"The essence of catering stores is retail industrialization, and the key to retail industrialization is high-quality supply chain."
Source | Wagyu Business (ID: heniucaijing)
Author | Huang Caixia
Edited | Uncle Cow
After the unsealing after the epidemic in 2020, it is the peak period of Haidilao.
"The first thing after unblocking is to go to Haidilao to eat hot pot" has been on the hot search of major social networks.
After the epidemic, Haidilao's market value soared to HK$468.2 billion. In March 2021, Haidilao founder Daniel Zhang became Singapore's richest man with a net worth of 245 billion.
However, half a year after reaching the summit, Haidilao became a "negative teaching material".
<h1 class="pgc-h-arrow-right" data-track="14" >01 Haidilao touches the ceiling</h1>
First of all, it was once the most popular "Haidilao-style service" that was attacked, and in today's consumption upgrading society, everyone no longer likes Haidilao's overly enthusiastic service methods, and even some people feel that it is a social disturbance.
Secondly, it is banu hot pot, cobbled hot pot (under the umbrella of sipping and feeding), and the rise of various small and medium-sized hot pot brands, they use more innovative and more in line with the audience to do hot pot after learning Haidilao, the industry leader teacher, or innovate in taste, category, or in service and dining environment, the overall effect is good. Haidilao no longer has an absolute competitive advantage.
In addition, after the epidemic, the public is no longer optimistic about the economy, and the desire to consume has decreased.
Finally, these changes are also truly reflected in Haidilao's financial report, and the turnover and turnover rate have declined.
Haidilao's net profit for the full year of 2020 was RMB235 million, and the expected net profit was about 90% lower than the net profit of approximately RMB2.347 billion in 2019.
In 2019, the average overturning rate of Haidilao declined for the first time, from 5.0 times/day in 2018 to 4.8 times/day in 2019, and in 2020, the average overturn rate was only 3.5 times/day. In 2021, it fell to 3 times / day, which is not as good as the industry's first-line hot pot restaurant.
Compared with last year, Haidilao's average daily same-store sales fell from 87,200 to 84,800.
......
Some people have calculated that last year, Haidilao averaged less than 300 yuan per store a day. Such a large hot pot restaurant, hard work daily profit of less than 300 yuan, many people will not do business.
In a word, everyone thinks that the seabed is out, no.
"I misjudged the trend (the store expansion plan)... It is indeed blind confidence to look at now. In June this year, in the face of severe pressure, Daniel Zhang admitted at the investor exchange meeting.
In October this year, Haidilao's market value evaporated by more than HK$300 billion, at one point less than HK$150 billion, and Daniel Zhang also fell to Singapore's richest man.
But that doesn't mean Daniel Zhang failed.
<h1 class="pgc-h-arrow-right" data-track="199" >02 Daniel Zhang three plans that have not been said to outsiders</h1>
Only entrepreneurs, investors and industry insiders in the catering circle know about the company "Shuhai Supply Chain" (hereinafter referred to as Shuhai), which is a supply chain company independent of Haidilao.
Wagyu Business (ID: heniucaijing) has come into contact with many business leaders and has a deep understanding that a good business leader will not only win in familiar areas, but also be better at finding new battlefields.
When the hot pot store fell into the "inner volume", Daniel Zhang was looking for a new battlefield, which determined the fate of Haidilao in the next 5 to 10 years.
An investor who works closely with Haidilao told Wagyu Commercial that in the Daniel Zhang's catering plan, there are three directions, and each direction can give birth to a 100-billion-level company.
The first is the store. Now Haidilao wins with services and standardized management. Haidilao stores are now listed at a stable market value of about 100 billion to 200 billion, but Haidilao also expects this field to fall into the Red Sea, so it is not realistic to maintain high profits, they pursue scale.
The second is the supply chain, that is, the Shu Sea. Shuhai first served Haidilao's supply chain system, and then became independent. Now we can provide high-quality dishes and raw materials for other food and beverage outlets.
This is like Ali's rookie logistics, born in the main company, but can serve the entire industry.
Nowadays, Shuhai has cooperated with many investment institutions and business schools to serve catering entrepreneurs and export supply chain systems and management methods.
The third is smart catering empowerment.
Haidilao began operating smart catering without waiters as early as 2019, which is said to cost 100 million.
This system is not only for its own stores to build, but Haidilao has seen the industrial trend of intelligent unmanned restaurants, and once mature, it can provide solutions such as restaurant robots and automation for the entire catering industry.
Today, Wagyu Business wants to focus on Shuhai, because intelligent catering solutions are still early, and the store war is in the past, and the supply chain layout is unfolding.
