Author |Tian Tian.
Edit |Lu Xucheng.
In the field of catering ** chain, the story of the Chinese version of SYSCO is a topic that is often talked about.
Founded in 1969, SYSCO is the world's largest food and beverage company, with a market capitalization of about $40 billion. Initially, the U.S. company was formed by the merger of 9 small food companies, and has since gradually grown through mergers and acquisitions, and now has more than 600,000 customers in more than 90 countries, mainly in North America and Europe, and the gross profit margin is stable between 18% and 20%.
Theoretically, as long as consumers are not satisfied with eating only the food of the same catering store forever, the higher the restaurant chain rate, the greater the opportunity for the first-chain enterprises behind it.
In this country alone there are about 1In the 5 trillion yuan catering chain market, from upstream farmers to downstream catering stores, intermediate link dealers are intertwined, and it is urgent to optimize and integrate the chain. The top catering chains in China, such as Meicai.com and Meituan's Kuaimu, have a GMV of tens of billions a year, divided into thousands of categories, and a category is at most hundreds of millions of yuan, corresponding to a market of hundreds of billions at every turn, which is really not about scale.
Compared with the United States, the upstream and downstream of the domestic catering chain are also much more dispersed, and the platform that integrates the upstream and downstream should have a greater right to speak. The Chinese version of sysco, which may be a more imaginative business than the American sysco.
Wang Xing of Meituan and Liu Chuanjun, CEO of Meicai.com, both of whom have made efforts in the catering ** chain, have publicly claimed to use SYSCO as the benchmark, and Ali Eleme has also launched the service "Youcai" with the same positioning. Today, Meituan Kuaidu and Meicai have both contracted sharply compared to their peaks, and Youcai was eventually abandoned after being shut down and restarted.
But that hasn't shaken the conviction of the SYSCO apprentices. Xianmu, which just completed its Series D financing in January 2024, is one of them. (The amount of financing and the investor have not been disclosed).
The company saved the country by starting with a more standardised casual dining track, but on the flip side, the team was often puzzled by how far away China's SYSCO would be when it was completed.
What is the difficulty in transforming the catering chain?
If the catering chain is divided into many multiple structures, it can be divided into three categories according to the value it provides: production and processing, circulation and service.
Before the advent of the Internet era, catering chain enterprises were mainly upstream production and processing enterprises. In the circulation and other links, each catering store purchases its own ingredients according to its needs and makes corresponding integration. From upstream farmers to terminal catering stores, they will go through wholesalers in the production area, wholesalers in the sales area, farmers' markets (community vegetable markets, fresh supermarkets) and other links, and layer by layer distribution improves the fresh loss rate, and it is common to increase the price by 70%-80%.
Based on this, in 2014, Meicai.com, a catering chain enterprise, was born, aiming to use Internet thinking to redo the traditional business of catering **chain. Four years later, when Meicai.com has raised funds to the E+ round with a valuation of $7 billion, Meituan has also established the Kuaidun business unit and entered the same track.
Meicai.com and Meituan Kuaidu, both of which adopt a platform-based, "self-operated + platform" model.
The platform model is to match catering ingredient wholesalers and stores; In the self-operated model, the platform purchases from manufacturers or distributors and sells to catering stores through the platform. Under both modes, the platform provides online information flow services for warehousing and logistics, as well as store food procurement.
In order to meet the needs of one-stop procurement of downstream stores and increase customer stickiness, Meicai.com and Meituan Kuaidu are gradually expanding SKUs and increasing the proportion of platform models in the development process. However, it is worth noting that, in general, the two chains are wide and shallow, and in essence, they have only completed a small section of warehouse control and store distribution, and the transformation of the chain in a single category is extremely limited.
In addition, the closure rate of small restaurants is high, and downstream customers may not be able to stay on the platform for a long time. The porter services of Meicai.com and Meituan Kuaidu are as thin as paper, and it is difficult to say that they are successful at today's point in time.
Some people may want to ask, Meicai.com and Meituan, one is a restaurant chain unicorn that has raised a lot of money, and the other is a large company that owns almost all catering stores in China and is always good at being the last to come, why are they difficult to become China's sysco? If other startups still have such opportunities, the remaining opportunities are in **?
A person from the catering chain told Blue Shark that the catering chain is an infrastructure industry, and the timing of the layout is very important, and the best time to enter the market is to provide them with "half a step early" basic service facilities when the catering brand standardization and chain will be opened on a large scale.
Judging from this point alone, Meicai.com and Meituan may enter the market at the right time.
In the era of pure offline transactions, the brand's control over franchisees is extremely limited, and cross-regional chaining is basically impossible to talk about. In 2014, in the same year that Meicai.com was established, Shuhai **chain, a chain project incubated by Haidilao, was officially independent and became a third-party food ingredient chain service provider, which greatly promoted the development of hot pot and other catering chains.
However, the more critical issue is that it is also a catering ** chainCompared with the United States, where SYSCO was born, China, a vast land, is distributed with very different geographical units and upstream and downstream compositions
At the beginning of the 20th century, the United States has formed specialized planting belts such as wheat belts and corn belts, and in terms of meat products, four meat processing plants have contracted 85% of Americans' beef share; China's agriculture is dominated by individual small-scale farmers, with scattered sources, and the four largest meat product manufacturers have a cumulative market share of only 30%.
If you look at it downstream, the United States is vast and sparsely populated, and the taste is relatively simple; There are great regional differences in China, one side of the water and soil and one side of the cuisine, a bowl of soy milk and a salty and sweet war between the north and the south.
