Written by Zhang Yu
Editor|Yang Bocheng
Source | Produced by hydrogen consumption
ID | HQingXiaoFei
On April 23, the new tea drink brand Chabaidao was listed on the main board of the Hong Kong Stock Exchange, officially becoming the "second share of new tea drink".
However, the stock market performance of Cha Bai Dao surprised the market, and its stock price fell by more than 38% intraday, and as of the close of the Hong Kong stock market on the same day, the share price of Cha Bai Dao finally fell by more than 26% from the issue price of HK$17.5 per share to HK$12.8 per share, with a market value of HK$18.91 billion, evaporating HK$6.95 billion from the issue market value.
Investors also "exploded", in the Oriental Fortune Internet stock bar, many retail investors have said, "lost hemp", "opened to the peak", "cut leeks", in addition to media reports that on the first day of the listing of Tea Baidao, some retail investors have lost more than 6 million Hong Kong dollars.
As of the close of the Hong Kong stock market on April 24, the share price of Chabaidao fell by 7.66% to HK$11.82 per share, and the market value of more than HK$14 was wiped out.
It is worth noting that after Tea Baidao, there are still a number of new tea brands such as Mixue Bingcheng, Gu Ming, and Shanghai Auntie waiting to be listed, and the performance of Tea Baidao will undoubtedly make investors doubt the development expectations of new tea drinks.
You must know that in the primary market, tea Baidao was once favored by investment institutions. In June 2023, Chabaidao received an angel round of financing of 1 billion yuan, with investment institutions such as Orchid Asia, Grassroots Capital, Tomato Capital, etc., with a post-investment valuation of about 18 billion yuan. It should be pointed out that this round of financing is the first round of financing received by Tea Baidao since its establishment in 2008, and it is also one of the largest financing in the new tea beverage industry in recent years.
At this stage, the war in the new tea beverage industry is intensifying, and it has already gone through the crazy period of capital boosting, for the new tea brands that are or are about to go public, the expansion speed is no longer the only criterion, and the sustainability and profitability of their business models will become the key to affecting the performance of the stock market.
Earn money from 5538 franchisees
According to the prospectus, from 2020 to 2023, the total revenue of Chabaidao will be 1.08 billion yuan, 3.644 billion yuan, 4.232 billion yuan and 5.704 billion yuan respectively, with a compound annual growth rate of 74.1%, and the net profit attributable to the parent company will be 238 million yuan, 756 million yuan, 954 million yuan and 1.139 billion yuan respectively, with a compound annual growth rate of 78.4%.
It is worth noting that compared with the growth rate of total revenue, the net profit growth rate of Chabaidao has slowed down, and from 2021 to 2023, its net profit growth rate will be 226.91%, 23.92% and 19.28% respectively.
Specifically, the main source of revenue of Cha Baidao is the sale of goods and equipment to franchise stores, including dairy products, tea and fruits and other tea materials and ingredients, as well as packaging materials and store equipment, which accounts for 95% of total revenue. Royalty and franchise fee revenue accounted for 4.1%, and these two businesses accounted for more than 99% of total revenue in 2023. However, the revenue from tea sales, takeaway platform operation and management services of the six directly-operated stores accounted for only 0.9% of the total revenue.
This means that the real income of Chabaidao comes from franchisees rather than consumers, and it also means that only by continuously expanding the number of franchised stores can the performance of Chabaidao continue to grow.
In fact, in recent years, the expansion rate of Chamodo stores has been quite astonishing.
In 2008, the first store of Chabaidao opened near Wenjiang No. 2 Middle School in Chengdu, and by the end of 2017, the number of its stores was just over 180.
The acceleration period of store expansion began around 2019, and from 2019 to 2022, the number of new stores added to Chabaidao was 367, 1,485, 2,844 and 1,817, respectively, according to data from Narrow Door Restaurant.
The comparison of a set of data can intuitively reflect the madness of Cha Baidao. In September 2021, Chabaidao announced on its official WeChat public account that the number of offline stores exceeded 5,000. In December 2020, there were only about 3,000 Chabaidao stores, which means that in about 9 months, the number of Chabaidao stores has rapidly increased by 2,000.
This frenzied pace of expansion continues to this day. In April 2023, Chabaidao held the 2023 brand upgrade conference in Chengdu, Sichuan, announcing that the number of its stores has exceeded 7,000, covering more than 330 cities.
Source: Tea Baidao Prospectus
According to the prospectus, there are currently 7,927 stores in Chabaidao, and in terms of the number of franchisees, from 2021 to 2023, Chabaidao will have 4,634, 5,396 and 5,538 franchisees respectively, of which 129, 363 and 595 franchisees operate more than two stores.
The rapid expansion of franchised stores has driven the growth of Chabaidao's performance, with a total retail sales of about 16.9 billion yuan in 2023 and a total of 1.016 billion cups of tea sold. According to Frost & Sullivan's report, in terms of retail sales in 2023, Chabaidao ranks third in China's freshly made tea shop market, with a market share of 6.8%, followed by Mixue Bingcheng and Gu Ming.
The new tea drink track is not easy to mix
The growth rate of the new tea beverage industry is slowing down. 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.
According to iiMedia Consulting, from 2016 to 2019, the mainland's new tea drinks ushered in explosive growth, with the revenue scale soaring from 29.1 billion yuan to 204.48 billion yuan, but from 2020 to 2025, the growth rate of new tea drinks has slowed down significantly, and the growth rate has fallen back to 5.1%-13.5%, and the "golden age" of new tea drinks has come to an end temporarily.
