Wen | Xie Yunzi
Editor| Pan Xinyi
Source |36 Kr Finance (ID:krfinance)
Cover source | Visual China
Winter at a hot pot restaurant
"In line with the epidemic, suspend business."
Shanghai's wave of epidemic is menacing, on Douyin, Shanghai hot pot shop owner Xiaoniu Brother's "shop business daily" has just been updated to the third episode and received instructions from the epidemic prevention office to "temporarily close the store".
In order to achieve the goal of achieving a turnover of 8 million yuan for his hot pot restaurant of more than 100 square meters, Brother Xiaoniu has been diligently updating his Douyin number in an attempt to "build a net red hot pot restaurant". Although there are only 75 fans and the amount of reading is pitifully small, this bold northeasterner promises: fans arrive at the store, and milk tea desserts are enough.
Shanghai, which has a very rich catering format, does not lack hot pot restaurants, the platform traffic is not tilted because of his label of "divorced catering entrepreneur after 80", and the epidemic will not show mercy because of the loss of an ordinary hot pot shop owner.
Brother Calf looked at the empty hot pot restaurant and felt a little lost.
In 2019, when he was under the plate of this hot pot restaurant, he watched the entire industry fall into a frenzy: the "net red shop" with its own traffic endured, the stars of all walks of life gathered on the hot pot track, and more and more stores in the shopping mall. But he overlooked that when the whole track became more crowded, the competition in store operations intensified, and the life cycle of brands was shorter, all of which had already appeared before the epidemic arrived.
At the end of 2015, Bao Bell participated in the investment of Spicy Zhuang opened its first store in Guijie Street, Beijing, and Zhang Siyang, director of operations in North China, became the head of the store. In Zhang Siyang's recollection, since the end of 2017, the overall growth path of Beijing's hot pot market has narrowed.
"The rate of joining brands is slowing down, and the number of newly emerging brands is also decreasing." Zhang Siyang revealed that after the epidemic in 2019, the decline of the entire market is more obvious.
He roughly estimated that at the height of the epidemic, the turnover of The Beijing store of Lizhuang fell by 40%-50% year-on-year, "which is a common phenomenon in Guijie Street.". Although the restaurant industry is picking up today, turnover is also down 20% from before the epidemic.
In order to implement the needs of epidemic prevention and control, the reduction of in-store consumption in the past two years is undoubtedly the "needle" that stings many hot pot stores, and it is also the most important factor in the injury of the catering industry.
Brother Xiaoniu bluntly told 36Kr that even if the revenue is zero, the store rent must be paid, the labor fee must be paid, and the electricity cannot be stopped in order to freeze the food. "The notice came suddenly, and without knowing how many days it would be closed, some meat dishes that could not be put would be wasted."
Zhu Haifeng, vice president of Huofengxiang, gave data to 36Kr that if the monthly revenue of a store reaches 500,000 yuan, then the turnover at the bottom of the pot should account for 30%. From the perspective of operating costs, the cost of the bottom of the pot accounts for about 10%, the cost of fresh raw materials is 25-30%, the cost of rent is about 10%, the labor cost is about 20%, and the rest is the cost of water, electricity and coal and the corresponding depreciation and loss.
"The era of capital exuberance has passed, and the era of refinement has arrived." In Zhu Haifeng's view, the current hot pot market, pot bottom, ingredients, operation, marketing, each sector needs to do the best, and one side of the omission will lead to poor management.
While the consumption in stores has decreased, the cost of raw material procurement and cold chain logistics has increased significantly during the epidemic prevention and control period. In the past two years, the price of fresh products such as vegetables has also increased by 30%. The upstream transmits the cost pressure layer by layer, but the store does not dare to increase the price easily - in the catering industry, it is taboo to raise prices at will.
As a result, in the case of a general downturn in the catering business, some stores with less say have to digest the price increases themselves.
"After the epidemic, large chain brands with stable supply chains have a higher chance of survival." Because Spicy Zhuang has a certain scale of stores and supply chain advantages, the cost of the bottom material price increase is not obvious, and the increase in cost and price is only within 5%, which has an impact on consumers is almost zero. If the hot pot brand wants to form a supply chain scale, it needs at least 3-5 stores to reduce costs.
In the north, Shanghai, Guangzhou, and Shenzhen, some chain brands often sell for 70 yuan or 100 yuan at the bottom of the pot, which can still win some respite for the rotation of funds, but in Chongqing, the capital of the fiercely competitive hot pot, the bottom of the pot is basically around 30 yuan or even free. Under the epidemic, the low price of the pot bottom has also made more stores lose their elasticity.
