The county town folds, and the seabed fishing "can't move"?

Text | Retailer Theory

As of the close of trading on February 22, Haidilao's total market value was only HK$105.46 billion, compared with the high of HK$454.475 billion set in February last year, a drop of nearly 80%, evaporating about HK$350 billion.

01 "Bottom reading" is not successful, expansion is reversed

In 2020, the epidemic struck, the whole people fought the epidemic at home, and for the offline catering industry, the epidemic brought a near-devastating impact. Haidilao decided that in the current situation, it did the opposite of other catering brands and accelerated the pace of expansion, opening 544 new stores in the whole year and increasing to 1298 stores worldwide.

In fact, Haidilao's aggressive expansion strategy does have its own requirements, and the increase in the opening of stores by the epidemic is a bet on the impact of the epidemic. First, you can sign a preferential agreement with the property owner to achieve low-cost expansion through rent reduction and reduction, non-increasing rent within a few years, etc.;

The most direct embodiment is that in the revenue data of single stores, Haidilao's decline in the first half of 2021 was the most obvious in third-tier cities and below, with a year-on-year decline of 4.8%, while this data was -3.3% and -0.01% in first- and second-tier cities, respectively.

At the same time, yang Lijuan, deputy CEO of the company, was fully responsible for the "woodpecker plan", supervised the poorly operated stores, and took decisive measures to shrink the group's expansion plan, so far, Haidilao's "expansion" strategy was dudded.

02 The county town folded, and the loss intensified

According to Jihai brand monitoring data, in Haidilao's continuous 9-month anti-market expansion, the store opening speed in fourth- and fifth-tier cities is the fastest, with nearly 80 new stores opened in fourth-tier cities, the number of stores has doubled, and the number of stores has increased by 12 times in fifth-tier cities.

The county economy is known as the second growth engine of commerce, and in the commercial environment with high coverage density and high competitive pressure in first-tier and new first-tier cities, more and more brands will aim at the county.

From a theoretical point of view, the sinking market represented by the third- and fourth-tier counties is indeed in line with the new supplementary forces of the current lack of growth of enterprises in large cities, such as new tea drinks, Naixue, community group buying class Meituan Preferred, more vegetables, etc., have been stationed in the county, in an attempt to use genetic reproduction to harvest the sinking market traffic.

But in fact, most enterprises generally have cognitive errors in the county economy, on the one hand, with the urbanization transformation, rural people gradually flow to the county, the flow of third- and fourth-line people has been effectively "supplemented", but for eating out, high consumption bureau (relatively), small town users with mediocre income may not necessarily pay;

On the other hand, for eating habits such as hot pot, young user groups have a higher degree of acceptance, and they are more recognized for brands, but there are few natural young groups in the county, and in counties where the flow of people is not large, it is normal to operate dismally.

In addition, the opening of offline stores relies heavily on in-store operations, and a qualified store manager will reduce many unnecessary losses for enterprises, and the talent shortage brought about by Haidilao's rapid expansion in the short term is bound to cause enterprise management problems.

Property rent and related expenses reached RMB198 million, an increase of 125.2% year-on-year. In addition, business expansion resulted in its gearing ratio of 75.4% in the first half of 2021, about doubling the year-on-year growth from the first half of 2020.

Market capacity compression, lack of management personnel, the amount of loss increased, in the past year, Haidilao undoubtedly fell into the "trio" of throwing money and smashing the air.

Retailer theory believes that insufficient control of the residual market research and judgment, the localization adaptation of the county town and the expansion rhythm directly leads to the folding of the county town of Haidilao.

03 Expectations are too high, and seedlings are encouraged

According to the "2021 China Catering Market Analysis and 2022 Market Prospect Forecast" released by the China Cuisine Association, in 2021, the national catering revenue was 4,689.5 billion yuan, an increase of 18.6% from negative to positive compared with the previous year, an average decline of 0.5% in two years, and has not yet recovered to the level of 2019 before the epidemic.

It is undeniable that hot pot has become a heavy eating hobby of contemporary young people, the position of a brother in Haidilao, there are still many enterprises "worried", in the post-epidemic era, the rising star of the hot pot brand is still financing.

In June 2021, Banu hot pot completed a new round of financing of 500 million yuan; in August, Chongqing hot pot brand Zhou Shidi completed a financing of 100 million yuan; in September, the Cantonese hot pot chain "Laowang" submitted a listing application to the main board of the Hong Kong Stock Exchange. At the same time, the investment heat of hot pot has also been transmitted to the supply chain of hot pot ingredients, and the three enterprises of pot circle food exchange, lazy bear hot pot and Chat bear have completed a total of 4 financings from February to August last year.

Under the situation of increasing competition, the catering industry is more and more aware of the necessity of new model innovation and development, and the current chain brand catering with certain development potential and high-quality chain brands has successively obtained capital support, hoping to recreate a hundred billion market value Haidilao.

At the same time, Haidilao began to extend its catering business to the fields of formal meals, casual catering, hot pot takeaway, etc., and learned from the experience of external restaurant operations through acquisitions, but in the short term, no effect was seen.

Under the competitive situation of consumption saturation, all players have begun to open source and reduce expenditure, and the same hot pot head enterprises have also closed loss-making stores in 2021, implementing the strategy of takeaway, boiling and boiling, tea and so on as new growth points.

Store expansion, engineering, selection, pricing, etc., are delegated to the managers of each region, and the community manager is responsible for the inspection and assessment of stores in each region. Regional stores can adjust the combination of dishes according to the preferences of local consumers to achieve a more localized dining experience.

On the other hand, the boundaries of Haidilao are excessively elevated, the hot pot market is only a single category in the field of diet, and in the first-tier cities, it may be able to serve as a representative of the new fashion food economy, and the same set of paradigms placed in different urban areas will lose its commercial reference standard.

In order to keep the "top brand" sign in the hot pot industry, Haidilao also needs a harder story backing.