Under this general trend, many new tea brands are frantically grabbing franchisees, such as Nai Xue's tea announced a new franchise policy in 2024 in February, lowering the investment budget for a single store, from 980,000 yuan to 580,000 yuan, and intending franchisees can enjoy a marketing subsidy of 60,000 yuan after signing a contract in the first half of the year. Tea Baidao implements contract reduction and exemption measures, with new franchise partners opening stores, with a total reduction of 4-270,000 yuan, and old franchise partners opening stores, with a total reduction of 9-180,000 yuan, and also opening a number of policies such as "point reduction policy", "material rebate policy" and "high rent rebate policy".
In addition, Shuyi Burning Fairy Grass directly launched the policy of "0 franchise fee, 0 service fee, 0 cooperation fee", and Lele Tea announced the full implementation of the store acceleration plan, 350,000 yuan can "go to the bottom" to open a store of no more than 50 square meters.
In order to find a new growth curve, the layout of overseas markets has become a common choice for many new tea beverage companies.
According to the 2023 financial report, Nai Xue's tea opened its first store in Thailand at the end of 2023, and will continue to increase its overseas market expansion efforts thereafter. It is reported that the store is located in the Emsphere high-end shopping mall in Bangkok, with a monthly turnover of more than 1 million yuan and a single-day turnover of more than 60,000 yuan. At present, the first store of Nayuki's tea in Southeast Asian countries and regions such as Singapore and the United Kingdom, the United States and other European and American countries is in preparation.
As early as September 2018, the first overseas store of Mixue Bingcheng opened in Hanoi, Vietnam. As of September 30, 2023, Mixue Bingcheng has opened nearly 4,000 stores in 11 countries, including Indonesia, Singapore, Japan, and Australia. According to the CIC report, in terms of the number of stores as of September 30, 2023, Mixue Bingcheng is the No. 1 freshly made tea brand in the Southeast Asian market.
In addition, in August 2019, Bawang Chaji opened its first store in Malaysia and officially entered the overseas market. According to Bawang Chaji, at present, Bawang Chaji mainly opens stores in Southeast Asia, covering Malaysia, Singapore and Thailand, with nearly 100 stores. In August 2023, Heytea will open its first local stores in the core business districts of many new overseas national markets such as the United Kingdom, Australia, and Canada.
It is foreseeable that in the face of the encirclement and interception of competitors such as Hey Tea, Nai Xue's tea, Shuyi Burning Fairy Grass, and Shanghai Auntie, Cha Baidao wants to survive for a long time in the new tea drink track, and the degree of difficulty is obvious.
Food safety reefs loom
The rapid expansion of the number of tea Baidao stores has attracted consumers' attention in terms of food safety and franchise store management.
During the "3.15" period, Hunan Economic Television's "Big Investigation" column reported that the unsold ingredients in the store would not be poured out, but replaced with a new expiration date label to use expired ingredients in "compliance". Subsequently, Chabaidao issued an apology statement on its official Weibo, admitting that the two stores had violated company regulations and changed the labels of raw materials without authorization.
In fact, tea Baidao has been exposed to food safety problems more than once.
In September 2021, the Weibo topic #茶百道 uses expired raw materials # appeared on the hot search, and the blogger @insider picket bureau secretly visited 4 tea baidao stores in different cities and found that there were expired materials to replace the label and promote the production of fresh fruits, but some products were replaced with fruit pulp.
In response to this matter, from October 2nd to 6th, Zhejiang Province urgently carried out a special inspection of "Tea Baidao" food safety, and found 36 problem stores, and found that some stores had non-standard food storage, mixed raw materials and finished products, uncovered trash cans in the food processing area, and unsealed storage of opened food raw materials without indicating the opening time or use period, and unsealed storage, all of which have been rectified. However, a few days later, the topic of "Tea Baidao Milk Tea Drinking Spiders" once again appeared on Weibo's hot search.
In May 2023, the official WeChat public account of the Beijing Consumers Association released the latest data on the 2023 Beijing food safety inspection, and a total of 24 chain catering brands were on the "black list", among which Chabaidao was notified again for food safety problems.
In addition, on the consumer complaint platform Black Cat Complaint Level, the number of complaints about tea Baidao reached 2,214, mainly involving "tea Baidao milk tea deterioration", "drinking tea Baidao causes gastroenteritis", "tea Baidao milk tea drinks cockroaches", "takeaway eats steel wool balls" and so on.
Source: Black Cat Complaint
Regarding food safety issues, Chabaidao also said frankly in the prospectus: "If any franchisee violates the agreement with us or misbehaves, the franchisee concerned may not be able to fully compensate us for the losses caused to us by the breach of contract or misconduct." While we may eventually be able to take action to terminate our relationship with franchisees who do not comply with the terms of our affiliate agreement or engage in misconduct, we may not be able to identify and respond to problems in a timely manner, which may damage our brand image and reputation. ”
What cannot be ignored is that food safety is a red line that must be kept, especially for new tea beverage enterprises based on the franchise model. The franchise model can bring a larger market scale and high-speed growth performance to Chabaidao, but it will also fall into a situation from which it will be irreversible if it is not careful.
Compared with becoming the "second share of new tea drinks", Chabaidao should perhaps put the importance of food safety in the first place, rather than making food safety issues a stumbling block in the development process.