The second wave of new tea drinks appeared.
On April 23, Chabaidao was officially listed on the main board of the Hong Kong Stock Exchange, becoming the second listed tea brand after Nai Xue and the largest IPO on the Hong Kong Stock Exchange this year. Different from the tea of Nai Xue, the "first share of new tea drink", Tea Baidao has adopted the franchise system from the beginning of the brand. In the fierce new tea beverage listing track, Tea Baidao is the first listed new tea beverage brand focusing on the franchise system.
Prior to this, speculation about the breakage of tea Baidao was rampant. The issue price of Chabaidao is HK$17.5 per share, and the market value of the issue is about HK$25.86 billion based on the offer price and issued share capital. One minute after the market opened on April 23, it fell by more than 30%, and the market value shrank rapidly. According to the documents of the Hong Kong Stock Exchange, someone won 100,000 shares, and according to the closing price, the shareholder lost 470,000 Hong Kong dollars in a single day.
Judging from the market's reaction, the crisis behind the breakage does not only belong to Chabaidao, but also other new tea brands that are lining up to prepare for IPO.
Listing, the most worried is the franchisee
Compared with the founder's beaming bell photo, the atmosphere in Liu Yi's tea Baidao franchisee exchange group is tense.
A local franchisee was the first to post the news link of the listing to the group, and some people in the group repligently replied with "roses" and "applause" and other congratulations. Another franchisee who was seeking the transfer of the store poured a basin of cold water in a stiff tone: "What does the listing have to do with us, it is Lao Wang (Wang Xiaokun, the founder of Chabaidao) and investors who make money, and we can't even drink soup." ”
There are many franchisees who are looking to close or transfer. Liu Yi said that the first frequent news of the closure of peers was about mid-2023, "The reason is nothing more than the high price of raw materials, I can't afford the discount, and I don't do it at a loss." Subsequently, in August 2023, Chabaidao submitted a prospectus on the Hong Kong Stock Exchange for the first time. At that time, Chabaidao announced in the prospectus that it would become the third largest freshly made tea company in China, accounting for 6.8% of the market share.
In the prospectus, the financial data disclosed by Chabaidao is quite optimistic. From 2021 to 2023, the company's revenue increased from 3.644 billion yuan to 5.706 billion yuan, net profit increased from 776 million yuan to 1.151 billion yuan, and the operating cash flow was positive for four consecutive years.
From the perspective of profitability, tea Baidao can also be called "muffled to make money". The sinking giant Mixue Bingcheng occupies 44% of China's market share of ready-made tea drinks, and its ability to absorb gold is well known, but from the perspective of the gross profit margin of public data, the gross profit margin of Mixue Bingcheng is only 29.7%, while the gross profit margin of Chabaidao is unbeatable among the new tea drinks of many IPOs, as high as 34.4%.
However, the profitability of Mixue Bingcheng comes from the huge and complete supply chain system, as well as the raw material cost advantage brought by this system. In other words, the secret of making money in Mixue Bingcheng is only four words, small profits but quick turnover. However, Chabaidao, which has a gross profit margin of 34.4%, although it also takes the road of franchise, is significantly behind several other IPO players in the same period in terms of self-built supply chain.
Tea Baidao mentioned in the prospectus that the company works with 333 suppliers, in addition to 124 suppliers. In other words, until now, the supply of raw materials for Chamodo has been dependent on third parties.
A senior multi-store franchisee in the ready-made tea beverage industry revealed that from a single-store perspective, the gross profit margin of tea Baidao franchisees can be said to be the lowest among competing products. "As far as I know, the basic average gross profit margin of Gu Ming is 40%, and the gross profit margin of Yihetang can go to about 45%, but while Chabaidao restricts franchisees from picking fresh fruits and other raw materials, the construction of the supply chain is relatively backward, resulting in the cost of raw materials for franchisees is much higher than that of peers. ”
A tea Baidao franchisee in the central province told "Leopard Change" that the subsidy promotion is often in the price band of 9.9 yuan, so as to compete with other brands, but the material cost of a cup of fresh fruit tea is as high as more than 7 yuan, and the cost of a cup is more than 10 yuan, which is difficult to make a profit.
