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Text / Wang Xiaoling and Luo Lixuan
Source/20she (ID:quancaijing_20she)
Is the chance to change your life against the sky?
At the beginning of November, HEYTEA, which had been self-operated for ten years, finally decided to open the franchise.
Xiao Li, who lives in a third-tier city in Guangdong, is very excited. Xiao Li knows the operation of some milk tea shops. When the Guangdong lemon tea first became popular the year before, he opened his own lemon tea shop. With a franchise fee of less than 500,000 yuan and the brand of HEYTEA, his first instinct was to “have a head start.”
Compared with those chain hot pot restaurants, coffee shops, and milk tea shops that have not been doing business for a long time after opening, HEYTEA is still fully attractive in lower-tier cities, making people more confident. “Moreover, the investment in these stores is actually not cheap.” Xiao Li added that the investment amount required by HEYTEA is actually a reasonable level in the industry, and it is not as high as everyone thinks.
Xiao Li, who works in a big Internet factory, loves to open stores, and his hometown has always had a tradition of doing business. He said that most young people will not work part-time if they can start a business. If they work in a company, it is probably because he can open the same company within three years.
However, after Xiao Li had a detailed understanding of the conditions for joining, he became a little hesitant. Because, HEYTEA has other strict requirements for the franchisees they call business partners, in addition to the investment of real money and silver.
The basic requirements include: working in the store for more than 3 months, fully understanding and agreeing with HEYTEA’s brand spirit and corporate culture, and passing the promotion assessment of 4 positions in the store, and passing the existing store standard food safety and quality control more than 3 times in a row Inspection and assessment, obtain the ability of the store manager, etc.
In other words, you have to become a qualified HEYTEA store manager before you can become a business partner. To a certain extent, this can also be regarded as bringing dry food to work for HEYTEA. In fact, this is the common feature of milk tea franchises in the past two years. Go to various platforms to search for milk tea franchises, such as Yidian, Michelle Bingcheng and other related topics of milk tea brands.
Some people think that opening a milk tea shop can leave the workplace and stop looking at the boss’s face. But in fact, the milk tea franchise stores are all managed by regional managers. The monthly income of the regional manager is not high, and most of the salary for this position on various recruitment platforms is not more than 10,000 yuan, but for the franchise store owner, he is an uncompromising boss.
Before your destiny is tied to the brand, it must be tied to the regional manager. If you run into a good regional manager, you can help with some problems. On the contrary, there will be all kinds of troubles. For example, area managers who are inexperienced in management may prefer simple and crude fines.
A regional manager manages multiple stores at the same time, and there is a group for daily communication. The regional manager’s management of the daily operation of the store is beyond imagination. For example, let you take pictures of the situation in the store and send it to check whether the work is carried out according to the regulations. Meetings in the group in the evening and communicating the company’s new arrangements are daily tasks. Regional managers may send dozens of messages a day, and they must respond when they receive them. If one misses one, they will be fined several hundred yuan.
Even franchise owners are strictly required to stay in the store, such as how many hours a week they must be in the store, and there are even regulations on how many days off each month. For example, some people say that a little bit stipulates that you can only rest for 4 days a month.
Such strict management makes the bosses feel ashamed. A new retail founder is very envious of a little bit of franchise store management. “There are regulations on how to clean the rags and where the sweeping brooms are placed.”
All shop owners can earnestly implement the regulations, relying on the drastic measures such as fines from the brand headquarters, restrictions on purchases, and termination of contracts. Therefore, in essence, a good franchisee must first be a “worker” of the brand.
Not cutting the leeks, but the problem remains
Even so, it is not easy to make money from milk tea franchise, and even in recent years, it has gradually become synonymous with cutting leeks. Chain franchises are generally divided into two types. One is the so-called quick recruiting company that attracts investment quickly. The purpose is to earn a wave of franchise fees. This kind of joining is obviously very risky. In recent years, there have been five or six cases of milk tea joining the thunder of celebrity endorsements.
Most of the franchise models of well-known brands are based on strong management models. “It is to help inexperienced franchisees avoid operational risks by strengthening management, and milk tea franchise is no exception.” said a milk tea shop franchisee.
In other words, the management of franchisees is becoming more and more strict, and there is no way. According to iResearch, in 2017, 96,000 milk tea shops were opened and 78,000 were closed, and only 18.8% of the milk tea shops were sustainable for more than one year.
However, under this model, the platform is becoming more and more convoluted, and franchisees have little autonomy in operation. Whether it can achieve profitability within the period promised by the brand has many factors.
However, the current milk tea franchise model, from the initial site selection, store decoration design, to the business strategy after opening, and product innovation and brand promotion, etc., it is difficult for franchisees to intervene.
The joining of HEYTEA seems to be a step further than the previous strong management model, and it seems to be close to internal entrepreneurship. From this point of view, the standard implemented by franchise stores is the same as that of directly-operated stores, which can indeed allow HEYTEA to avoid business risks in the early stage of franchise.
According to a report from Yicai, at the beginning of HEYTEA’s business, it also piloted the business partnership business on a small scale. However, due to the lack of early HEYTEA experience, capabilities and resources, it was unable to provide good support for business partners, and it was unable to provide users with good products and experiences under the business partnership business. Therefore, HEYTEA gave up and chose direct sales. Development methods.
The current test is that HEYTEA’s accumulated capabilities come from its own hundreds of directly-operated stores, while the franchise model needs to provide continuous business guidance, food safety control, and supply of ingredients and packaging materials to thousands or even tens of thousands of franchised stores. Resources, between the two capabilities, there are many differences.
