What does it mean for Haidilao to open up to join?
Author | Editorial Department of Pinzhao
01
The wind has changed, and the chain of contempt is reversed?
In the world of catering, which has a strong atmosphere of rivers and lakes, various forces are clearly divided, just like the sects in martial arts novels, each with its own unique skills, but they examine each other, forming a subtle chain of contempt.
In the rivers and lakes, whether it is the martial arts of swords and swords, or the table full of fireworks, it seems that it is difficult to avoid vulgarity, and you want to talk about it.
Direct sellers question the franchise model and regard it as a way to make money in the name of cooperation; time-honored brands despise new Internet celebrities because of their unstable foundation and vain reputation; dine-in diners are unable to tolerate takeout, believing that the latter sacrifices flavor and compromises;
Brands with high unit price disdain to compete with low unit price, believing that they only satisfy the appetite and are difficult to achieve elegance, while those who focus on craftsmanship are disgusted with excessive marketing, worrying that it emphasizes form over connotation and deviates from the essence of cooking.
In this intricate network of contempt, the most striking and controversial is the dispute between direct sales and franchises, which are like two camps, although they are in the same catering industry, but they are often tense and hold one end.
Once, at a restaurant dinner in a first-tier city, the brand head with hundreds of franchised stores was not as tall as the founder in charge of ten directly-operated restaurants. Perhaps this scene is the promotion of the direct sales model and the potential depreciation of the franchise model by the catering rivers and lakes at that time.
However, in the past two years, the wind direction of the industry has changed abruptly. In the past, the benchmark brands that adhered to direct sales have turned to join.
Around 2023, starting from the tea track, first Heytea, Nai Xueyi, and then Hefu Lao Noodles and Le Caesar Pizza changed their flagheads.
In February, Jiumaojiu Group announced the opening of the franchise business and officially joined the franchise army; in March, Haidilao listed the QR code on the official website to apply for franchisees, and openly recruited franchisees.
Haidilao franchise requirements丨Source: Haidilao official website
What does it mean for Haidilao to open up to joining? This industry big brother, who has insisted on direct operation for 30 years, has solemnly stated on many occasions: "We do not accept any form of application for joining, cooperation, franchising, etc., and consumers and investors are invited to be aware of it."
Now that the flag has changed, there is a lot of speculation.
Is it a helpless move for the direct brand to be under pressure? Or is the direct sales just the initial stage of development of the brand, and the end of the brand is only to join?
Are these statements correct, perhaps we can get the answer from some of the changes that have taken place in China's catering franchise industry in recent years?
02
The chain rate has increased significantly, and the franchise model has contributed a lot
According to the "China Catering Development Report 2023" of Red Meal.com, the chaining rate of China's catering market has increased from 12% in 2018 to 15% in 2020, to 19% in 2022, and then to 21% last year, and franchise brands have played a key role in this process. Among the top 100 restaurant chain brands in China, the franchise camp occupies an overwhelming seat, which is enough to prove the core position of the franchise model in promoting the large-scale development of the industry.
Among them, the tea beverage track is the most obvious, and the tea beverage currently accounts for the first place in each category with a chain rate of 49%, and many brands are rapidly expanding the scale of sprint to 10,000 stores with the help of the franchise model.
It is expected that Chabaidao, which will be listed on the Hong Kong stock market on April 23, has a total of more than 7,800 stores by the end of 2023, and nearly 1,500 new stores were opened that year, more than 99% of which were franchised stores. The number of stores has exceeded 9,000, and more than 2,300 new stores have been added within a year, also achieving a high franchise ratio of 99%.
Changes in the number of Gu Ming stores丨Source: Gu Ming prospectus
It is worth noting that the current direct benchmark brand has turned to joining, which has also injected more vitality into the industry.
Heytea opened for franchise at the end of 2022, and in just one year, the number of stores has surged from more than 800 to more than 3,200, a year-on-year increase of 280%, and successfully opened up more than 210 new cities across the country. Nayuki's tea followed suit, launching its franchise business in July 2023 and successfully opening 200 franchise stores by the end of February 2024.
The rapid rise of franchise brands has loosened the discourse power of the contempt chain.
The chain of contempt between F&B brands often presents a top-down trend, with the weak relying on being stronger than themselves and despising those who are inferior to themselves. But in the face of the outstanding performance of the franchise brand in terms of chaining and market competitiveness, who dares to despise those franchise brands with rapid growth in market share?
03
Two-way upgrade between the brand and the franchisee
In a sense, the rookie pecking in the franchise market has ended, and the only ones who can stay in the future are professional players.
After years of all kinds of mixed fast recruitment brand market education, the ability of entrepreneurs to identify has been gradually improved, coupled with the exposure of some vicious franchise incidents, the pressure of public opinion has also forced the supervision to continue to escalate.
There is also intensified market competition, the industry is forced to upgrade the brand, if you go to the franchise exhibition in the past two years, you will obviously find that the quality of the franchise brand has become higher and higher.
