1 becomes 5, with an annual turnover of 3 million, which is the glamorous side of the tea Baidao franchisees. High rent costs, constrained lease conditions, and high employee mobility are the flip sides of franchisees. Recently, the business editor talked with a number of franchisees about the listing of Tea Baidao, obviously the franchisees are willing, listing means that Tea Baidao can give them more financial support, of course, they want more, such as research and development, publicity, digitalization, etc. As the owner of the franchisee, Chabaidao should consider the maximization of revenue, but also think about the stability of the franchise, so that the two can achieve a balance in order to make each other happy to cooperate.
Franchisees want more
"At its peak, it sold nearly 30,000 cups a day, and sold more than 2,000 cups. "Gao Fei (pseudonym), a franchisee with a store in Changping, has made a small achievement after joining Chabaidao. Gao Fei is a franchisee of Tea Baidao, and the number of stores in Beijing has changed from 1 to 5, with an annual turnover of 1.5 million to 3 million yuan.
It's not just about making money, franchisees want more. "Listing has both opportunities and challenges for brands, and franchisees hope that brands can give more support, such as building digital and visual tools, understanding user groups, city positioning, etc. through technology, and whether there can be some technical support in site selection and differentiated layout. Of course, it is hoped that the brand can strengthen the competitive barriers, and only if the brand is strong enough and the store business is good, will it be a win-win situation. Gao Fei sighed after witnessing the brand's listing, and has joined Chabaidao for 3 years, and has now fissioned 5 stores in Beijing.
Indeed, for enterprises, listing will have more capital support for expanding stores, improving product quality, and strengthening brand marketing. Franchisees have more confidence and want to provide more blessings. Ni Cheng (pseudonym), a franchisee who joined Chabaidao in 2019, said that Chabaidao has now reached a new level, and with stronger financial support, he hopes to give more support to franchisees in product development and publicity in the later stage.
Just 5 days ago, Tea Baidao officially landed on the Hong Kong Stock Exchange, in addition to being the largest IPO of Hong Kong stocks in 2024 so far, the "first share of franchised tea drinks" that landed on the Hong Kong Stock Exchange is one of the representative labels. The performance of Tea Baidao is inseparable from the franchisees, "at the peak, the daily sales were close to 30,000, and more than 2,000 cups were sold." Gao Fei said that it is normal for business to have ups and downs, such as the net profit of tens of thousands of yuan a month in the off-season, and the number of tens of thousands in the peak season. At present, it has fission 5 stores in Beijing, with an annual turnover of between 1.5 million and 3 million yuan.
A similar case occurred in Shenyang. "At its peak, the turnover of a single store was nearly 700,000, and the daily turnover could be tens of thousands. Ni Cheng said that with 4 stores in Shenyang, he did not enter the game smoothly, but followed the brand step by step to today.
Ni Cheng recalled that after seeing the popularity of tea Baidao in the southern market, Ni Cheng and his family were full of praise for the taste of the product, so they opened their first store in Shenyang. However, due to the fact that the tea Baidao at this time was not as well-known in the north as in the southern market, it was rejected by many property owners when selecting the site. Finally, everything settled, and Ni Cheng lost a large pot of sago taro balls on the first day of opening because a cup of milk tea was not sold, but Ni Cheng was already mentally prepared, and he emphasized to the clerk before the opening that "we have no popularity, only word of mouth, and every cup of drink must be done with heart." With the increasing brand power of Chabaidao and Ni Cheng's careful management, the daily turnover of its stores has increased from a few hundred yuan to tens of thousands of yuan, and the reputation is getting better and better, and the property owner has taken the initiative to find him, and the number of stores has increased to 4 in 2020.
According to the information of the Tea Baidao hearing, as of 2021-2023 and April 5, 2024, the number of Chabaidao franchised stores was 5,070, 6,352, 7,795 and 8,010 respectively, accounting for more than 99% of the total number of stores in operation as of the relevant date. In terms of revenue structure, the data shows that the revenue from the sale of goods and equipment to franchisees from 2021 to 2023 will account for 94.6%, 95% and 95% respectively, and the revenue will be about 5.42 billion yuan in 2023.