This has also been confirmed by other tea Baidao franchisees. A Sichuan franchisee said that because it is adjacent to the headquarters, the supervision has great restrictions on the external procurement of raw materials for Sichuan franchisees. Another franchisee in the eastern province confirmed that even if the headquarters is more relaxed than Sichuan's restrictions on external procurement, it is difficult for franchisees to make profits through external procurement of fresh fruits and other raw materials, and to reduce procurement costs, they still have to rely on the company's scale effect. ”
Chabaidao is also aware of the crisis of the supply chain, not only repeatedly stated in the prospectus that the main purpose of the funds raised by the listing is to strengthen the supply chain, but also emphasized after the early financing that the funds will be used for the upstream construction of intelligent production and processing bases and supply chain bases.
However, compared with its peers, the construction of the supply chain of Tea Baidao is a little late. As early as 2012, Mixue Bingcheng has begun to build its own factory, and currently has production bases in five provinces including Henan, Guangxi and Anhui.
The construction of Gu Ming's supply chain also started early. An insider of Gu Ming revealed to "Leopard Change" that the construction of Gu Ming's supply chain began around 2016. According to the prospectus, Gu Ming has the largest cold chain warehousing and logistics infrastructure in the industry, and 97% of its stores can achieve cold chain distribution services for two days and one match.
The reef behind the food safety turmoil
Since March 16, the gloomy atmosphere has been shrouded in the group of tea Baidao franchisees.
During March 15 this year, Chabaidao was named and criticized for the store's awareness of changing the expiration date label of ingredients. The negative impact came quickly, and the franchisees were not prepared for such bad expectations. Franchisees in many places confirmed to "Leopard Change" that the impact of this incident on turnover was huge, and in the second half of March, store turnover was nearly halved, and even worse, turnover fell to one-third of the same period last year.
More than a month has passed since the 3.15 party, but many franchisees lack confidence in the recovery of turnover. Being named on 3.15 is just a way for the sluggish franchisees to find a way to break the embankment, and the crisis has been seen for the first time before that. A person close to Chabaidao said that as one of the advantageous markets of Chabaidao, the number of takeaway orders in stores in Shanghai has declined to varying degrees since this year, and the overall trend is almost halved.
A franchisee in Jiangsu and Zhejiang told "Leopard Change" that the consensus of peers is that the negative impact of the 3.15 turmoil on the turnover of a single store is expected to last for half a year.
Half a year is an extremely precious window of time for the fiercely competitive new tea drink track. At a time when the new tea market has been determined to turn into stock competition, consumers are becoming weak, and at the same time, competing brands are constantly encrypting the store opening network, and more and more franchisees cannot afford to wait for half a year.
The food safety crisis was indeed the last straw that overwhelmed some franchisees. A former franchisee who has just transferred the store said that he joined Chabaidao from the beginning of 2023, and in the first quarter of this year, his store has been unable to make a profit, and it has been struggling to support. After the 3.15 turmoil, the single-day turnover was directly cut in half.
The silent franchisee chose to close the store. According to the prospectus data, from 2020 to 2022, the number of closed stores of Chabaidao will be 3, 13, and 76 respectively, and this number will soar to 220 in 2023.
Although Chabaidao is still trying to accelerate the opening of stores, the store encryption logic that underpinned the business model in the past seems to be being tested, and the retention rate and willingness of franchisees to expand stores are strongly related to the sustainable development of the brand.
According to the data in the prospectus, the annual net closure rate of Chabaidao has reached about 10%. As of the end of 2023, the number of Chabaidao stores has reached 7,801, but in the company's caliber, the encryption plan will continue until at least 2027.
Another noteworthy data is that in 2023, Chabaidao will terminate cooperation with 663 franchisees, of which 397 franchisees' stores will be transferred to other franchisees to continue to operate.