Yi Cibin, the stir-frying master of "Yuwei Xiang Hot Pot", introduced to 36Kr that not counting labor costs, the net cost of the current Chongqing hot pot, the soup base is about 30 yuan.
From preparing ingredients to stir-frying a pot of authentic Chongqing old hot pot base, even experienced chefs take 4-5 hours. Yi Cibin estimates that in the Chongqing market alone, at least 85% of hot pot stores choose to cooperate with upstream bottomers, which improves the stability of the supply chain and reduces the purchase cost of hot pot bottoms.
The chain of "cost reduction and efficiency increase" brought about by capitalization is clear and efficient, and the arrival of the epidemic has broken this rhythm. In Yi Cibin's observation, since 2018, the cost of the entire hot pot base has increased by 25%-30%.
In order to cope with such a situation, "it can only be said that the recipe is adjusted accordingly while the taste is guaranteed." For example, the amount of white butter is reduced by a little, but the amount of butter is difficult to reduce the amount of butter for a pound of base material 8 or two. ”
However, how long this trend will last, it is difficult for Yi Cibin and his partner Li Shudong to say. In addition to the increase in the price of the base material, the price of ingredients is also gradually rising. And by 2022, raw material prices are still "quietly" going up.
Prospective Industry Research Institute Mapping
Li Shudong calculated the account, "The cost of ingredients is almost 45%, but our turnover rate is OK, and although the rise in vegetables is terrible, it has little impact on our profits." ”
But when the protagonist of the story switches to a hot pot shop owner who passively accepts the "0 turnover rate" from time to time like Brother Xiaoniu, it is inevitable to bear pressure.
The situation of accelerated centralization has changed the expansion speed of stores, the upstream industrial model, and even the underlying logic of catering, and the market has also worried about capital overheating, until the epidemic pressed the pause button, and the original latent crisis was exposed.
After the capital regurgitation
Ordinary practitioners feel powerless in the face of the epidemic, and the bubble of capital has also been shattered.
There is no doubt that Sichuan-Chongqing hot pot is an important factor in promoting the industrialization and capitalization of the industry. Unlike the rich flavors it is now, hot pot was once deeply bundled with "spicy".
Some studies believe that as a "benign masochistic mechanism", spicy creates the secretion of endophenolphthalein, gives the central nervous system the illusion, paralyzes the urbanization of time and space axis, those painful involutions, opposites, and losses.
Tang Lei, the founder of Chuanwazi, has been in the hot pot industry for more than ten years, and he has long judged that under the pressure of society, addiction to spicy will be an obvious trend. In 2008, Tang Lei opened his first string incense shop in Meishan, Sichuan, but his dream was not so.
With the help of unique taste, Tang Lei's skewer franchise stores have expanded to thousands in just a few years. Then, he started the pre-packaging business of hot pot base, firmly controlling the supply demand of thousands of franchise stores until customs clearance became the supplier of "Big Boss" Haidilao.
According to Tang Lei, in terms of some sauces and basic raw materials such as peppercorns, Haidilao is the biggest customer of Chuanwazi. An industry insider once told 36Kr, "Haidilao's pepper use is very large, and the requirements are high, and many restaurants do not use such 'high standard' products." "Chuanwazi, who has widely picked peppers in the southwest region, has such an advantage.
Cattle and sheep are slaughtered in the northwest, raw materials are grown everywhere, the base is fried by Sichuan-Chongqing craftsmen, and finally integrated into the tables of towns and cities to be consumed – this is an ideal map of the industrialization of hot pot.
However, compared with the fresh track with more SKUs, longer production chains and cold chain logistics needs, the business of base materials and dipping sauces is less difficult and easier to standardize, so it is the first to be embraced by capital.
After 21 years of stir-frying hot pot base in Chongqing, Yi Cibin gave the explanation that the recipe for stir-frying is basically the same, and the so-called "secret recipe" is only the selection of different varieties of the same material, a slight adjustment of the proportion and the most critical control of the heat.
As the base of the "soul" of the hot pot determines whether the bottom of the pot is enough to taste, but the "soul" has long been an assembly line product that can be standardized and sold, and the related enterprises of the "hot pot base" have already completed the road to listing.
According to public information, as of February 2021, there are a total of 2,013 hot pot base-related enterprises in the mainland. From the perspective of representative enterprises, Yihai International, Tianwei Food, Hongjiujiu, Chuanwazi and other market share is relatively high. With the entry of Haitian Flavor Industry, a situation of "Three Kingdoms Killing" has been formed with Yihai International and Tianwei Food.