<h1 class="pgc-h-arrow-right" data-track="206" >03 Common problem in the catering industry: the food supply chain that is distributed layer by layer</h1>
Back in 2016, Daniel Zhang said in an interview with the Harvard Business Review: "Our strongest part is actually the supply chain. If you look at our central kitchen and distribution center, you will be shocked, I dare not say that the best in the world, but definitely the world's first class. ”
Everyone is most familiar with Haidilao hot pot, but there is also a U Ding Mao dish founded in 2011 and open to join, which relies on the strong supply chain incubation of Shuhai. This is an attempt to lay out the external services of Haidilao's supply chain, and the results prove that they have this ability.
We should look at Haidilao from the perspective of an "industrial group" in order to get a glimpse of the whole picture.
Haidilao's store system includes Haidilao hot pot and U Dingmao cuisine; Shuhai supply chain responsible for the supply, reserve and transportation of ingredients; Shuyun Oriental, which is responsible for store decoration and renovation; Weihai Consulting, which provides services such as human resource management, commodity pricing, brand marketing, etc.; and Yihai International (01579. HK）......
Among them, the market value of Yihai International is 48.2 billion, the market value of Shuhai supply chain is more than 43.4 billion yuan, and the market value of the entire Haidilao "supply chain empire" is conservatively estimated to be more than 300 billion yuan.
With the improvement of the supply chain, the catering industry is likely to set off a new round of innovation.
According to the "China Catering Big Data 2021" released in May this year, the number of Chinese restaurant chain stores reached 0.7% of the scale of 10,000 stores three years ago, and in just three years, the proportion of chain franchise stores with more than 10,000 stores doubled.
Source: China Catering Big Data 2021
According to the report, the chain rate of China's catering market was 12.8% in 2018 and rose to 15% by 2020. Compared with the 50% restaurant chain rate in the United States, the growth space of domestic restaurant chaining is huge.
Fast food, snacks, beverages and other formats have emerged Wandian chain brands, which means that the catering industry has entered a new node of development of scale, branding and standardization.
This also means that the food supply chain industry will usher in an explosive period.
Wagyu Business (ID: heniucaijing) will further explore how Haidilao's food supply chain is evolving. What are its advantages?
As mentioned earlier, Daniel Zhang three steps of 100 billion chess: stores, supply chains, and smart catering empowerment, in fact, they are also the three stages experienced by Haidilao.
The first phase was from 1994 to 2009, with the aim of making money by using stores.
With the concept of "people on earth can't stop Haidilao's services" and "Haidilao you can't learn", Daniel Zhang has become the learning object of many enterprises.
At this time, Haidilao's supply chain is still in the early stages, more traditional, and the supply of ingredients relies more on human operation.
In the procurement process, Haidilao, like most traditional catering stores, mainly relied on private procurement, and accounted for 80% of the overall sales ratio through the farmers' market.
In the whole procurement process, the traditional multi-level distribution model is the mainstay, from the place of origin to the place of sale of the circulation process, to go through the primary, secondary wholesale market, in the current situation of layers of distribution, the purchase price is 2-3 times the origin of the range.
In the initial processing of raw materials, the back kitchen of small catering brands is generally roughly processed by 2-3 employees to process clean vegetables and meat.
In terms of warehousing and logistics, they generally choose third-party logistics, with high prices and large loss of ingredients.
With the increase in the cost of each link, the profit margins of its stores are constantly compressing.
According to the "China Catering Big Data 2021" report, 85% of China's catering enterprises are small and medium-sized non-chain stores, and their entire supply chain is in a traditional way, and the products produced by each store do not have a unified standard.
Daniel Zhang, who are at the forefront of the industry, quickly realize the importance of supply chain system layout.
In 2004, Haidilao already had 6 stores, and Daniel Zhang began to think about the problem of standardization and chaining, but suffered from the lack of a solution.
<h1 class="pgc-h-arrow-right" data-track="207" >04 Split the supply chain independently, and Shuhai will do the Chinese version of "Sysco"</h1>
In 2007, Haidilao entered the Beijing catering market, and subsequently expanded rapidly nationwide.
By 2009, the Haidilao business began to flourish, with a turnover rate of up to 5-6 times a day. Since the beginning of this year, Haidilao has actively laid out the upstream of catering, and has built its own hot pot base, dishes, logistics and other companies, producing and selling itself, and can also supply other hot pot shops.
Haidilao enters the second stage of development, 2010 to 2016: going international and reshaping the food supply chain.
During this period, Haidilao took Singapore as a breakthrough point and stepped into the international market and became an international brand in the hot pot industry. At the same time, Haidilao will split and improve its supply chain and comprehensively transform and upgrade.
Daniel Zhang has made it clear that the development of Haidilao's supply chain is influenced by Sysco in the United States.
Who is Sysco?
In the 1970s, the economic development of the United States was in a golden period, and food distribution, as a supporting service for the city, also ushered in rapid development.
In 1969, John Bowe merged five independent wholesale grocery stores in Houston to found Sysco.
Listed in 1970, Sysco shifted from the primary market to the secondary market in just one year, which is a magical presence in the capital market.