At the same time, the franchisee group itself has also been significantly upgraded, and the novice entrepreneurs have either evolved into professional franchisees or left the market miserably. The group of super franchisees who open multiple stores by one person is growing day by day, and these professional franchisees can form a positive interaction with high-quality franchise brands. The rapid development of the brand with efficient execution is very similar to the franchise market boom brought by KFC's entry into China in early 1987.
On the one hand, professional franchisees have gradually become the backbone of brand expansion. Taking Guming franchisees as an example, each person who has been in operation for more than two years has an average of 3.1 stores, and 75% of them have successfully operated two or more franchise stores. They help brands quickly deploy in a large-scale and standardized way, showing strong commercial operation strength.
Gu Ming's business data丨Source: Gu Ming prospectus
On the other hand, professional franchisees also reap rich rewards in the process of growing together with the brand. According to the Gu Ming prospectus, the operating profit of Gu Ming franchisees in 2023 will reach 376,000 yuan, and the senior franchisees will operate more than 3 stores on average, with an annual profit of 600,000 to 700,000 yuan, achieving steady accumulation of wealth.
This snowballing model of success has given rise to a group of "super franchisees", who control multiple brand stores, and even operate across brands. This kind of group is often well versed in the competitive strategies of various brands, sitting on rich local resources and a wide range of property advantages, and it is no longer a strange news that dozens or even hundreds of franchised stores of different brands are under the command of one person, but a real business teaching material.
Of course, in this context, the franchise market presents a more rigorous two-way selection mechanism. Well-known brands have raised the threshold for joining and bid farewell to the extensive era of heroes based solely on capital. Taking Haidilao as an example, in addition to setting a capital threshold of 10 million yuan when opening up to join, the franchise objects are limited to institutional investors and enterprises with business experience, not ordinary investors or individual investors.
04
The diversification of the franchise model gives both sides more choices
In the evolution of the catering franchise market, the franchise model has also undergone many innovations and subdivisions, and now the catering franchise market has formed a rich and diversified system, covering internal partnerships, joint ventures, single-store franchises, regional franchises, multi-store, trusteeship and other cooperation models. This diversity not only provides brands with flexible strategic deployment tools, but also creates a broader choice space for franchisees to achieve a win-win situation for both parties.
In the past, brand owners' concerns about the franchise model mainly stemmed from concerns about brand image, service quality, standardized processes, etc. Nowadays, brands realize that they can flexibly choose or combine different franchise models through customized franchise strategies to achieve their own development goals.
Taking Haidilao as an example, its open franchise cooperation is more similar to the custody model, which is actually a form of deep involvement of the brand in store operation. Haidilao is responsible for the daily operation, performance appraisal, personnel recruitment, membership management, supply chain and other work of the franchise stores, ensuring that the core elements such as customer experience, service standards, and operation management are consistent with those of the directly operated stores. Under this model, in addition to investing funds, the franchisee provides the brand with an in-depth understanding of the local market and a resource network, reducing the cost and risk of the brand's information acquisition in the new market.
Haidilao franchise support丨Source: Haidilao official website
The business partnership model implemented by Heytea in non-first-tier cities is a cooperation model that emphasizes the deep participation and common growth of franchisees. Heytea strictly screens the financial strength, educational background, work experience, market insight and other conditions, and requires partners to undergo a three-month full-time training and assessment to ensure that they have the professional knowledge and skills required to operate the new store. This model encourages franchisees not only to be a provider of capital, but also to be a co-builder of the brand, and to improve the operational quality and success rate of newly opened stores through all-round participation and training.
Heytea's diversified franchise combination plan丨Source: Heytea applet
The diversification of the franchise model makes the franchisee have greater flexibility when choosing the way of cooperation. They can choose the most suitable franchise model according to their own financial situation, management experience, geographical advantages and expectations for participation. Whether it is choosing a custody model, using the brand's professional operation capabilities to achieve efficient use of capital, or devoting itself to business partnerships, deeply involved in brand building and store operation, it provides franchisees with different paths to achieve their business ambitions.
epilogue
There is no distinction between high and low business models, and the so-called chain of contempt is just a reflection of the value evaluation formed in the circle for a long time, which changes with the changes in the market environment and industry cognition.
The opening of direct brands to join is not only an exploration of new business models, but also an adjustment to respond to market demand, which is worthy of the encouragement and appreciation of all catering people. In the future, the franchise model will undoubtedly continue to play a key role in the improvement of the chain rate of China's catering industry, along with the development of the industry.
Relying on red meal big data and more than ten years of industry research experience, "Red Meal Recruitment" is committed to building a trustworthy product recruitment project platform, outputting in-depth vertical franchise industry information and building a high-quality franchise ecology.
The catering rivers and lakes are not limited to competitive games, strong and weak showdowns, but also the unity of helping each other and advancing and retreating hand in hand. Break the prejudice of the industry's contempt chain, let us face changes with an open and inclusive attitude, continue to create value, and jointly lead the development of the era of catering recruitment.