It fell by 6.9 billion on the first day of listing! Franchisees supported tea Baidao, but the income from opening a store may not be as good as a part-time job

On April 23, Chabaidao officially landed on the Hong Kong Stock Exchange. Following Nai Xue's tea, the market finally waited for the "second share of new tea drinks", and it was also the "first share of franchised tea drinks". According to the prospectus, the operating income from franchise stores accounts for more than 99% of the total revenue of Chabaidao in 2023. In the fierce competition in the industry, are thousands of franchisees supporting this listed milk tea brand?

How to become a tea Baidao franchisee? After paying 300,000 yuan, you still need 300,000 yuan

According to the prospectus, the performance of Tea Baidao in the past few years has been quite impressive. From 2021 to 2023, the company's revenue will be 3.644 billion yuan, 4.232 billion yuan, and 5.704 billion yuan respectively. In the past three years, the compound annual growth rate of net profit of Tea Baidao has reached 21.6%.

The franchise model is obviously a key factor in the rapid growth of Chabaidao's business and scale. According to the financial report, as of the end of 2021, 2022 and 2023, there are 5,070, 6,352 and 7,795 franchised stores in the tea Baidao store network, respectively, accounting for more than 99% of the total number of tea Baidao stores at that time. By the end of 2023, Chabaidao has 5,538 franchisees, with 595 franchisees operating more than two stores. In comparison, the number of directly operated stores is only 6.

From the perspective of revenue structure, in the past three years, about 95% of Chabaidao's revenue has come from the sale of goods and equipment to franchisees. Counting the royalties and franchise fees, which account for about 4%, the franchisee group contributes the vast majority of the revenue to Chabaidao - they have made great contributions to the listing of Chabaidao, and they are also the company's real "customers".

So how much does it cost to join a tea Baidao?

According to the franchise policy announced by the WeChat public account of Gencha Baidao, the franchise fee mainly includes brand authorization fees, equipment, training fees, first distribution fees, opening comprehensive service fees, etc., which add up to at least 282,000 yuan. It is worth noting that this price does not include store rent, water and electricity, decoration, labor wages, etc., and the management fees and comprehensive operation service fees of the takeaway platform also need to be paid annually or monthly. If the store is closed, the only official deposit that can be refunded is 10,000 yuan.

According to the 2023 China Commercial Real Estate Development White Paper, in the first half of 2023, the average rent of shops in Baijie was 24.33 yuan/square meter/day. It is known that the single-sided area of tea Baidao is generally more than 30 square meters, and the annual rent is 266,400 yuan. According to the staff of the official hotline of Tea Baidao, Tea Baidao has cooperative decoration companies in most areas, which can provide unified drawings and decoration services, and the average decoration cost of a 40-50 square meter store is about 100,000.

In addition, according to the prospectus data, the average annual salary of employees in the tea market in 2023 will be 49,300 yuan. Based on the calculation that a store is equipped with at least 4 employees, the annual labor expenditure is about 147,900 yuan.

Even if it is roughly estimated, the cost of opening a tea Baidao franchise store in the first year will cost 60-700,000 yuan.

Have enough funds, but you may not be able to become a tea Baidao franchisee. In addition to the most basic age limit (20-45 years old) and requirements such as leading the store in person, the tea Baidao prospectus also mentions that "due to our strict selection process, only 7% of franchisee candidates can pass the screening and eventually become our franchisees during the previous record period." A tea Baidao franchisee with two stores told the Blue Whale reporter, "After applying online, I have to go to Chengdu for an interview, and about 10 out of 100 people." It is not so simple to have requirements for funds, experience, experience and management ability. ”

According to the National Business Daily, Chabaidao has also set up 16 training centers and a regional supervision team of about 570 people, in addition to regular inspections of stores 3 to 4 times a month, as well as daily random inspections by the headquarters and regional inspection teams. A number of franchisees reported to the Blue Whale reporter that the inspection management of tea Baidao is strict in the industry.

Or due to the combination of the above, the closure rate of Chabaidao franchise stores will be 0.2%, 1.1% and 2.3% respectively from 2021 to 2023, which is far lower than the industry average. However, it is also evident that the closure rate of Chamodo franchise stores is increasing, and the number of franchise stores closed has increased from 13 and 76 to 220 in the past three years.

Is it still profitable to open a tea shop now? Some stores earn 30,000 yuan a month, and some people bluntly say, "It's better to work part-time."

