The ‘Prisoner’s Dilemma’ of Prepared Foods: The Freezer Wars of New Consumption

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Image source @Visual China

Image source @Visual China

Text | Whale Merchant, Author | Three Wheels

The end result of capital ripening of pre-made dishes is demonstrated in fresh food e-commerce and community group buying.

Luo Min, who entered the prefabricated food track in a high-profile manner, originally wanted to take advantage of the new “window” to turn around, but unexpectedly fell into a big somersault.

The day before yesterday, with a 19-hour live broadcast, he gained more than 4 million followers and a GMV of 250 million, but his debut was the peak. A few days later, Luo Min’s “live broadcast partners” Jia Nailiang and Fu Seoul issued statements one after another, terminating cooperation with Qudian and drawing a clear line. The reason is that the dark history of Qudian’s “campus loan” has been pulled out and fermented and has become the target of public criticism.

In the live broadcast, Luo Min called on the mothers to join, and said that as long as the mothers opened a pre-made vegetable store a few hundred meters away from the community, they only needed to sell 50 dishes per day, and they could easily earn thousands of dollars per month. .

Netizens left messages one after another: “After harvesting college students, come to harvest Baoma again.” “Capital is the original sin.” “The fun store does not fail, this netizen has an inescapable responsibility”…

In fact, the prefabricated vegetable track was not born to “cut leeks”, the demand itself exists. According to statistics from relevant institutions, in 2021, the market size of China’s prefabricated vegetable industry will reach 345.9 billion yuan. But most of them come from the 2B scene. This time, the capital to help pre-made dishes is pushing to the climax of the 2C retail scene.

The popularity of pre-made dishes today is similar to that of fresh food e-commerce, community group purchases, and front-end warehouse e-commerce in the past. They are all “high-frequency just-needed”. However, the scale “burned” by subsidies will eventually become a “dead game” when the capital environment and economic environment deteriorate.

Yesterday, the “storm thunder” of Daily Youxian, which fell into bankruptcy, once again sounded the alarm for the entire industry .

Capital masters “do the game” pre-made dishes

Luo Min, who started a grassroots business and failed many times, finally put Qudian on the US market at the age of 34, is already a winner in life in the eyes of many people.

However, he is familiar with capital routines and keeps up with every trend, even if it is Dabai Automobile, Qianlimu luxury goods, etc., none of the transformation projects after the liquidation of Qudian Campus Loan have been successful, but he always adheres to the principle of “holding high and spreading the scale of the currency circle”. the rules.

This time, Luo Min entered the pre-made dishes “Buy pickled fish for a penny” and “Free delivery of 1,500 iPhone 13s”. Under the Internet marketing strategy of attracting people at a low price and spending a lot of money on traffic, Qudian has completed the progress of rapid entry and expansion. But excluding logistics and costs, Luo Min lost 5 million in 5 minutes.

Losses can’t stop Luo Min’s pace. After seeing the crazy increase in fans and orders, Luo Min publicly stated the next day that he would launch a plan to open 100,000 offline stores in the second half of the year.

According to Luo Min’s plan, users of Qudian ‘s pre-made dishes can join the Qudian pre-made food store for free. The number of such free-to-franchise brick-and-mortar stores will reach 10,000 within this year, 50,000 next year, and 200,000 by 2024.

However, after the highlight moment, it turned into “death to the light”.

Luo Min was blocked by the former director when he was on the live broadcast of “Oriental Selection”, and the fans of “Boss Luo of Qudian ” also dropped from 5.082 million at the peak to 4.84 million at present.

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Luo Min’s rapid decline in fans is the result of netizens’ crusade. At the same time, netizens questioned the business model of pre-made dishes.

Pre-made dishes are a business model emerging with the “home economy” and “lazy culture”. According to iiMedia Research, from 2019 to 2021, the size of my country’s prefabricated vegetable market will increase from 144.5 billion yuan to 345.9 billion yuan. It is expected to grow year by year at a growth rate of 20%, and by 2027, the market size will exceed 1 trillion yuan.

The public questioned, mainly because the prefabricated food brand usually adopts the expansion model of franchise. Qudian does not take the usual path. It authorizes brands to users without charging any fees, and is also responsible for guiding store decoration and product sales.