It doesn't seem like every franchisee is willing to quit. A franchisee told "Leopard Change" that the current franchisee signing model of Chabaidao is slightly different from similar brands on the market, and the signing period is very short, insisting on signing once a year. When some franchisees with high-quality points want to transfer their stores, the transfer price arranged by the company will be "cut in half". Therefore, some franchisees who are willing to transfer would rather recruit someone to take over the store on social platforms than go through the company.
In August 2023, when Chabaidao submitted its statement to the Hong Kong Stock Exchange for the first time, a financial data attracted the attention of the outside world. As of 2023, the proportion of orders from the takeaway channel has increased from 47.6% in 2020 to 59%, close to 60% of the total order volume. Chabaidao also repeatedly mentioned in the prospectus its good cooperative relationship with the head takeaway platform, as well as the proud performance obtained through takeaway.
However, the high exposure and turnover of Tea Baidao on the head takeaway platform is behind the high commission of countless franchisees who have sacrificed to the platform. A franchisee in Hubei showed "Leopard Change" one of the orders in the store, a single product with a unit price of 15 yuan, which needs to pay a fixed 23% commission and service fee to the platform, and also has to bear the activity subsidy of the platform to customers, and the final gross turnover is only 5 yuan.
Going to sea and coffee, where is the next wealth code?
Going overseas is an unavoidable development proposition for new tea brands.
At present, among the common new tea brands on the market, except for Gu Ming, who is a little cautious in replying to the field of going overseas, other brands have already crossed over one after another. In 2018, the first overseas store of Mixue Bingcheng landed in Vietnam. In 2019, Bawang Chaji opened its first overseas store in Malaysia. In 2023, Hey Tea, Sweet Lala, and Nai Xue's teas will also anchor in Southeast Asia to open stores.
It is not difficult to understand that Southeast Asia has a relatively mature milk tea consumer market, and there is no need for too much market education. At the same time, local consumer brands in Southeast Asia are not strong and can easily steal the hearts and minds of users.
However, the location of Chabaidao's first overseas store was unique, landing in Gangnam-gu, Seoul, South Korea in mid-January this year. At the same time, Chabaidao is still trying to continuously copy the domestic store network logic: focusing on encryption. In April, the second Seoul Hongdae store and the third Apgujeong Galleria store in Seoul also opened. At the same time, the Seoul area is also laying out the Ewha Sinchon store.
Despite the growing network of stores in Seoul, the most favored region in the Chabaidao prospectus is Southeast Asia. According to the prospectus, it plans to start establishing a supply chain system covering Southeast Asian markets such as Thailand, Vietnam and Malaysia in 2024, and plans to start setting up distribution centers in 2025 to expand in Southeast Asia.
However, according to "Leopard Change", the dividends of the Southeast Asian milk tea market have come to an end, and the domestic expansion inflection point has begun to be replicated in the Southeast Asian market. In Vietnam, for example, the promised area of protection is shrinking from 500 meters to 200 meters in 2022. In this case, the profit space of tea brands is inevitably eaten, and the mid-range price of tea Baidao is slightly embarrassing in the Southeast Asian market, and Mixue Bingcheng and Heytea occupy low-end and high-end prices respectively, and it is not easy to run out.
It is worth noting that the ambition of Chabaidao has also begun to show in the coffee track, which is also involuted. In January 2024, Chabaidao's sub-brand "Coffee Ash" opened its first directly-operated store in Chengdu. Although Cha Baidao said that coffee ash will be an independent brand and will not participate in the tea Baidao store network, the prospectus shows that 5% of the funds raised will be used for coffee ash.
It is not difficult to see that Chabaidao wants to use this to expand the second income curve. However, none of the cross-border coffee attempts of milk tea brands on the market, whether it is Lucky Coffee in Mixue Bingcheng, Hey Tea, Shanghai Auntie, etc., have not developed competitiveness for the time being.
With the supply chain of Chamochi still relatively weak, would this be a worthwhile path?