Is it still profitable to open a tea Baidao franchise? Many franchisees expressed similar views: it depends on the status and location and the time of entry.

A tea Baidao franchisee told the Blue Whale reporter that his store is in a good location, and he currently has a profit of more than 30,000 yuan per month, and he has returned to his capital in more than a year. He knew a tea Baidao super franchisee with 25 stores, and the owner entered early, and the first store earned about 10,000 yuan a day at that time, and it returned to its original cost in three months. Regarding the statement that "thousands of franchisees support the tea Baidao", this store is particularly open-minded: the company earns the company, and I earn mine.

Not all franchisees can catch up with the good times and good locations.

Xiaolan, a tea Baidao franchisee, calculated a more detailed account for us. The cost of opening her store was about 600,000, and her profit in 22 years was about 350,000, and it dropped to 200,000 in 23. She believes that it is too late to enter the market, "Now that the market is saturated, there are more than 8,000 light tea Baidao." Although there is a protection distance of 50-400 meters, what is the difference between this and a knife holder on my neck. ”

According to the prospectus, in the past three years, the proportion of takeaway and dine-in orders for tea Baidao is about 6:4. For a long time, Chabaidao has focused on the small store model and takeaway business, on the one hand, it has more cost advantages and relatively low capital investment requirements. But on the other hand, the proportion of takeaway is too high, and platform commissions, subsidies, push streams and delivery fees will greatly squeeze profit margins. Xiaolan, the shopkeeper, revealed that the takeaway business in her store is only about 61-63%.

Even for dine-in, customers will gravitate towards more affordable TikTok coupons. "The unit price of more than 20 yuan is just running water, and there are only a dozen yuan when you get it. To do business, we franchisees have to look at the actual money. Xiaolan showed reporters the background data of her store, nearly 5,000 orders a month, a total of more than 120,000 turnover, and the actual amount was only about 90,000, of which more than 30,000 were discounted.

In addition, Xiaolan revealed that the materials of tea Baidao are relatively expensive, and the basic performance of 100,000 yuan needs to match 40,000 yuan. This is also the majority of the income of tea Baidao in the prospectus, including the sale of dairy products, tea and fruits and other tea materials, ingredients, packaging materials, equipment, etc.

It is worth mentioning that although the franchisee pays a lot of money to Chabaidao for this, the gross profit margin of the company's business is not high - only about 32%. One of the data that can be used for comparison is that the revenue from royalties and franchise fees accounts for only about 4%, and the gross profit margin is as high as more than 92%. The reason for the low proportion of the aforementioned business is that, unlike Mixue Bingcheng, which is 100% self-produced as its core ingredient, Chabaidao relies on purchasing various raw materials and packaging materials from other suppliers, and then selling them to franchisees to make the difference.

Back to the core profit problem, counting about 30% of the revenue of rent, artificial water and electricity, the real profit of the franchisee is only 10% of the revenue. Since September last year, the monthly profit of Xiaolan's store has been about 10,000 yuan. "It took me more than two years to pay back, and it may take 3-5 years or even longer to open the business. Opening a store is not as good as working part-time to earn more. ”

The situation of franchisee Xiaolan can represent a considerable part of the franchise group.

With the decline of brand potential and the fierce competition in the industry, the data of tea Baidao single stores has shown a downward trend. From 2021 to 2023, the average daily retail sales per store decreased from 7,414.1 to 6,887.2 yuan.

In order to win franchisees and expand market share, many tea brands such as Hey Tea, Tea Baidao, Nai Xue's Tea, and Shuyi Yao Xiancao have launched preferential measures in the first half of this year. Taking Tea Baidao as an example, a new franchisee can get a reduction of 40,000 yuan if he signs 1 store, and a total of 180,000 yuan if he signs 2 stores.

Even so, brands and franchisees may have realized that slowing growth is a dilemma for the industry as a whole. According to Frost & Sullivan's report, the compound growth rate of the mainland tea shop industry is 25.2% from 2018 to 2023, and the compound growth rate is expected to be 15.4% from 2024 to 2028.

Capital markets have always been sensitive. On the first day of listing, Chabaidao opened 10.06% lower on the first day of listing, and the intraday decline once expanded to 38%, and finally closed down 26.86%, now at HK$12.8 per share, with a total market value of HK$18.914 billion.