Not only is it free, but Qudian even has to “borrow money” to franchisees. At the press conference, Luo Min said, “We will provide interest-free loans to those who join, and all APP mini-programs do not need to worry about the technical system, we will do it well.” In addition, he also emphasized that Qudian will be a retailer in the future. It is a vegetable company, not an Internet company.

In fact, the essence of making pre-made dishes in Qudian is to be a (supply chain) financial company under the “vegetable garb”. This kind of franchise model similar to MINISO, if the profit effect of the store is not good, the contradiction between franchisees will break out collectively.

Luo Min is not the only one who values ​​the value of pre-made dishes. In the early days, well-known catering brands such as Haidilao and Quanjude were also restless and entered the game one after another. Brands such as Weizhixiang and Qianwei Central Kitchen have also been listed and have continued to raise funds.

At the beginning of the year, Lu Zhengyao, who had built two listed companies, Shenzhou Car Rental and Ruixing Coffee, also announced the launch of the pre-made food project “Bite of the Tongue”. In just 4 months, Tongue Hero has received 1.6 billion yuan in financing, and the number of franchise stores has reached 6,000, and plans to open 3,000 stores within 5 months.

And Lu Zhengyao’s mode of making pre-made dishes is similar to that of car rental in Shenzhou. With the help of rapid capital increase, scale is formed and multi-channel realization. This is a very test of the financial strength of the brand. If you are not careful, there is a risk of capital disconnection.

Now, new and old players are staking their pre-made dishes one after another, and they don’t seem to be worried about capital. When the brand became more and more crazy and inflated, they didn’t seem to have time to see how far pre-made dishes could go with capital.

The protagonist of the B-end “makes money in silence”, and the supporting role of the C-end is “zoomed” to attract attention

According to the “2022 China Prefabricated Vegetable Industry Insight Report”, from 2013 to 2021, a total of 71 investment and financing events occurred in the prefabricated vegetable track, and the total disclosed financing amount exceeded 1 billion yuan, involving 42 projects.

10 days ago, Lihe Taste, which focuses on the food field, completed the D round of financing, which was jointly invested by Huaxing New Economy Fund, Yinshan Capital, and Jianfa Xinxing Investment. Aunt Qian, who was frustrated by the community fresh food store, also recently received a new round of financing by relying on the pre-made vegetable project.

However, at present, most of the pre-made food brands in my country are mainly 2B. According to the research report of Guohai Securities, in 2021, the C-end market of pre-made dishes will only account for 20%, and the B-end market will occupy 80%.

The B-side accounts for 80% of the share, mainly because there are a large number of catering companies that do not have supply chain capabilities. Pre-made dishes have the characteristics of standardization, easy replication, and reduction of processing procedures, which saves the cost of kitchen chefs and improves the efficiency of meal delivery.

In addition, the supplier of pre-made dishes is a professional R&D team, and the speed of new products will be faster and more professional than that of general catering, which can greatly improve the speed of new restaurants. Therefore, pre-made dishes are a very “money” market at the B-side of catering.

Enterprises such as Weizhixiang, Xinliangji, and Steamed Boiled Cooking, which entered the game earlier, have benefited from dividends. In April last year, Weizhixiang was also successfully listed, becoming the “first stock of pre-made dishes”.

On the other hand, in the C-end market, prepared vegetable companies try to rely on a lot of investment to open up new markets with marketing as a gimmick. In 2021, a number of pre-made food brands targeting the C-end market, such as Wangjiadu Foods, Zhenwei Xiaomeiyuan, Xunweishi, and Sanmean Youbao, will receive financing. IDG Capital, Meituan Dragon Ball, Baidu Ventures and other capitals have successively added.

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However, in the Chinese consumer market with diverse food cultures, pre-made dishes have not yet been established due to factors such as taste and cost. Consumers who don’t cook usually order takeout instead of buying pre-made dishes, which are cumbersome to eat.