In fact, the needs of many B-end catering merchants are very similar to big C, a dish may correspond to 2-3 kinds of ingredients, and dozens of dishes will correspond to dozens or hundreds of ingredients, some from the local area, and some also need to be deployed across regions.
It is the above characteristics that determine the complexity of the national network of China's catering chain, which is not the same as that of sysco, which is based on Americans' three meals a day. Internet platforms with a wide variety of SKUs, sinking to third-tier cities and below, may not be as efficient as local snack distributors with a small service radius and a better understanding of local people. The transformation of the catering chain by the Internet can only be done more heavily, go upstream, and even control how many scale and level of ingredients are produced and transported from the place of origin, and control the end-to-end circulation from the source of more SKUs to the restaurant, so as to achieve stronger bargaining power, higher circulation efficiency and lower cost.
But this path is doomed to make it impossible to make excess profits in the short term. Only by investing consistently can it be possible to make money consistently and steadily after a period of time. Is there any other easier path to achieve the Chinese version of Sysco?
Starting from the subdivided categories that are easier to standardize and scale is a new attempt in the industry.
Casual dining B2B battle
In 2016, several core members of Xianmu came out of Ali to start a business, and they started from the casual catering track to provide first-class chain solutions for tea, coffee, baking and other industry brands.
The choice of casual catering, a more subdivided track, is based on the team's "problem-oriented". Since it is difficult to scale the ** chain of Chinese food, the problem is that the downstream scenarios are not standardized enough, so start with the application-level categories in the casual catering track.
In recent years, people's requirements for eating better have become higher and higher, and fresh fruits and high-quality milk sources have been widely used in freshly made beverages.
How to open up the upstream and downstream markets? Xianmu's strategy can be divided into "two steps".
The first step is to start with the B-end casual catering business. Xianmu provides dairy products and more than a dozen core fruit categories with the highest application frequency, and strictly controls the gross profit of products, and deeply connects them with cost-effective advantages and high-frequency services; The second step is to reverse the upstream after having a certain stable demand scale. At present, Xianmu's B-end merchant customers include Tea Baidao, Haidilao, M Stand, etc.
What are the pain points of upstream agricultural production?
First, the market is unstable, and secondly, the quality of the fruits grown is different.
For upstream growers, if they are facing C-end consumers, first-class fruits with good quality will naturally not be sold, but second-class fruits with good quality and poor appearance or overripe often troublesome farmers. Xianmu locks in the core fruit category in the form of baoyuan underwriting, and sells the second **fruit to B-end catering stores at a lower price**. After helping farmers eat unsalable products, Xian Mu has gradually gained the bargaining power of first-class fruits, and has also become the leading merchant of B2C fresh e-commerce platforms.
While taking the core category as the starting point and transforming the upstream chain, Xianmu has also introduced other brands through the open platform to meet the needs of downstream customers for one-stop procurement, and the number of SKUs has reached thousands.
In the early stage of development, Xianmu began to penetrate from East China. After reaching a certain stage of development, the key question is: how to help customers achieve cross-regional expansion and solve the problem of long-radius transportation of ingredients from the source to any store in the country?
Digitalization and quality control technology are the keys to success.
Since 2021, Xianmu has carried out digital series with various key nodes in the upstream and downstream, realizing the control of raw material procurement, product quality monitoring, scheduling between different warehouses, and intelligent distribution routes. In addition, Xianmu also helps brands manage the purchase, sale and inventory of stores across the country.
In terms of quality control, Xianmu solves the problems of fruit seasonality and freshness period through post-harvest ripening control and other technologies, and some seasonal fruits can be achieved all year round.
Up to now, the number of urban outlets in the country is about 180, and among the existing chain brand customers, the new products can sink to all stores in the country within 3-5 days.
When will Chinese sysco come
Judging from the practice of Xianmu, perhaps the biggest inspiration of SYSCO for domestic catering chain enterprises is:It is necessary to go downstream to find more large-scale chain scenarios and categories, just as beef is to American consumers.
Without standardization and interlocking, many solutions cannot be reused.
All first-chain enterprises will face a challenge: their own performance is closely related to the development of downstream customers. Taking tea as an example, after several years of rapid growth and the head enterprises have entered the "era of 10,000 stores", the growth rate is expected to slow down in the next few years.
The above-mentioned catering chain people told Blue Shark Consumption that the penetration rate of each of the casual catering chain industry is very low, and even if the downstream industry hits the ceiling, it will not affect the upstream chain in the short and medium term.
When the development of the industry shifts from the incremental market to the stock market, customers will pay more attention to the cost, which is not a crisis but an opportunity for the first-chain enterprises with high efficiency advantages.
In the longer term, Xian Mu hopes to build an industrial router of the catering chain, so that the demand of terminal stores, upstream production resources, and various service providers are equipped on it to form a new ecology, at that time, differentiation will be left to upstream and downstream enterprises, and the standardized links that can be integrated will be handed over to intermediate service providers, and the supply and demand will be efficiently matched, and all participants will get several times the growth.
However, this matter can only be explored step by step in the very narrow track of casual dining, after all, at this point in time, only prefabricated dishes can be standardized and large-scale Chinese food.
In the future, through the merger and acquisition of capital, China may give birth to SYSCO, when the circulation efficiency will be greatly improved, and the ingredients we eat in other places will be cheaper. But there is no doubt that all of us need more patience before we reach the finish line.