36Kr collates drawings based on publicly available information
Born out of Haidilao, the media often describes the "compound seasoning leader" between Yihai International and Haidilao as a "father-son relationship". The actual controller is also a Daniel Zhang, Yihai International obtained a permanent royalty-free exclusive use of the Haidilao brand in 2007, and in 2013, Yihai International spun off from Haidilao and listed on Haidilao three years later.
In 2020, Yihai International's revenue was 5.36 billion yuan, an increase of 25.2% year-on-year, and net profit was 983 million yuan, an increase of 23.2% year-on-year. On January 26, 2021, Yihai International's stock price reached an all-time high, quoting HK$148.60 per share, with a total market capitalization of HK$155.584 billion.
In the view of He Xiaoqing, president of Kearney Greater China, the basis for the development of the hot pot supply chain lies in the "central kitchen fever" that emerged around 2010.
According to Kearney statistics, in the past three years, there have been more than 60 investment cases in the Chinese market for central kitchens, and the development of central kitchens has also led to the establishment of cold chain logistics.
Since 2015, the hot pot supply chain has gradually formed two categories of "hot pot base" and "fresh products", and pepper, butter, tripe and other products have gradually formed industry standards and industrial scale. And with the expansion of the downstream stores of hot pot, the middle and upstream tracks have also been further concentrated.
But also in this year, capital began a vigorous "god-making movement", Xiaolongkan, Dalongyi and other chain brands exploded, stars also began to add hot pot brands, Huofengxiang, Xianhezhuang, spicy dou spicy are the products of this period.
In September 2018, Haidilao was listed on the Hong Kong stock market, and its stock price repeatedly reached a new high, which once led to the listing trend of domestic catering enterprises. The head brands represented by Haidilao and Banu have also entered the stage of the fastest growth of stores.
However, the good times are not long, and the rapid growth of stores has also laid hidden dangers for Haidilao. In 2019, the overturning rate of Haidilao declined, from 5 times/day in 2018 to 4.8 times/day, and in 2020, it fell to the lowest overturn rate of 3.5 times/day.
The industry generally believes that the decline in Haidilao's turnover rate is closely related to the number of stores that have expanded year after year. In February 2021, Haidilao's stock price rose to a record high of HK$85.8 per share, but under the dual impact of the epidemic and the turnover rate, Haidilao began to be eaten back by capital, and its market value evaporated by nearly HK$300 billion. Therefore, in the second half of 2021, Haidilao opened a wave of store closures called "Woodpecker Strategy", and then its founder Daniel Zhang also resigned as CEO.
On the evening of March 23, Haidilao released its 2021 performance announcement, with a loss of up to 4.16 billion yuan for the whole year. That's almost the sum of Haidilao's profits in the three years since it went public. For the loss, Haidilao showed that it is more affected by the impact of the epidemic and "store closures", according to reports, in 2021, Haidilao will close more than 300 stores.
Haidilao's 2017-2021 financial report profits; 36Kr collation and mapping
Almost at the same time, the cheaper sipping and feeding, which is also a Hong Kong-listed company, also fell into a huge loss. According to public information, the expected revenue of sipping and feeding in 2021 is about 13% year-on-year to reach 6.15 billion yuan, but its net loss is expected to reach 275 million yuan to 295 million yuan.
In the capital market, with the collapse of Haidilao's stock price, Yihai International has also been affected. Daiwa Securities recently released a report saying that weak demand and intensified competition in Yihai International led to disappointing performance in the second half of 2021. Yihai International lowered its revenue forecast for 2022/23 by 14%-20% and net profit forecast by 20%-24%, the gross profit margin fell by 2-2.4 percentage points, the revenue growth from related parties fell by 19%-25%, and the target price was cut from HK$45.2 to HK$22.7, and the gross profit margin was still under pressure.
The steering of the giant ship is not easy, but the small boat is very flexible to operate. Tang Lei has long sensed the cooling of water temperature, and "the growth rate of enterprises has not had double-digit extensive growth like in previous years."
Since 2015, the seasoning brand Chuanwazi has learned the "METRO model", mainly serving restaurant chain enterprises such as Hefu Lao noodles and Ziyan Baiwei Chicken. After New Hope Grassroots entered the market, under the empowerment of multiple advantages such as capital and resources, Chuanwazi began to enter the field of hot sauce and pre-made dishes and other markets.
To resist the risk, some people are busy putting eggs in different baskets, and some people try to take advantage of the rent falling and the market rising.
