Oral / Liu Run Lead Writer / Jingxian
This is the 1477th original article of Liu Run's public account
On evolutionary island, I often receive such questions from my classmates.
I want to open the store in my hand into a chain, what should I do?
Today we will talk about the logic of chain stores. Let's start with breakfast.
(This article is from the daily sharing of the Evolution Island community)
—1—
Opened a breakfast chain
Which one to choose?
Once, I left a small assignment on Evolution Island.
If you open a breakfast chain, choose the same among steamed buns, wontons, noodles, and rice porridge.
What do you choose? Why?
72% of the students chose the correct answer, buns.
(Image from the Evolution Island Community)
So, why?
Nearly half of the students said that because the packaging is fast.
From the perspective of user needs, it is indeed very convenient to buy and go. Many people buy breakfast just to figure this out.
In addition to that, I think the chain breakfast shop needs to consider 4 points.
Consistency, routineness, take-out, standardization.
(1) Consistency
The first challenge in opening a chain restaurant is that there are large geographical differences.
Cantonese people love to drink morning tea, northwestern people like to come to a bowl of hot chopped soup, the Yangtze River Delta may be a guest soup bun, raw fried steamed buns, North China is pancake fruit with soy milk.
Each place has its own unique dining culture.
You have to find food that is accepted in both the east, the west, the south, and the north.
For example, buns.
In fact, in the convenience store, the best selling breakfast is also, buns.
Interjecting, convenience stores have actually quietly seized the breakfast choices of some office workers. According to Mintel's report, 30% of people buy breakfast at convenience stores.
A bun that conforms to consistency naturally has an audience base.
(2) Everydayness
Buy it every day, and it is not easy to get tired.
Incorporate your own products into your customers' daily dining habits.
For example, buns, such staple foods, are in line with daily nature.
Without much publicity, the repurchase rate will be raised by itself.
(3) Externality
Mintel's Good Morning China report shows that
75% of Breakfast Consumers in China choose to "buy something casually along the way", 15% are willing to get up earlier to eat at home, and 10% choose other ways.
Bought to take away and basically breakfast came standard.
Buns, just right.
So, we see bun shops, often with only one counter and no dine-in tables and chairs.
The store configuration is simple, and the number of people required is also small, one to two is good.
The bun that meets the take-out nature saves the labor cost of the store.
(4) Standardization
Once we want to standardize, we must sacrifice the diversity of varieties and only do so many simple things. For example, KFC's classic original chicken, McDonald's Big Mac, and Haidilao's fixed pot bottom flavor.
Therefore, there are not many flavors, and making simple buns is very suitable for standardized management.
Through the city's central kitchen, centralized procurement, production, and re-distribution.
Like Babi Mantou, it is the use of the "central factory + store network distribution" model, to achieve 80% of the factory supply, 20% of the on-site production of the business model.
The bun that conforms to the standardization reduces the dependence on people and saves management costs.
Chain catering 4 elements, consistency, routine, takeaway and standardization.
What they solve is actually a problem, reducing internal transaction costs. How to understand?
—2—
Transaction costs
The friction of the business world
In the process of trading, the cost incurred is the transaction cost.
For example, Xiao Zhang's fruit shop needs to sell a batch of strawberries, choose to supply online or go to the distribution center to choose?
Either way, you have to compare it again and again. The time spent is the transaction cost.
It was hard to settle, place an order, ship. Logistics costs are also transaction costs.
It arrived at the store just in time for the peak season when strawberries were on the market, and everyone else was selling them. In order to make customers buy more from home, they have to think of some special features. For example, wash and plate strawberries and sell them, for example, as strawberry shakes. The increased labor cost is also a transaction cost.
Stigler said,
A world without transaction costs is as strange as a physical world without friction.
It is the friction of commerce, everywhere, which can be both resistance and force.
Behind any decision we make, we are in a game with transaction costs.
How to game?
Balance the two points of force, market transaction costs and internal transaction costs.
You must have noticed that these phenomena:
Fruit specialty stores will not sell seafood, but vegetable shops will sell eggs.
Some e-commerce companies build their own logistics, and some do not.
Some multinational companies want to outsource their business.
Because there is a difference between market transaction costs and internal transaction costs.
Externally, the market transaction costs are:
The costs incurred by coordinating the contradictions between supply and demand through market transactions.
For example, fashion rental company Aircloset.