To ensure that thousands of franchised stores have consistent standards and quality, the idea of training franchisees to be their own store managers is simpler in terms of operation in the early stage.
From this point of view, HEYTEA may be able to avoid the problem of too dense outlets. A franchisee of Michelle Bingcheng complained that it is becoming more and more difficult to join and make money, mainly because the density of online stores is increasing, the regional protection distance of stores is getting shorter and shorter, and there are even gaps between two stores in places with large crowds. Only a few dozen meters.
According to public information, in June 2020, Michelle Bingcheng had 10,000 stores around the world, and by the end of March 2022, it had soared to 22,000, making it the chain of ready-made beverages with the largest number of stores in China, of which only 47 Direct store.
At present, HEYTEA’s plans for the location of franchise stores and the density of outlets are not known. Site selection has always been one of HEYTEA’s core competitiveness. The spatial heat map is used to calculate the flow of people, and the success rate has an excellent reputation in the industry. If you plan franchise stores strictly according to this standard, it is not difficult for franchisees to make money.
However, HEYTEA franchise stores are likely to change the rhythm of the previous store expansion and pursue speed and scale more. The problem is, HEYTEA comes a little late in this market. Colleagues have long turned the non-first-tier market for HEYTEA franchise into a red ocean.
Taking it all into consideration, even if it is HEYTEA, Xiao Li finds it difficult to make up his mind to invest.
Previously, we have also contacted many franchise owners such as Mixue Bingcheng, Aunt Qian and Yidian. Some of them, like Xiao Li, want to find a space for development outside the workplace, or consider joining as an investment that can yield a good return, while some just want to live a free life. At present, most of these beautiful longings have been wiped out, and they have become migrant workers in the county town with less guaranteed income.
This may be the biggest difficulty for HEYTEA to join as a latecomer.
Save HEYTEA by joining?
However, it is necessary for HEYTEA to join. In fact, whether the franchise can be successful is likely to be the key to the future rise and fall of HEYTEA.
This is not alarmist. Judging from the 10-year development history of HEYTEA, it may be the most dangerous moment – a weak consumer market, a lack of cash flow sources, and weak store growth. According to the data from the narrow door dining eye, in the past three quarters, HEYTEA has only opened more than 30 stores, which can be said to be a world of difference from the speed of opening 300 stores in a year in 2020.
As one of the most important unicorn companies in the beverage chain market, the last time it was rumored to be valued was in July last year, reaching a staggering 60 billion (the same as Michelle Ice City). Although it’s a good thing to be bigger, how can a lake hold a giant whale? In the current primary market where liquidity is not ideal, there are very few institutions that can supply blood to HEYTEA.
Snow Lake Capital has just released a report on the investigation of Ruixing. In the report, they also investigated the data of competing companies, including HEYTEA. Judging from this report, HEYTEA’s situation may be worse than the market expected. From the second half of last year to the first half of this year, HEYTEA’s same-store sales declined 20%-30% faster than the industry average.
Snow Lake Capital believes that this will allow Heytea to turn from profit to loss in the second half of 2021. This means that even if HEYTEA does not expand, it needs blood supply. Joining can reduce the cost of HEYTEA’s expansion, thereby lengthening its capital runway.
In addition, compared with the coffee industry, the retention rate of the tea beverage industry is not high enough. The purchase frequency of new users of Heytea and Nai Xue will drop after a year, while the purchase frequency of new users of Ruixing and Starbucks will increase more or less. This has nothing to do with price, but with the non-rigid demand of milk tea products.
Therefore, the more important issue is actually development. Heytea and Naixue need new users and expansion more than the coffee industry. Nie Yunchen, the founder of Heytea, once said in an interview with Tiger Sniff that if Heytea becomes a super brand, it needs a super scale. And now, HEYTEA has not been successfully listed, nor has it had a super scale.
When HEYTEA was born, the reason why they insisted on the self-operated model was because they wanted to use fresh fruits. The self-operated model can make the store more flexible to deal with complex supply chains and complicated material preparation links (such as the popular ones). Succulent grapes need to be manually peeled out one by one).
Snow Lake Capital has observed that in the past few years, the mid-end brand competitors who have adopted the franchise model have made great efforts to improve their supply chains and can provide fresh fruit tea drinks at a price of 5-10 yuan lower than HEYTEA . The product advantages established by HEYTEA through the self-operated model are gradually declining. Moreover, the penetration rate of these mid-end brands in low-tier cities is much higher than HEYTEA, which has launched a siege on HEYTEA that is trying to sink.
They also mentioned some worrying changes within HEYTEA. One is that product research and development capabilities seem to be weakening. After the succulent grapes, HEYTEA has not released popular models for a long time. This can’t help but make people worry about HEYTEA’s research and development capabilities.
Then there is the issue of executive turnover. In the second half of last year, HEYTEA’s head of operations (from Starbucks) resigned to Piye Coffee. They believed that this would further distract Nie Yunchen, who had already been distracted from the R&D department to do the retail beverage business, and let him You also need to care about the details of day-to-day store operations management.
Now it seems that joining at least one part of HEYTEA’s problem of going to super-scale will allow the headquarters to achieve a faster pace of expansion when facing the competition of mid-end brands, while the headquarters can concentrate on product development and supply chain Sort and upgrade.
If HEYTEA can cultivate a group of reliable store managers and franchisees, and implement a strict management mechanism, so that they can give full play to their autonomy to expand stores in low-tier cities, it is obviously the most ideal situation. But it can only be said that HEYTEA has chosen the one that may gain more friends among the two equally difficult paths.
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