A low threshold does not equal a low level of difficulty
Gao Fei admits that the biggest pressure comes from the cost of rent and the constraints of lease conditions.
"Is it profitable to open a store?" is one of the most heard phrases in the tea market, and tea Baidao data shows that from 2021 to 2023, it has achieved a store closure rate far below the industry average. In fact, whether it is Chabaidao or other brands, it is normal for the industry to open and close stores, but the reasons behind it are worth exploring after all. For the increasingly dense franchise army, in the case of a low entry threshold, can franchisees still achieve "steady" investment?
"I also paid tuition, and I thought that I had some experience in the real estate industry for site selection, front desk, terminal, etc., and I could avoid many pitfalls. Gao Fei said that in the early days of entering the industry, he once bought two brands of tea shops from an individual to try, and learned about the industry with a learning mentality, and finally lost more than 300,000 yuan. The reality is that the low threshold does not mean that it can be achieved as long as the cost of capital is invested, and there are many trivial problems involved from store operation to store management, such as high employee mobility, increasingly fierce competition in the industry, etc.
Before joining Chabaidao, Gao Fei had been to Shenzhen, Changsha and other places to inspect the brand, from understanding the brand, opening a store location to store management have been personally on the battlefield, and now after nearly four years, he also has a further understanding of the industry.
A number of brands, including Chabaidao, have reduced costs and increased efficiency in many aspects to enhance their comprehensive strength. The relevant person in charge of tea Baidao investment promotion said that next, tea Baidao will reduce costs and increase efficiency from three dimensions, and provide more support for franchisees. First of all, Chabaidao will continue to improve the supply chain, increase the frequency of distribution, and reduce inventory turnover. At the same time, Chabaidao will cooperate with third-party platforms to use big data algorithms to assist franchisees in decision-making and improve the accuracy of store opening effect prediction. In addition, Chabaidao will also invest more energy and funds in the product research and development system, keep up with the changes in market consumption concepts, and provide healthy, natural and environmentally friendly products to meet consumer needs.
In fact, brands such as Tea Baidao continue to improve their comprehensive strength, which is related to the development trend of the tea market. In recent years, the tea market has developed rapidly, not only the birth of the first share of tea, but also the news of financing in the tea market is endless, with the continuous improvement of industry standardization, the chain rate is among the best in the catering market. According to the "2024 China Catering Franchise Industry White Paper", in 2023, the top three major catering categories in terms of chain rate are beverage stores (49%), bread and desserts (30%) and international cuisine (28%), of which the chain rate of beverage stores will increase by 5%, continuing to expand its lead.
The chain rate of the catering industry is gradually increasing, which is related to the fact that more and more brands have changed from direct sales to franchises. In July 2023, Nai Xue's tea, which has always adhered to the direct sales of the "first share of new tea drinks", officially announced the opening of the "partner plan", and in February this year, Nai Xue's tea once again significantly lowered the threshold, and the franchise fee was reduced from about 1 million yuan to 580,000 yuan. At the end of 2022, another leading brand, Heytea, opened to join, and at the beginning of 2024, Heytea revealed the details of the franchise business, saying that it had interviewed more than 7,700 potential business partners and opened more than 2,300 new business partnership stores in one year. In addition, Lele Tea also announced that it was open to joining. It is not difficult to see that direct sales to franchise, rapid expansion of stores, and completion of multi-tier city layout have become the goals of many tea brands.
The owner wants to co-create with the franchisee
Although the listing of Tea Baidao Bell is closely related to many franchisees, the relationship between the two is more like "co-creation". For the fiercely competitive tea market, location determines the surrounding customer flow, income structure and profit model and many other factors that determine the survival of stores.
