke on the first day, and then the market value was cut. Regardless of whether xi tea lays off employees or not, the scorching of the new tea drinking track is visible to the naked eye. Returning to the essence of business and improving business efficiency, it is time for xicha to de-bubble.

01 Under heavy pressure, subtraction is required

"Welcome to our Tea Inspiration Live Room"

"Babies who want to try can choose our one-week tea gift box, 7 days a week without repeating the sample"

At 8:00 p.m. on February 12, the Douyin account "Heytea Department Store (Live Room)" and the official flagship store of Heytea Taobao simultaneously opened the live broadcast with goods, and the goods sold included heytea's tea bags, bottled juices, milk tea, etc.

According to gray dolphin data, the number of live broadcast viewers on the dual platform that night was 30,000, and the sales were 131,000. Live broadcasts like this, Xicha will be carried out almost every night, and a live broadcast is generally about 4 hours.

Online, has become an important action of heytea to reduce stress.

We calculated an account for Xicha and found that milk tea with 30 yuan + at every turn did not make money.

Taking coffee as an analogy, from the cost structure chart of a cup of Starbucks coffee disclosed by Standard Chartered Bank disclosed by the Wall Street Journal, the cost of raw materials accounted for 7.3%, and the highest proportion was the rental cost and store operating cost, which were as high as 26.1% and 15% respectively, while the profit was 17.7%.

The cost of the new tea on the back may be heavier.

According to the mature store model of catering and tea enterprises calculated by Xinye Securities, the cost of raw materials for Heytea accounted for the highest proportion, reaching 35%, followed by employee compensation and rent, which accounted for 25.6% and 12% respectively. In other words, the cost of raw materials, employee costs and rent together accounts for more than 70%.

Under the data model estimate, including the store rent, store location, decoration design, equipment depreciation, labor costs and other elements, the monthly fixed cost of heytea stores in first-tier cities needs nearly 500,000 yuan, and the stores in new first-tier and second-tier cities need about 400,000 yuan.

Take the average, that is, the monthly fixed cost of Xicha per store is 450,000 yuan, so the cost of raw materials, staff costs and rent is about 330,000 yuan. By the end of 2021, the number of Heytea stores will be 865, which means that the annual cost of Heytea in raw materials, employees and rent will be nearly 3.5 billion yuan.

The high-end tea drinking route has forced Xicha to work brand marketing, store design, raw materials, labor and direct operation mode. And this also makes the cost a boulder pressed on Xicha's body.

Nie Yunchen, the founder of Heytea, has repeatedly said in public that Heytea's products are made of high-grade tea leaves, handmade with fresh fruits, milk, natural animal cream, etc., which also makes raw materials the biggest cost.

At the same time, according to boss direct employment, the salary of Heytea junior tea adjuster is 5-7k. Since fruits like grapes and mangoes need to be peeled and made freshly, the staff of a heytea store is generally more than 10 people.

Under this account, The direct operation model that Xicha has always adhered to is mixed. The good thing is that it is beneficial to the stability of quality; the worry is that the operating costs of nearly 900 stores are too heavy.

In terms of store selection, the standard store with the largest number of Heytea stores has an average area of more than 200 square meters, and most of them are located in commercial centers or high-end office buildings. And these stores will also try to do different styles of theme stores, which is also a fixed cost for Heytea.

According to The Naixue prospectus, it has accumulated a loss of more than 300 million yuan for three consecutive years after the listing. These losses are also mostly concentrated in venue and personnel costs.

By the end of 2021, Heytea and Nesher's tea have 865 and 817 stores, respectively. Similar number of stores, similar pricing strategies, Xicha and Naixue, in the business model, can be regarded as a difficult brother.

With the impact of the epidemic, consumers have become more price sensitive, and high-end milk tea is no longer the first choice of the public. According to the "2020 H1 China New Tea Industry Development Status and Consumption Trend Survey and Analysis Report" data show that people can accept the price of new tea, is changing, of which consumers who choose the 11-20 yuan range account for 52%, 21-30 yuan range accounted for 25%.

The traffic of offline stores has dried up, and the revenue growth has been blocked, making Xicha overwhelmed by the cost stone. The hi-teas who have been doing addition have come to do subtraction.

02 Additive sequelae

Today's weight forward comes from the blindfolded run of the past.

Xicha, which began to do additions in 2015, may not have thought that the strategies such as high financing, intensive store opening, and rapid increase in SKUs that were once proud are becoming boulders stacked on their backs.

"I very much hate to see guest complaints. So, others may think that we will think very complicated, but in fact, the reason for speeding up the opening of the store in our internal view is very naïve, that is, there are customer complaints, and we want to make them happy. Under the phenomenon-level explosion, negative news such as "hiring people to queue" and "hunger marketing" appear frequently, and Nie Yunchen, founder of Xicha, gave the above answer.

In 2016, Shanghai's first Heytea store opened in Raffles City, and there were reports that there were more than 7 hours of queues on the same day, and scalpers were dispatched to sell Heytea at a price increase of 50 yuan. As a result, Shanghai Xicha had to be purchased under the real-name system, and it was stipulated that there was a limit of 6 cups per person per day.