Consumers who cook say that most of the pre-made dishes taste average and are not suitable for the whole family. It is better to go to the vegetable market to buy fresh and healthy ingredients. This means that pre-made dishes cannot directly hit the pain points of consumers, but instead fall into an embarrassing situation between take-out and vegetable markets. Once the capital subsidy is lost, the price will rise, the repurchase will be low, and the loss will be too high, and most players will be in a dead end.

In addition, the acceptance of pre-made dishes in first- and second-tier cities is not as high as the brand expects. In 2021, first-tier cities will account for nearly half of the consumption of “C-end” prepared dishes, while the population of first-tier cities will only be 82.99 million, accounting for less than 6% of the national population.

Also, the sinking of pre-cooked dishes is also very difficult. Consumers in third- and fourth-tier cities have not shown obvious enthusiasm for pre-made dishes, and most consumers in lower-tier markets still have the impression of “unhealthy” pre-made dishes.

Today, the pre-prepared vegetable industry with more meat and less meat is full of capital bubbles. After a pre-made vegetable brand specializing in the C-end spends money and earns a lot of money, whether it can continue to play this traffic game is not only related to the brand’s own supply chain capabilities and product reputation, but also the more important factor is whether the capital is willing to continue to burn money.

After all, the “predecessors” of pre-made dishes have not tasted too much “sweetness”. Early-stage start-ups such as Qingniancaijun, Wochu and other brands were closed successively due to operational difficulties. Among them, Young Caijun declared bankruptcy and liquidation due to factors such as supply chain upgrade and store expansion, the capital chain was broken . My kitchen is also unable to continue to burn money, and the order volume has dropped rapidly.

The story of “joining”, don’t become a capital “sickle”

With the popularity of capital, pre-made dishes have indeed become a “window”. Professionals such as Weizhixiang and Haodelai, as well as “latecomers” such as Hema Xiansheng, Yonghui Caishixian, and Dingdong Shopping all hope to quickly reach the top and become the industry leader.

When the tide of capital recedes, the risks of pre-made dishes will be revealed.

First of all, the scale of franchising used by pre-made food brands is the offline mode, which will cause the cost to rise sharply.

For example, the already listed Weizhixiang. Its sales channel layout is B-end + C-end. The 2021 financial report shows that the annual revenue is 754 million yuan, of which 1,319 franchise stores contributed 346 million yuan, and the average annual revenue of each franchise store is 262,300 yuan; the average gross profit margin of franchise stores is only 26.01%. Because store rent and labor costs are not small expenses.

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Secondly, the cold chain problem that cannot be bypassed by pre-made dishes. The processing of Chinese-style prefabricated dishes is more complex, the categories are more abundant, and the types are wider. Foods with a short shelf life have a high demand for preservation and cold chain.

Companies with cold chain advantages, such as Dingdong Maicai, Hema, and Daily Youxian , can win a place by virtue of their supply chain and front-end warehouse advantages. However, even large-scale frozen products will have problems such as loss and complaints. This is a historical problem that platforms and merchants are still unable to overcome.

Moreover, the cold chain will increase the price of the product. Compared with the high-quality and inexpensive pre-made food on the supermarket shelves in the United States, the domestic pre-made food is expensive and not cost-effective. This is also one of the reasons why it is difficult for pre-made dishes to open the market on the C side.

Finally, there is the issue of food safety. According to the “Pre-made Vegetable Consumption Survey Report” released by the Jiangsu Provincial Consumer Protection Committee this year, nearly 80% of consumers said they encountered quality problems when purchasing pre-made vegetables. Among them, 25.71% of consumers encountered the problem of spoilage and corruption of dishes, and 15.39% of consumers said that the purchased pre-made dishes contained foreign matter.

It can be seen that the pre-made dishes in the eyes of consumers not only need to be improved in taste, but also the safety issues are more worthy of attention. With more and more companies with insufficient qualifications or no catering experience, they have entered the prefabricated food track. Perhaps there will be more food safety issues and business closures that will emerge later. Relevant departments also need to issue relevant policies to escort the prefabricated vegetable industry.

Pre-made dishes are “good stories” in the eyes of capital. Players represented by Luo Min and Lu Zhengyao use capital to get traffic and make money with aggressive methods. It’s just that this card, if you want to win on the C side, is still debatable.

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