Following the sharp price reduction of its products, BESTORE (603719SH) chairman and general manager Yang Yinfen has a new move.
On December 14th, TIMS Tianhao China announced that it had reached a cooperation with BESTORE, and BESTORE, as a KA franchisee of TIMS Tianhao Coffee, will open a small TIMS Express (Lingfeng store) in some stores.
Prior to this, Tims Tianhao Coffee had already opened this "shop-in-shop" into Sinopec Yijie convenience stores, Century 21 Real Estate and Haier Three-winged Bird.
Trade Winds (ID: tradewind01) learned from people close to BESTORE that the two sides are expected to open three stores in the Wuhan area.
The cooperation between BESTORE and TIMS Tianhao Coffee is generally interpreted by the outside world as a track of the same involution, and the combination of snack merchants and chain coffee will bring incremental customers to each other.
However, looking at the situation of the two in recent years, it may not be like the cooperative propaganda slogan "God-given good fate", but more like a trial and error out of group warmth.
BESTORE felt the chill because the discourse power in the snack industry is gradually shifting from the brand side to the downstream channel, and the "high-end snack" image it adhered to in the past is not enough to win the competition.
This will be especially evident in an environment of weak recovery in consumption.
In the first three quarters of this year, BESTORE achieved revenue of 599.9 billion yuan, a year-on-year decrease of 1433%；Achieved a net profit of 19.1 billion yuan, a year-on-year decrease of 3343%。
Yang Yinfen bluntly said in an open letter to take office: "At present, what is in front of us is not only the problem of difficult life, but the problem of whether we can live. ”
Therefore, as soon as Yang Yinfen took office, he burned the fire to the top of the world: 300 of its products implemented an average price reduction of 22%, with a maximum reduction of 45%. Yang Yinfen called this a reform that "returned to the original intention".
Only half a month after BESTORE officially announced the price reduction, I waited for the news of the cooperation between BESTORE and TIMS Tianhao Coffee.
As of the third quarter of this year, the number of TIMS Tianhao Coffee stores in China for 6 years has only reached 763, while the local specialty coffee brand Manner has made great progress, exceeding 1,000 stores in October this year, and is regarded as the "only seedling" in the specialty coffee track.
Regarding the cooperation between BESTORE and TIMS Tianhao Coffee, a private equity person in South China said bluntly that the problem of TIMS China is that it has not made obvious differentiation from its peers, and the setting of "warm food" plus coffee is facing direct competition with restaurants, and KFC and McDonald's with more stores are also buying coffee, which has a greater advantage.
In addition, analysts of food and beverage industry brokerages in North China expressed concerns about "not being able to see who is giving whom to drain from both sides of the cooperation" to Trade Winds (ID: tradewind01). The meaning of "huddling together for warmth" is obvious.
Prior to the partnership with BESTORE, Tims had already opened coffee shops in Sinopec EasyJet, 21st Century Real Estate, Haier Three-winged Bird and other stores, and as of August this year, it had opened 46, 12 and 3 Tims Express fusion stores in the above three brand stores, respectively.
The above-mentioned South China private equity person told Tradewind (ID: tradewind01) that TIMS's shop-in-shop model is conducive to quickly selecting points for expansion, but on the one hand, there is no shortage of high-quality offline points for TIMS to expand, and on the other hand, people who enter BESTORE stores to buy snacks also have doubts about whether there is a strong demand for coffee.
And the person said that at present, Sinopec EasyJet has more than 20,000 stores, if the shop-in-store model goes smoothly, the number of Tims stores in EasyJet is only 46, which seems too small, "if it can be copied in batches in EasyJet, there is no need to enter the BESTORE to open a store."
From the way of cooperation between the two sides, we can also see the "cautiousness" of BESTORE. A person related to BESTORE told Tradewind (ID: tradewind01) that the cooperation with Tims Coffee has not been finalized. At present, TIMS Coffee pays rent to BESTORE, and it will be adjusted according to the actual operation situation in the future, and the possibility of sharing the account between the two parties is not ruled out.
It is worth mentioning that some of BESTORE's stores are currently operating its own coffee brand "Liangjia", which may have a potential conflict with TIMS Coffee.
In this regard, a relevant person from BESTORE told Tradewind (ID: tradewind01) that there may be adjustments in the future, because there are still relatively few cooperative stores with TIMS, so it will not affect Liangjia for the time being.
For BESTORE, the logic of coffee drainage and snacks may not be reliable, but the rapid expansion of mass snack stores this year shows that low prices are more reliable to a certain extent.
Since more than eighty percent of snack consumption is completed through the lower channels, this means that whichever opens more stores and has a wider range of downstream channels will have a greater right to speak.
The essence of the business of mass snack merchants is to reduce the circulation links, reduce the procurement cost by relying on the scale advantage of opening more stores, and then build competitive barriers.
Trade Winds (ID: tradewind01) learned from people close to Zhao Yiming that the unit price of Zhao Yiming's members is 60 yuan, compared with the unit price of BESTORE that was once positioned as a high-end store is more than 100 yuan.
Since the beginning of this year, in order to seize the dominant position of the industry's head, first in September, Wanchen's brands "I want to come", "Come to Youpin", "Di Di Di" and "Lu Xiao Glutton" have completed the merger, and the number of stores has reached 3,700;Subsequently, in November this year, Snacks was busy and Zhao Yiming Snacks merged, and the number of stores reached more than 6,500, realizing the overtaking of Wanchen's corner.
In order to achieve the purpose of low prices, it is not as easy as sending a hard price reduction notice, BESTORE needs to adjust the SKU and re-polish the single-store model.
Trade Winds (ID: tradewind01) learned from people close to BESTORE that the number of SKUs currently sold by BESTORE is 1,300, but about 500 of them need to be OEM. In the future, BESTORE will significantly reduce the number of SKUs and create large items such as crispy pancakes and pork jerky.
In addition, Trade Winds learned that BESTORE will also introduce products from other brands that have brand effect in a certain subcategory, and the ratio of self-owned brands to third-party brands is about 6:4 in the long-term SKU number plan.
In terms of store opening, BESTORE plans to open 600-700 new stores this year, and the store growth rate is close to 20%. However, the pace of expansion will slow down significantly next year, with the number increasing by about 10%.
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