Then, the queue, synonymous with Hi Tea, began his journey of expansion.

Bento Finance sorted out the 5 rounds of financing of Heytea and found that since 2018, Heytea has received an investment of hundreds of millions of dollars every year, and in the list of investors, there is no shortage of star investors including IDG Capital, Today Capital, Black Ant Capital, Dragon Ball Capital, Tencent, etc.

It is worth noting that the latest round of financing has made Heytea refresh the valuation record of China's new-style tea drinks with a high valuation of 60 billion yuan.

Faster and faster financing, as well as rising valuations, gave Xicha the confidence to run wildly. According to the official public data of Heytea, as of the end of 2019, Heytea opened a total of 390 stores, and the number of new stores in 2019 reached 239. This means that in 2019, Heytea opened a new store in an average of 1.5 days.

By the end of 2020, Heytea had opened 695 stores in 61 cities at home and abroad, adding 304 stores, almost doubling the number of stores in one year compared with 2019.

In addition to stores, Heytea's SKUs are also increasing rapidly.

According to the data of The Coffee Gate, in 2018, Heytea disclosed 48 new products to the public; in 2019, the number of new products on the market increased by nearly 5 times, with an average of 20 new products per month.

However, the rules of the game have changed.

In 2015, Nesher's Tea was established in Shenzhen. Like Xicha, in the face of the hundreds of billions of markets, Nai Xue has also become a fanatical pursuer of the capital market. According to enterprise investigation data, as of June 2021, Naixue's tea ranked first in the financing amount of new tea brands with a financing amount of 6.486 billion yuan.

According to the prospectus, from 2017 to 2020, the number of Naixue's tea stores was 44, 155, 327 and 491, and as of June 2021, the number of Naixue stores had reached 603.

At that time, profitability was no longer the primary consideration, and under the leverage of capital, expansion became the best choice. However, in the current de-bubble, the low passenger flow can not support the need for high flow of water, and the thunder planted by addition begins to detonate.

03 How to move forward with weight, it is time to disenchant

Carrying the pressure of "boulders", not only the Xicha family.

Box Lunch Finance sorted out the major events of several tea beverage head brands since 2020, and found that tea brands with different price bands have closed stores and other phenomena.

Judging from the time of establishment and the number of stores, tea brands that have experienced major business events such as store closures have achieved large-scale expansion in a short period of time.

According to the data of the "2021 New Tea Beverage Research Report", at the end of 2019, the total number of mainland beverage stores was about 427,000, and the number of stores at the end of 2020 was about 596,000. Among them, new tea stores accounted for the highest proportion, reaching 65.5%, and the number of stores was about 378,000.

Judging from the reasons for the closure of the store, in addition to the closure of the store for rectification due to food safety reasons in Mi xue Bingcheng, the reasons for the closure of other brands are all affected by the epidemic. In the case of intensified homogeneous competition, the epidemic has become the last straw to compress the camel. According to ai media consulting data, in 2021, the number of milk tea shops that have survived for more than one year in the country will account for only 18.8%, and nearly 80% of the new brand tea shops will close.

However, in addition to the internal volume and the epidemic, Naixue's tea broke on the first day of listing, and Luckin's financial fraud and high-market value bubble was punctured, which made the capital market have to calm down.

After the listing of Nai Xue's tea, it fell for 6 consecutive trading days, the stock price hit a new 52-week low, and the market value evaporated by nearly half. At the beginning of February this year, the stock price fell by more than 60% compared with the time of listing, and the total market value was only HK$12.16 billion.

Only when the tide recedes will it be known who has been swimming naked. In the rapid development, the new consumption track that is highly sought after by capital will inevitably have a bubble, and when the outlet dissipates and the bubble bursts, the danger can be imagined.

At the beginning of 2022, Heytea lowered the price of some products, with a maximum price reduction of 5 yuan. In this regard, Xicha said that its mainstream product price band has been maintained between 19-29 yuan for a long time, and it is not the so-called high-priced tea.

In the case of bottlenecks in offline traffic, low customer unit prices have become a way to attract consumers. At the same time, shrinking the number and area of stores and expanding online traffic are all ways for Xicha to alleviate cost pressure.

According to Huatai Securities data, from 2018 to 2020, Nesher's tea has closed 9 stores, but in the second half of 2021 alone, the company has closed 10 stores.

The growth rate of Heytea's stores has also declined year by year, from nearly 140% to 26.3%.

In terms of store area, Heytea is also doing subtraction. It is understood that the store types of Xicha can be basically divided into 3 categories, according to the size of the area: GO stores, standard stores, flagship stores. The search found that since July 2020, the number of Heytea flagship stores has not increased. Among the 198 new stores added in the past year, go stores and standard stores are the mainstay.

The number of small shop-type Pro stores launched by Nesher's tea in the late 2020s has also gradually increased, and as of December 31, 2021, 23 standard tea shops in Nesher's tea have been converted into Nesher Pro tea shops.

"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 the new consumer brand Perfect Diary, said in an interview.

This passage may explain the current situation of the tea people.

Resources:

"The wind of new consumption will not blow", the most popular FunTalk

"Dialogue with Nie Yunchen, founder of Xicha: We don't exist to find someone to queue up", Lei Di