Text | Retail Business Finance, author | Wang Xiaoyu, editor | Crane Xiang
Selling 1.3 billion cups of milk tea a year, expanding 10,000 stores in a year, and winning 800 million profits a year, why can Mixue Ice City with an average price of 6 yuan be valued at 20 billion? What exactly is its wealth code?
Unveiling the veil of the Ten Thousand Stores of Mi xue ice city will find that under the appearance of the "Snow King", there is a heart of the "Sea King", and the consumers who are captured by the "cost performance" do not seem to know where the wool is. On the contrary, Michelle Ice City is constantly using "cheap" to whitewash the history of franchisee blood and tears, trying to harvest the sinking market in all directions.
On the surface, The product of Michelle Ice City is milk tea, but in fact it is a trading company that sells stores, raw materials and consumables, unveils the business model of Michelle Ice City, and finds that it is more like a "money printing factory".
01 The company that sells the store
What is The product of Michelle Ice City?
In fact, Michelle Ice City really sells "stores", and franchisees sell milk tea, ice cream and other products.
As a "store" company, from 2016 to 2020, the number of Michelle Ice City stores is 2500, 3500, 5000, 7500, 10,000, and the number of stores in Michelle Ice City exceeds 20,000 in 2021, which is very cost-effective, and the franchise fee is the main source of profit for Honey Snow Ice City.
According to the official website of Mi xue bingcheng, the annual franchise fees of county-level cities, prefecture-level cities and provincial capital cities are 7,000 yuan, 9,000 yuan and 11,000 yuan respectively, in addition to the franchise fee, there are contract performance bonds, brand management fees, equipment required for store opening and other costs. Roughly calculated, the initial investment cost of joining a prefecture-level city, Mixue Ice City, is about 400,000.
Can you really make money by joining Michelle Ice City?
Generally speaking, franchisees use information platforms such as Baidu to investigate franchise projects, but it is difficult for the information flow that has been "optimized" by the brand to present the actual situation of joining the franchise truthfully and quickly.
After searching on Baidu with the keyword of "Michelle Ice City Franchise", retail business finance found that most of the content such as the introduction of franchise fees and inspirational type franchise notes was placed in the front end of Baidu's information flow (1-10 pages), but the real feedback content of franchisees was displayed after 10 pages.
For example, after clicking on the Baidu homepage displayed on the topic of "Honey Snow Ice City to earn money after joining", the link immediately jumped to the inspirational answer of Zhihu netizen "Reignwood", but the comment area of the post attracted netizens to complain: definitely a writer hired by Michelle.
"Honey Snow Ice City disgusting forever black! Don't join! You have worked hard to choose a good address to audit directly without reason not to pass and then within a month your address will be opened! At first I didn't believe it, but I experienced it myself! ”
"The most devastating thing about Michelle is that the management is too strict, three days and two ends to check you, the fine is very cruel, and the fine of Wanba is very normal." There are many things in the group, today let you take a bunch of photos, edit into notes and send them to the regional manager, tomorrow let you have a meeting in the group at eight o'clock in the evening, if you do not cooperate with the management, close the store, do not supply you, terminate the contract! ”
The comment area is full of spitting people, and the terms such as "dry honey snow ice city does not make money real people", "honey snow ice city joined the pit dead people", "I regret joining honey snow ice city" and other terms in the "related search" column quietly displayed also confirmed that the information "hidden" by Baidu is the "truth" of the honey snow ice city to join.
According to the enterprise investigation, there are 9 disputes over the franchise contract of Michelle Ice City Co., Ltd., and there are 2 disputes over lease contracts and housing lease contracts. Compared with the public opinion that has been optimized and guided, the real legal proceedings can obviously not be covered up and tampered with.
02 Middlemen who sell raw materials
A franchisee said: "If the price franchisee wants to make money, the average daily turnover cannot be less than 10,000, and less than 10,000 is a loss." Michelle to put it bluntly, franchisees sell a lively, headquarters to earn raw material money, which is why crazy expansion does not want franchise fees. ”
In the era of "going to the middleman", Michelle Ice City did not rely on franchise fees and selling products to make money, but used raw materials and supply chains to make money, becoming the largest middleman in the supply of raw materials.
According to the research report of Jiuqian Zhongtai, Michelle's stores must use the company's raw materials, and 40% of the group's profits come from raw materials provided to franchisees.