With this mentality, in May 2020, Yi Cibin joined the "Yuwei Xiang Hot Pot" as a technology shareholder. According to Yi Cibin, the brand has always insisted on hand-stir-frying ingredients, and in less than a year, Xiang Hotpot has opened two branches on the same street, and has also established its own "base material speculation workshop" between stores.
"At 7 o'clock in the morning, the preparation of ingredients began, about 150 pounds of one-time stir-fry, and a store consumes less than 80-100 pounds of base materials per day on average."
Partner Li Shudong told 36Kr that there is not much investment in decoration, and the 600,000-700,000 yuan invested in the early stage can be returned in more than 4 months. But other surrounding stores are not so lucky, in the past two years, in Chongqing's "Daping Zheng Street", nearly 60% of the stores in the past two years "changed owners", the left and right of the main store have changed hands.
The situation is more complicated in first-tier cities with higher rents. 36Kr learned that operating a hot pot store in Beijing, the upfront investment is about 2.5 million yuan, calculated at a profit level of 100,000-150,000 per month, and the return cycle is about 1.5-2 years.
Such a return cycle is particularly long and difficult in the face of the epidemic.
The hardest cake to cut
In 2020, the worst of the epidemic, capital still did not give up hot pot - this trillion-scale catering track, only this time, they focused on the ingredients themselves.
"From the perspective of single-table consumption, if 4 people consume 500 yuan, of which the bottom of the pot may account for 70 pieces, and most of the rest is the consumption of ingredients."
In huofengxiang Zhu Haifeng's view, the market size of hot pot ingredients is much higher than that of the base, there are more SKUs of hot pot ingredients, and mature suppliers do not only serve hot pot companies, although they are not declared, but almost all large-scale enterprises are aiming to become "China's version of Sysco".
The essence of the hot pot industry chain is still biased towards the agricultural and sideline products industry, which is extremely decentralized, the chain is lengthy, and the degree of standardization is low. Business logic makes sense, the market concentration is limited, and the upstream can release more pressure - in summary, under the repeated toss of the epidemic, there seems to be no better investment target than this.
Fresh supermarkets represented by pot circle food and focusing on the consumption scene of family hot pot have been warmly welcomed by capital. In the 2020 financial report, Yasui Food, a listed company of quick-frozen dish products, also mentioned that thanks to the increase in new retail customers such as pot circles, the operating income of the special channel increased by 34.78% year-on-year.
In China, the supply of hot pot fresh food is still inseparable from chain brands such as Haidilao and Sipping, such as After the listing of Haidilao, Anjing Food has received more attention as a "Haidilao concept stock". On February 18, 2021, Anjing Foods' stock price reached its highest point, with a market value of more than 60 billion yuan, a 24-fold increase compared with the initial stage of listing.
In terms of performance, it has also continued to rise with the expansion of Haidilao stores and the development of the hot pot industry. In the first three quarters of 2021, Anjing Foods' dish products grew rapidly, up 126.15% year-on-year, with revenue of about 920 million yuan.
In fact, the current quick-frozen hot pot ingredients market is still in the capital competition and brand formation period, and there are more small and medium-sized enterprises and most of them are concentrated in Fujian and Shandong. Yasui's financial report data shows that in 2020, the CR4 market share of the entire quick-frozen hot pot ingredients industry is less than 20%, while Yasui achieved a market share of 9.4% as early as 2017.
In addition to Anjing Food, the main enterprises in the fresh food track upstream of the hot pot are Longda Meat, New Hope Liuhe, Horqin Beef Industry, Isai Beef, Heronghui, Sanquan Food, Haixin Food, Guolian Aquatic Products, Heshenghe, Delicious Lai, etc., Qianwei Central Kitchen, etc. Among them, the most traditional animal husbandry is also constantly experimenting with simple processing services such as pre-packaging.
Haidilao also has its own fresh supply system, and the first major supplier, Shuhai Group, is also a wholly-owned subsidiary. Different from Yihai International, which focuses on hot pot base and dipping sauce, Shuhai focuses more on cold chain logistics and fresh semi-finished products, providing customized products and services for Haidilao and other catering enterprises.
However, "success is also Xiao He, defeat is also Xiao He", with the sound volume of the entire hot pot track becoming smaller, more upstream suppliers began to contact other channels, and gradually turned to the C-end. In November 2021, after Haidilao announced the closure of 300 stores, its largest pork product supplier, Longda Food, said it had "done back-up channel expansion".