Users pay 6,800 yen to become members and register their favorite type and size of clothes on the platform.
Then, the professional designer will select three pieces of clothing according to the user's conditions and send them to try on.
If you are satisfied, you can buy it, if you are not satisfied, you can return it without shipping and dry cleaning charges.
In this process, mailing, returning, dry cleaning.
When these are in contact with the outside world, the fee that must be paid is the cost of market transactions.
----
On the other hand, internal transaction costs are also called administrative fees. It is:
The costs incurred by coordinating the contradictions between the supply and demand sides through the internal management of the enterprise.
For example, Company B is a large multinational corporation covering large appliances, automobiles, chemicals and other industries, with a total of more than 300,000 employees in 10 countries.
When you coordinate various industries and manage employees in various places, you will inevitably incur expenses.
This fee is the internal transaction cost.
The difference between market transaction costs and internal transaction costs determines the size of the enterprise.
If the internal transaction cost can be reduced under the condition that the market transaction cost is unchanged, then the efficiency of the internal resources of the organization will be improved, and the scale of the enterprise can become larger.
That is, when the market transaction cost > the internal transaction cost, the size of the enterprise expands.
The same is true for opening a chain store.
Find scalable categories to reduce management costs.
—3—
Insist on being small and beautiful
Keep the most efficient parts
However, when the enterprise expands, the cost of management is bound to rise.
What to do?
We must find ourselves to do more efficient things than the market and build core competitiveness.
Throw yourself into the market as soon as possible to do the general.
The lower the transaction cost, the more it should be externalized; the lower the management cost, the more it should be internalized.
I dare to guess that the future form of the enterprise may become smaller and smaller.
Small and strong, retain your most efficient core competencies.
For example, Microsoft's outsourcing.
Microsoft China's customer service is actually not Microsoft's own work. Instead, it was outsourced to a company called MicroPort, in Shanghai's Zizhu Park, which Tang Jun founded at that time.
Why?
Because Microsoft does it itself, the cost is too high. At that time, in 2000, Microsoft's cost per person per minute was very high.
If you outsource it, you only need to pay Micro-Invasive $0.5 a minute, which is half the price.
At this time, Microsoft's customer service business is equivalent to being externalized, handing over the part with high internal transaction costs to the market.
From individual stores to multinational companies.
The key is to improve efficiency and build core competitiveness.
Some time ago, a classmate on Evolution Island asked a question,
I have just transitioned from early childhood education to the home economics industry, how should I make it bigger?
How to make their own core competitiveness?
Don't think about getting bigger, think about getting stronger.
How to be strong?
You have to find your own outstanding advantage over others.
At the beginning of the housekeeping company, I had to be at ease, steadfast and down-to-earth to recruit 20 aunts, and do a good job in housekeeping first.
It's like I open a hot pot restaurant, but the queue at the door is particularly long. When others mention the hot pot restaurant, they will think of my house for the first time.
This is the first step, to do your job well, to be stronger, and to make a special feature.
It may be that the aunt is particularly good at cooking and is good at nutritional collocation; or the fee is low, the cost performance is particularly high; or the details are in place; or the service attitude is first-class, and so on.
The purpose is to make a gold signboard and generate a large number of repurchases. Let others think of you as soon as they mention housekeeping.
You can make money with this company alone.
The second step, how to make it bigger?
Cost savings. The expansion of the confrontational organization may bring chaos.
How do I set the indicator? How is personnel mobility managed? How to ensure the quality of personnel recruitment? To answer this question, you have to think about management methods.
Management skills must be your strong point.
If you want to expand the scale, you may have to consider how to get a steady stream of excellent employees.
Therefore, training ability has become your strength.
From downstream service stores to upstream supply chains.
This is the third step. Every step of the leap requires you to win the winning points.
To be big, first to be strong.
Final words
Today we talked about the logic of chain stores.
In fact, there are many driving factors for the growth of enterprises, such as competitive incentives, technological advantages, and so on.
We mainly discussed the internal transaction costs.
In the end to open a chain store, or insist on small and beautiful?
Chain stores require you to reduce management costs as much as possible.
Sticking to being small and beautiful requires digging deep into your core competencies.
The essence is to maximize the use of resources and give them greater value.
To quote a quote from Future Consumption Patterns,
In the future, our goal is not relative value, but absolute value. It's not about being cheaper than other companies or buying something and giving something away, it's about creating unique value even if it's small.
May you find yourself unique in value.