It is conservatively estimated that the wholesale profit margin of Michelle Ice City is about 20%, so a single store can contribute 100,000 yuan of net profit to the headquarters every year, and 10,000 stores is 1 billion yuan. From this point of view, the expansion of the scale of Honey Snow Ice City is imperative.
In many city blocks, only a few hundred meters apart, there will be a Mixue Ice City, resulting in fierce competition, franchisees also have to pay a variety of fees, not only raw material fees, as well as annual management fees ranging from 13800 yuan to 17800 yuan, "can not make money at all."
Therefore, there are constantly franchisees pouring bitter water: "Mixue Ice City is actually a pit person, some first- and second-tier cities are OK, but small cities are not." Earn franchise fees, raw materials, decoration. That's the routine. Low profits and low quality are not too good. ”
Relying on the supply of tea gardens, orchards and milk tea powder, Michelle Ice City draws profits from milk tea raw materials, marketing materials, equipment, decoration and other supporting facilities. The rest of the profits are then distributed to the franchisees below, incentivizing them to sell more, resulting in a scale effect. The huge procurement scale of Wandian can form the bargaining power of upstream raw materials and expand the profitability of enterprises.
Let the young people in the town drink milk tea, Andi Xue Ice City seems to conform to the trend of "consumption upgrading" in the sinking market, but in fact, it uses "blended sugar water" to expel the living space of good coins in the county, so that the low price has become a pass for "quality degradation".
Compared with the 60% to 65% gross profit of the new tea drink, The Honey Snow Ice City, which is mainly based on powder preparation products, has pressed the gross profit to 50% to 55%, and blatantly started the business of "blending sugar water".
Mi Xue Ice City stores have never been afraid to be found by consumers that their drinks are basically made of various seasoning powders, jams, concentrates and other raw materials, after all, the tea tonality of "LOW" makes consumers' requirements for Mi Xue Ice City far lower than that of high-end tea brands such as Nei Xue and Xi Tea.
What cannot be ignored is that in the face of the disguised squeeze of "everything is big and small" in Mi xue ice city, it is not easy for franchisees to make money, and the food safety problem and the franchisee profit problem have become irreconcilable contradictions.
"Invested in 400,000 yuan in Mi Xue Ice City, only opened for three months, and did not make much money, because it did not enter a few oranges from the headquarters, it was forcibly shut down, and hundreds of thousands of people were adrift." A franchisee said on the social platform that the reluctance to import raw materials from the headquarters is related to its low cost performance, but once the franchisee violates the regulations, it is fine or disqualified.
Under the pressure of franchisee profits, the pricing of Michelle Ice City is still "as stable as Taishan". Compared with the "store" of Michelle Ice City, franchisees are the party that really wants to do a good job in products, but in the face of the dilemma of insufficient revenue, it is inevitable to neglect management, and even deduct raw materials to lay mines for the food safety problems of Honey Snow Ice City.
According to the "21st Century New Domestic Products and Tide Brands - 2021 New Tea Drink List", The ESG (negative index) score of Michelle Ice City is at the bottom. The list uses ESG (negative index) to assess the chaotic occurrence of tea brands, and the main reference indicators include the number of stores that have been punished, notified, and exposed, the number of user complaints, and the number of lawsuits (defendants).
At the beginning of this year, in the face of rising pressure on raw materials, hey tea, Naixue tea and other brands have raised prices, Michelle Ice City is determined not to increase prices, although the brand has gained a wave of goodwill, but the headquarters painting of the big cake, in the end, but by the franchisee to bear, the profit space left for franchisees is further compressed, there will be tampering with the date label of the opened ingredients, arbitrarily change or do not record the preparation deadline of the ingredient "validity tracking card", the illegal use of overnight ice cream milk milk, tea soup, milk tea and so on.
To put it bluntly, Michelle Ice City earns a lot of money by selling stores and being middlemen, but franchisees can only find ways to survive. The paradox between low prices and management eventually leads to a vicious circle between low products and low prices.
03 Factory where money is printed
In addition to selling raw materials, the biggest business of Michelle Ice City is to sell packaging materials, beverage cups, straws, packers, handbags and other series of consumables, which is the "invisible currency" issued by Michelle Ice City, franchisees can only purchase related consumables from Honey Snow Ice City, although the quality is much higher than the market!