In the view of Song Liu, senior project manager of Roland Berger, in the long run, the fresh business of the hot pot track has more room for transformation than the base and dipping materials, and the final say in the fresh business is still in the hands of animal husbandry giants such as New Hope Liuhe, because it has more source resources and also seizes the opportunities of the whole industry chain.
Compared with the lively capitalization of hot pot base, it is more difficult and more challenging for capital to cut the cake of the fresh supply chain from the hands of animal husbandry enterprises.
In the days of home, the concept of "hot pot at home" is on fire, and the fresh e-commerce hema fresh hot pot delivery has become hot. While the iron was hot, in December 2021, Hema opened the first independent hot pot store "Hema Fresh Hot Pot" in its supermarket.
According to Zhang Qian, purchasing director of Hema 3R Commodity Center, the business is based on the supply chain of Hema Fresh Supermarket, focusing on the concept of "self-help" and "fresh", and the bottom of the pot used is boiled in the store on the same day. But Zhang Qian also admitted that in the research and development of all hot pot categories, hema is the least afraid to "touch" is the Chongqing spicy pot.
Through cooperation with local enterprises in Chongqing, the original taste of the spicy pot can still be restored to the greatest extent. Zhang Qian told 36Kr, "For ingredients, such as pig brain and duck blood, it is really difficult to create a mature supply chain of these 'scraps', and the entire market is relatively scattered, in order to ensure the taste, these ingredients must also be airlifted." ”
In the view of Liu Huaiwei, president of New Hope Liuhe Food Industry, there is "scarcity" in fresh products such as yellow throat and pig brain.
"First of all, yellow throat and hairy belly, the yield of a pig is only a few tenths of a kilogram, and the output is very small. Secondly, the processing difficulty is also very large, like the yellow monkey, must be quickly stripped of oil skin after slaughter, which is very high in the supply chain requirements, without the resources of breeding and slaughterhouses, the general fresh enterprises can not do it. ”
Liu Huaiwei told 36Kr that in the hot pot circuit, New Hope Liuhe mainly supplies more than 80 brands across the country, including Haidilao, Tan Duck Blood and Xiaolongkan, and is also the upstream supplier of Shuhai and Yihai. Its products include fresh ingredients such as yak beef, yellow throat, hairy belly, duck blood, and semi-finished products such as brine sausages and small crispy meat produced by Meiyou Food.
It is worth mentioning that the small crispy meat is the main product developed by Beautiful Food for Sichuan-Chongqing hot pot. In the whole year of 2021, the sales of Beautiful Food's small crispy meat reached 980 million yuan, of which 60-70% was used in Sichuan-Chongqing hot pot stores.
According to Liu Huaiwei, Good Food began to target the hot pot track in 2019, "at that time, it seemed that everyone was opening hot pot restaurants." As a local enterprise in Chengdu, the ham sausage produced by Meimei Food itself has cooperated with many hot pot stores.
For the current fresh enterprises, Liu Huaiwei added, "What else can the hot pot do?" What other ingredients can be standardized? "It has become a problem that all enterprises continue to explore and think about."
Dealing with front-line consumers every day, Li Shudong's worries about the hot pot are more "grounded" - will the recurrence of the epidemic in Shanghai also occur in Chongqing? "We are stepping up to do the private domain traffic of the store, and we are also preparing the hot pot takeaway business, hoping to better prevent the aggravation of the epidemic in the future."
His partner Yi Cibin can't think too much, like the other 800,000 Chongqing stir-fry chefs, as long as the hot pot shop is still open, his time will be occupied by work - get up early to find the freshest ingredients in the wet market, and spend another four or five hours to cook and chop the peppers to make rice dumplings, and fry a pot of authentic Chongqing old hot pot base.
At the age of 16, he entered the hot pot industry, began to learn stir-frying at the age of 19, and Yi Cibin, 50, went from a nameless helper to a partner, but his life still revolved around the stir-fry workshop. Everything has changed, and it seems as if nothing has changed.
The pursuit of profits of capital has pushed the hot pot to industrialization, the chain is more and more fine, and countless screws are embedded in it, playing a role in continuously increasing the value of capital.
Yi Cibin's hot pot restaurant has achieved a positive cycle, and the screws have left the bottom of the industry, but can those others who are seduced by the "god-making movement" and attracted by the residual temperature of capital fanaticism successfully escape from the "curse" of the uncertain return cycle?
Before the pandemic, it was a matter of probability; now, it's more of a metaphysics.
(Note: Brother Calf in this article is a pseudonym)
This article is from the WeChat public account "36Kr" (ID: wow36kr), author: Xie Yunzi Pan Xinyi, 36Kr is published with permission.
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