Text: Luo Zeng
Before Mixue Bingcheng, Gu Ming, and Shanghai Auntie, Tea Baidao is about to win the "second share of new tea drinks".
On April 15, according to the announcement of the Hong Kong Stock Exchange, Sichuan Baicha Baidao Industrial Co., Ltd. (hereinafter referred to as "Chabaidao") opened its IPO and ended on April 18, with an issue price of HK$17.50 per share. Based on this issue price, Chabaidao, which plans to raise 2.586 billion yuan, will become the largest IPO raised by Hong Kong stocks in the year.
However, retail investors' enthusiasm for tea Baidao does not seem to be high. According to AIPO data, the amount of funds raised in the public offering of Chabaidao was HK$259 million, while the total margin funds for the IPO were HK$97 million, which was not fully subscribed.
Some industry insiders pointed out to China Net Finance that according to the general process, the underwriter will give a part of the shares of the company to be listed to a brokerage such as Futu Securities, and Futu will subscribe to retail investors in advance on its own APP, similar to the "new market" of A shares.
"If a company does not have retail investors to subscribe to the brokerage, it is obvious that people may not be willing to buy the company's shares. The above-mentioned industry insiders said.
In recent years, the new tea players in the secondary market do not seem to be smooth. In this context, what kind of new story will be used to reverse the lack of investor confidence in the tea Baidao, which accounts for 99% of franchises and has frequent food safety problems?
Expand franchise and earn the price difference, the "middleman business" of tea Baidao
It is undeniable that Tea Baidao, which won the "second share of new tea drinks", does have a certain strength.
In the past four years, the new tea drink track has been up and down, but Chabaidao has still achieved significant growth. According to the prospectus data, from 2020 to 2023, the company's revenue soared from 1.08 billion yuan to 5.704 billion yuan, with a compound annual growth rate of 74.1%. At the same time, the net profit attributable to the parent company was 238 million yuan, 756 million yuan, 954 million yuan and 1.139 billion yuan respectively, with a compound annual growth rate of 78.4%.
Behind the growth, it is mainly due to the rapid expansion of the store network of Chabaidao.
From 2020 to 2023, the number of tea Baidao stores will be 2,242, 5,077, 6,361, and 7,927 respectively, covering 31 provinces and cities across the country. This expansion strategy not only increased the brand's market coverage, but also greatly increased the company's revenue and profits.
However, the profit model of Chabaidao does not rely on the direct sales of stores, but comes from the sale of raw materials and equipment to franchisees to do "B-end business".
According to the data, from 2020 to 2023, there will be 2,240, 5,070, 6,352, and 7,795 franchised stores in the Chabaidao store network, accounting for more than 99% of the total number of stores in the current period. During the period, the revenue from the sale of goods and equipment to franchisees accounted for more than ninety percent of the total revenue, of which the revenue from goods was the main source, which increased with the growth of the total number of franchise stores, and the proportion of equipment revenue was declining year by year due to the decrease in the number of new stores.
However, it is also a "supply chain" business, compared with Mixue Bingcheng, which has built itself and has a complete supply chain system, Chabaidao plays more of a "middleman" role, that is, it mainly relies on third-party suppliers and other business partners to provide raw materials and services for franchisees, so that the company can achieve profitability by "making the difference" without directly bearing the risk of store operation.
On the whole, the franchise model of Chabaidao, with its rapid market expansion and stable revenue stream, has become an important engine for the company's growth. On the one hand, through the rapid expansion of the franchisee network, Chabaidao can effectively occupy market share without increasing its own operational burden, and on the other hand, through the regular procurement of raw materials and equipment by franchisees, it can also bring predictable and continuous cash inflow to the company.
Franchise is difficult to control, food safety is frequent, and Tea Baidao still wants to tell the "coffee story"?
However, this business model that relies on franchises also means that it will face a lot of challenges.
As the franchise network continues to expand, so does the difficulty of management and control. How to ensure that franchisees throughout the country can continue to provide consistent service standards and high-quality products has become a major test for Chabaidao. Among them, food safety issues are particularly sensitive, requiring companies to invest more energy and resources in strict supervision and control.
In fact, there are not many heels in terms of food safety. In recent years, Chabaidao has been complained by consumers many times because of foreign objects such as spiders, flies, and screws in the drink. In addition, it is worth mentioning that after the hot search caused by the store's "use of expired raw materials" in September 2021, during the 315 period this year, a reporter went undercover to the tea Baidao store again, but found that there were still cases where the clerk tampered with the expiration date label of the ingredients and used expired ingredients in order to "compliantly", which undoubtedly exacerbated the public's concerns about brand food safety.
In addition to the need to strengthen the control of food safety issues under the franchise model, in the context of increasingly fierce market competition, Chabaidao must also continue to innovate to meet the changing tastes and needs of consumers. This means that companies need to invest more resources in product development and marketing to maintain their competitiveness in the market.
Approximately 51% of the net proceeds will be used to enhance overall operational capabilities and strengthen the supply chain, 20% to develop digital capabilities and engage and train professionals, 12% to brand building and promotional activities, 2% to product development and innovation, and 10% to working capital and general corporate purposes.
It is worth noting that Chabaidao also revealed its strategic plan to increase the coffee market in the prospectus, and intends to use the remaining 5% of the above-mentioned raised funds to promote its own coffee brand and lay a coffee shop network.
It is reported that in January 2024, Chabaidao opened its first directly-operated coffee shop "Coffee Ash" in Chengdu, and plans to open 15 coffee shops through direct sales and franchise models in the next three years. This strategic transformation shows that Chabaidao intends to break through the existing business scope and explore new growth points.
However, the coffee market is significantly different from the tea market, and Chamoto needs to face new competitors and market environments. In the coffee sector, there are many brands, and consumers' tastes and preferences are more diverse. Whether Tea Baidao can successfully combine the "milk tea story" and "coffee story" and continue to gain a firm foothold in the market remains to be tested by the market.