Source: Liu Zhiyuan
Tea Baidao broke 36% in 2 days after it was listed, and Gu Ming, Mixue Bingcheng, and Shanghai Auntie, who are still queuing up in Hong Kong stocks, are probably trembling.
From the opening of the first store in Chengdu in 2008, to the number of stores exceeding 100 in 2016, and then to the current number of stores exceeding 8,000, Tea Baidao is a dark horse running out of the red sea of milk tea.
Cha Baidao ranks third in China's freshly made tea shop market (the first is of course Mixue Bingcheng), with a market share of 6.8%. There are a total of 8,016 stores in China, covering 31 provinces and cities across the country, achieving full coverage of all provinces and tier-level cities in China.
As a milk tea lover, Brother Yuan will talk to you about the supply chain of Tea Baidao and the help of digitalization for his business.
1. Store expansion and performance growth
Chabaidao focuses on an efficient small store model, which minimizes store costs while further improving the efficiency of a single store with the help of external channels. The gross floor area of most of the Cha Bai Dao stores is between 30 and 100 square meters, with 44.3% in the range of 30 to 49 square meters and 42.8% in the range of 50 to 100 square meters. It also relies on the takeaway business, and our takeaway store coverage rate is as high as 95.9%.
The number of Chabaidao stores has grown significantly over the past few years, from 5,077 in 2021 to more than 8,000 today. The stores are widely distributed, especially in Sichuan, Jiangsu, Zhejiang and Guangdong provinces, achieving full coverage of first-tier to fourth-tier cities.
This growth not only expands the brand's market coverage, but also brings a rapid improvement in performance.
Chabaidao mainly adopts a franchise model, and the asset-light operation model makes the company's capital expenditure smaller, which brings high profit margins and strong cash flow. The company's revenue mainly comes from the sale of raw materials and equipment to franchise stores, as well as the collection of franchise fees, accounting for more than 95% of the total revenue. Royalties and franchise fees account for a relatively low percentage. Other revenues mainly come from the design services of Chabaidao stores, the online operation and management of takeaway platforms, and the revenue of Chabaidao directly-operated stores.
The products of Chabaidao are positioned in the mid-range price band, with an average unit price of 14.8 yuan. In 2023, the revenue will be 5.7 billion yuan and the net profit will be 1.14 billion yuan, showing strong profitability.
At present, Chabaidao has formed a complete operation system, supply chain system, and digital system, which has laid a good foundation for its efficient growth.
Second, the supply chain helps rapid growth
Chabaidao's supply chain management plays an important role in supporting its rapidly expanding store network and meeting market demand.
As of December 31, 2023, Chabaidao has an integrated cold chain warehousing and distribution network, including 21 multi-temperature zone warehouses with a total area of approximately 80,000 square meters. Consisting of 20 central warehouses and 1 front warehouse, it is designed to ensure the rapid transportation of products from the warehouse to the store, while reducing transportation costs and time.
The warehouse management of Chabaidao mainly focuses on the storage of raw materials, and adopts a dynamic centralized management model. The order planning department formulates the procurement plan for raw materials based on the latest market demand, logistics conditions and sales volume. The purchased raw materials will be allocated to the corresponding warehouses according to the actual delivery needs of each warehouse.
In terms of the fruit supply chain, Chabaidao actively supplies fruits to warehouses across the country, and has professional quality control personnel in each warehouse.
Through the digitalization of the OWT supply chain, Chabaidao has the ability to centrally process, manage and track orders. Intelligently monitor warehouse operations to efficiently plan, execute and optimize the transportation of goods.
Through these well-designed supply chain management measures, Chabaidao is able to efficiently support the operation of its store network, ensure product quality and supply stability, and improve overall operational efficiency.
3. All-round digital empowerment
Chabaidao empowers business operations in an all-round way through an intelligent inventory management system, digital product development, precise pricing strategies, integrated financial management framework, and membership programs. These measures enhance supply chain efficiency, enhance customer experience, and strengthen brand loyalty.
Digitize your supply chain
Chabaidao's supply chain digitalization system includes Order Management System (OMS), Transportation Management System (TMS), Supplier Relationship Management (SRM), etc.
In order to ensure the accuracy and effectiveness of order execution, Chabaidao's order fulfillment system implements intelligent inventory management according to different transaction types and scenarios. Categorize and organize inventory information by specific usage to ensure that orders are fulfilled accurately and avoid errors or product shortages. The system also provides a distribution calculation tool, which is convenient for Chabaidao to flexibly arrange product delivery.
Digitalization of product development
Chamoto actively promotes the digitalization of the product development process. The company has established a comprehensive database of authoritative resource data for fruit products and specialty agricultural products, including a geographic database of fruit production in China, so that Chabaidao can quickly and accurately obtain the required fruit resources.
The company uses digital methods to manage product recipes, analyze market trends, and provide products that meet the needs of the masses to ensure that product development results meet market needs.
In terms of product pricing, Chabaidao uses a digital approach to manage the entire product lifecycle, integrating product pricing into product development by dividing product data into three main components (product introduction, raw materials and product formulation), standardizing cost management and streamlining the pricing process.
Digitize financial management
Chabaidao has developed a digital framework for financial management, integrating multiple financial functions such as sales, procurement, asset management, budgeting, financial analysis, expense control and accounting to ensure the efficient management of financial resources. The system also includes a dedicated system for real-time data integration between ordering and fee payments, sales and finance.
Tea Baidao Membership Program
In order to understand and meet the needs of consumers, Tea Baidao launched a membership program in February 2021, and members who participate in the program are called "tea powder". At present, there are more than 9800w registered members, aged between 18 and 35. There are 2000w active users in the quarter, and the repurchase rate is 35%. Through loyalty programs and referral rewards, Chabaidao cultivates brand advocates. The Tea Baidao affiliate program is highly sticky and successful.
As one of the major players in China's freshly brewed tea market, Chabaidao has established a solid market position through its strong brand, extensive store network and effective business strategy. Its supply chain and digitalization are worth learning from many industries. However, in the fiercely competitive tea market, there are still many unknowns about whether Tea Baidao can continue to grow and whether it can get out of the new growth cancellation on the way to the sea.