Under the appearance of the "Snow King" of Mi Xue Ice City, there is a heart of "Sea King" - "dominating" the sinking market.
Perhaps in the imagination of "Snow King", the first cup of tea drink "Honey Snow Ice City" for young people in the town, the first cup of freshly ground coffee "Lucky Coffee", the first ice cream "Polar Latour", the first cup of craft beer "Fulujia", the first convenience store "Fulujia", the first tide play "Snow King"...
If "milk tea" is regarded as a currency issued and circulated by Michelle Ice City, coffee, ice cream, convenience stores, craft beer, and tide play are the multi-type currencies issued by Michelle Ice City to diversify market risks and expand brand effects.
Under such logic, whether it is selling stores or selling raw materials, Michelle Ice City can "flourish".
Of course, Michelle Ice City's products generally have the characteristics of "low price", which is also the entry point for its playing sinking market, just like Coca-Cola, which has been loved by all major classes since its inception.
From the reasons why Coca-Cola has maintained low prices for more than a decade, we may be able to glimpse the development strategy of Michelle Ice City.
In simple terms, Coca-Cola's profit margin is very low, but it is a small profit and high-selling product, relying on the global market and large-scale production, it can still make a lot of money. Secondly, the Coke industry has very high competitive barriers, the market is basically Coca-Cola and Pepsi Cola two are playing, in the "duopoly economy", both will not easily open a price war.
If the Michelle Ice City is regarded as assembly line production, the use of raw materials self-production and warehousing and logistics centers to achieve cost reduction and efficiency, after creating explosive products, open to join, through intensive store opening to seize the market, and then maximize the efficiency of chain brands.
It is worth mentioning that from the price point of view, "Fulujia" craft beer does not follow its "low price" strategy. Fundamentally, craft beer is different from brewing drinks, it needs Mi Xue Ice City to build its own factory, so that consumers can identify its brand taste, and the highest price setting of 56 yuan also leaves plenty of space for the profitability and development of Mi Xue Ice City in first- and second-tier cities.
In terms of marketing, Michelle Ice City shapes the brand IP, makes full use of all advertising spaces and out-of-the-loop opportunities.
From the very beginning through sound marketing, a piece of earthy lyrics throughout the network, to recently hung a banner to welcome the police into the store to rest, was complained by netizens about the "star is difficult to wealth" of the Honey Snow Ice City continues to shake the clever.
In addition, Michelle Ice City uses bright red to attract people's attention; the street is its shelf, Michelle Ice City will increase the brand name bolder, improve the probability of being seen, so that the brand name as much as possible to fill the signboard full of space, so that customers can see the signboard at a glance; the roller shutter is a 24-hour advertising space, the door is brushed with its own IP, even if the store is closed, the advertisement will always reside in people's hearts; Honey Snow's material placement is simply a must, from banners to floor stickers, billboards are readily available, hate can not be pasted on the entire street.
What Michelle Ice City wants is to be "seen", and only when it is seen can it be joined. In this way, the "factory where money is printed" can be brightly lit and non-stop day and night.
epilogue
For consumers, the low-end consumer market, even if it is a miscellaneous brand, cannot be equated with inferior products and cottage goods. Michelle Ice City blindly pursues low prices, so that the low-line market is misguided. Most importantly, the sinking market space is limited, and consumers only have "bad money" to choose from. On the contrary, the "good money" that should have reached people's hands could not penetrate and survive because of the expulsion of "bad money".
Nowadays, the relationship between Michelle Ice City and consumers is changing, once "I don't think you're poor, you don't think I'm low" evolved into "it's not that we look down on them, they all step on our heads", and the food safety problem makes consumers feel like a fish in the throat.
For franchisees, the profit margin brought by the brand's pursuit of low prices has always been limited, after all, there is a lot of cost behind high-quality products and services.
A heart-wrenching fact is that franchisees stare at the profits of Michelle Ice City, but Michelle Ice City stares at the principal of franchisees, which is essentially a canning factory and decoration team cloaked in the cloak of a milk tea shop. The poor survival status quo pushes franchisees to save money and have to ignore food safety.
In 2022, for prospective shopkeepers who are eager to join Michelle Ice City or other brands, it is necessary to comprehensively and rationally look at the tea market of "10 franchises and 9 cheats", don't look at the current Mixue Ice City is not hot, whether joining is more beneficial than harmful or more harmful than beneficial, it is worth pondering.