Since its listing, Sysco's stock price has soared, growing much faster than other companies in the same period, and today, Sysco is the world's largest food supplier, feeding 356,000 restaurants, restaurants, hospitals and schools. As of October 2021, Sysco's market capitalization has reached 42.1 billion.
The success factor depends largely on the expansion of scale, that is, through the acquisition of regional food distribution companies, to help themselves grasp the supply and demand network of local food, and in the process, consciously build distribution centers and sales bases.
Over time, Sysco not only reduced costs, but also established itself as a food supplier.
For players in the domestic catering supply chain, Sysco is undoubtedly a benchmark for learning.
In 2011, Haidilao introduced the "Amoeba" model, splitting all aspects of its supply chain into "independent" organizations, decentralizing power, using flat management and independent accounting, and encouraging major subsidiaries to explore on their own to seek more opportunities for profit growth.
The "Hai Brothers" were born in this context. In 2011, Zhengzhou Shuhai Supply Chain was established.
In 2014, Haidilao's stores exceeded 100, and the catering value chain split action was carried out, and the Shuhai (Beijing) supply chain business was adjusted, focusing on B2B of catering ingredients for restaurant chains and retailers, and was responsible for providing fully managed services for the overall supply chain.
After the split, the Shuhai supply chain has developed rapidly, and now has a modern cold chain logistics center, food processing center, bottom material processing, vegetable planting base, mutton processing base and so on throughout the country.
By the end of 2019, Shuhai had achieved an external customer revenue of 4 billion yuan, and the related party transactions with Haidilao were still nearly 2.2 billion yuan, with overall sales of 6 billion yuan, which has exceeded the sales of many head hot pot restaurant brands. At present, it has cooperated with more than 1500 restaurant chains and retail brands.
The new wave barbecue chain brand "Mutton Skewers A Long Time Ago" is one of the partners of Shuhai Supply Chain, which currently has 77 directly operated stores.
In 2016, "a long time ago" fell into an unprecedented loss.
In 2015, the catering industry was fiercely competitive, with Beijing alone adding 170,000 restaurants, and coupled with the economic downturn, Song Ji, the founder of "a long time ago", had to rethink.
At that time, almost all the larger barbecue brands used the central kitchen, but this investment was often tens of millions, and the speed of opening stores could not keep up.
Therefore, Song Ji adopted the OEM model (oem), and the object of cooperation was the Shuhai supply chain.
He looked at the procurement, quality control, warehousing and distribution advantages accumulated by Shuhai, and according to his own positioning, Shuhai gave a set of personalized cooperation programs.
Thanks to the light loading, the profit margin of "a long time ago" quickly increased to 15%-20%, compared to McDonald's's 8%, leading the rest of the industry.
By 2019, Shuhai Supply Chain has established 7 central kitchens to supply Haidilao's regional stores as much as possible, as well as other catering brands.
05 "The essence of catering stores is retail industrialization"
With the development of "Hai's Brothers", Haidilao has established industry barriers with a complete supply chain and food safety control as the core.
In 2016, Yihai International and Haidilao were listed successively. In the next three years, Haidilao's revenue rose from 7.8 billion yuan to 26.6 billion yuan, becoming a legend of the entire business.
With a new round of consumption upgrades, in the face of small and medium-sized non-chain stores with huge potential, Daniel Zhang need to think more, how to achieve long-term growth?
Li Zhujie, the founder of Buqiu Venture Capital, who invested in the star hot pot ingredient project "Pot Circle", in his view, the lack of Starbucks and McDonald's in China is because the supply chain is not good, and the industry currently does not lack a supply chain, but the quality is not good and the efficiency is not good.
He believes: "At present, there is oversupply, but high-quality supply is scarce, and only by integrating those high-quality and innovative supply chains in China can we meet the needs of users in this consumption upgrade."
Li Zhujie further explained that once the upstream high-quality production capacity and high-quality raw materials can be mastered, a moat can be established, and the upstream factor monopoly can be realized, so that it has downstream pricing power.
"Standardization and retailization meet the development needs of the catering industry, and it must be ensured that 10,000 stores provide the same high quality to users, and even sink to China's counties and villages."
The scale effect and user feedback of C-end consumption are formed, and enterprises can continue to improve, and in turn obtain a larger scale, so that factories can continuously improve efficiency, squeeze idle capacity, and then provide cheaper, higher quality, lower price commodities, and finally form a "double flywheel effect".
With the tide of the era of ten thousand chain stores coming, can Daniel Zhang rely on Shuhai to return again?
Resources:
[1] Business Journal, No. 6, 2017, Liang Yulong
[2] "Ten Thousand Stores Profit: 30 Lectures on the Profit Model of Restaurant Chains", Chen Zhiqiang
[3] "Digital Transformation of Banks: Paths and Strategies", Wang Songqi
[4] "You can't learn haidilao", Huang Tieying
The end