In the view of the above-mentioned person in charge, only when the brand and the franchisee reach a consensus and use the resources of the two to co-create, can the franchisee and the company form a win-win situation. In terms of site selection, at the macro level, the brand cooperates with a third-party cooperation digital platform to analyze key indicators such as business atmosphere, brand performance, and population consumption in the business district, so as to provide franchisees with pre-position judgment and check the site selection. At the micro level, the brand will conduct an in-depth on-site inspection of the points provided by the franchisee, including the flow of people, housing structure, water and electricity facilities and other engineering conditions to ensure that the points can support future continuous sales and operations, and then calculate the profit and loss of the store, evaluate whether the rent level is appropriate, and key indicators such as the payback cycle, and provide risk avoidance suggestions for franchisees at the site selection level.
The brand provides support for franchisees, but in fact, it is the franchisee who faces consumers every day, and in the dimension of understanding consumer demand, the feelings of franchisees are the most intuitive and real, and the problems raised are to the point and need to be solved urgently. In order to help franchisees solve practical problems, Chabaidao has established 16 operation centers across the country, and supervisors can travel to and from surrounding districts and counties within a day to provide on-the-spot assistance to franchisees in a timely manner. In addition, in order to maintain sensitivity to the market, the brand has also established a brand communication group, including the chairman of Chabaidao, company executives, heads of various departments and franchisees, in order to efficiently solve the problems of franchisee feedback, but also in marketing, packaging materials and new product design and other aspects of the extensive consultation of franchisees, the formation of co-creation.
According to Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, the profit model of Tea Baidao has brought it a stable source of income, but it also means that the brand is highly dependent on the business conditions of franchisees. The strong binding relationship between the two helps to ensure the consistency of brand standards and service quality, which is essential for building and maintaining brand image. On the contrary, once the franchisee has mismanagement or violations, it will have a negative impact on the entire brand image. Therefore, Chabaidao needs to find a balance between maintaining close cooperation with franchisees and ensuring franchisees' autonomy to achieve coordinated development of both parties.
Not only in the tea industry, but also in the entire catering industry, the franchise model is more common, and with the continuous increase in the restaurant chain rate, it will be more perfect. When it comes to joining, controversial topics such as "cutting leeks", "high franchise fees" and "payback cycle" will follow, which makes the franchise model have many questions. But now, the binding coefficient between brands and franchisees has improved, and compared with the previous stories of some brands "running away with money", today's brands are more willing to provide support for franchisees, so as to become bigger and stronger.
Correspondingly, there is a relationship between the two that "one is prosperous, one is lost", and the brand is more cautious about the screening of franchisees, and the status quo that the cost is enough to join has become a thing of the past, and the high threshold of the brand for franchisees is not something that anyone can overcome. From the perspective of several brands that have been directly transferred to franchise, not only are there financial requirements, but also the participation and experience of franchisees are equally important. When Heytea announced that it could be released, the screening conditions mentioned that the business partners needed to become qualified Heytea employees and work in the store for more than 3 months; Naixue's tea not only required the franchisee to operate full-time, set up a time to take the store, but also listed the conditions that the single-store franchisee must have more than two years of direct operation and management experience in the catering industry; Lelecha also said in the early stage of opening up the franchise that the headquarters needs to review the information, and the franchisee also needs to participate in the interview.
"The savage growth period of the tea industry has passed, but with the gradual expansion of brand scale and market awareness, there is more initiative in the selection of franchisees. The person in charge further said that in the past 3-4 years, large or head chain franchise brands have begun to strengthen the secondary screening and control of investment leads, pay more attention to the quality and fit of partners, and tend to choose franchisees with the same concept and management awareness to promote the healthy development of business.
Wang Peng believes that the increasingly fierce competition in the tea market, with new brands and new products emerging, prompting brands to innovate and adjust their strategies. Not only that, but brands are also facing cost pressures, such as rising raw materials, rents and labor costs, driving them to seek a more efficient and low-cost operating model, which is also driving the development of the franchise model to a certain extent.
Guo Binlu and Zhang Tianyuan/text
Source: Photo provided by the enterprise, the company's official WeChat, Beijing Business Daily