Many companies that say they won't go public have been listed in the end, and those who say they won't join will eventually develop and join.
On March 4, Haidilao International Holdings***hereinafter referred to as "Haidilao", *6862HK) announced that it will implement the franchise model of Haidilao restaurants to further promote the expansion of its restaurant network with a diversified business model.
In the face of the continuous development of the catering industry in recent years in the chain operation and franchise model, Haidilao believes that the current direct operation and timely introduction of the franchise model will help the company achieve further moderate expansion. It is reported that Haidilao has also established a franchise division to formulate the details of the franchise franchise model and business cooperation process.
Haidilao said in the announcement that the company will adopt a number of criteria for the selection of franchisees, including a high degree of recognition of Haidilao's brand and values, vision planning, industry experience, financial foundation, etc., and implement unified operation and quality standards for all self-operated and franchised restaurants.
In addition, the franchised restaurants will receive the middle and back office services such as personnel training, first-class chain system, management experience, food safety control, brand marketing services, and performance appraisal provided by the group to ensure food safety and customer experience.
According to the information released on Haidilao's official website, Haidilao's requirements for franchisees include:
01.Agree with Haidilao's corporate culture and have the same values;
02.Have the willingness and planning to develop with Haidilao for a long time;
03.Have a financial foundation for multi-store development;
04.Have local property resources and have experience in enterprise management.
According to incomplete statistics, since 2022, there have been dozens of brands that have opened (restarted) catering franchises, distributed in multiple tracks such as tea, coffee, and snack fast food. According to the "2023 China Fast Food Enterprise Development Research Report" of Chenzhi Big Data, the proportion of pure direct enterprises in the top 100 fast food enterprises from 2020 to 2022 has decreased year by year.
Relatively speaking, the model of joining large stores will be more complex than the store models such as new tea drinks and snacks. As a leading catering enterprise, Haidilao's opening to franchise may be the most significant footnote under the accelerated trend of restaurant chaining.
Joining, an inevitable step to deepen the sinking market
For Haidilao's opening to join, many industry insiders expressed their surprise.
The tide is unstoppable. In the view of Long Zhen, a franchise evaluation expert and founder of Dream Data, Haidilao has two core competitiveness, namely low rent and intimate service. Among them, low-rent properties are Haidilao's core competitiveness, and under normal circumstances, Haidilao's rent is much lower than that of general brands. "Low rents are the business foundation of Haidilao's model. ”
According to Long Zhen's observation, Haidilao's site selection strategy mainly includes: choosing first-class business districts, the best shopping malls, huge areas, and locations in corners and corners. And Haidilao often signs an 8-10 year lease at once, and under such a strategy, it can guarantee a low rent.
Because of this, the proportion of Haidilao's rental cost has always been much lower than that of similar brands. According to the statistics of China Securities Construction Investment, Haidilao's rental cost in 2019 accounted for 4%, and the rent of hot pot and dinner corresponded respectively in the same period. 3%。
However, this strategy is prone to problems in the sinking market.
Shopping malls in lower-tier markets tend to be relatively small, so there is less pressure to attract investment. With a large area of long-term leases, it is difficult to get such a low rental cost, which also makes the past headquarters expansion method difficult.
Whether it is for Haidilao or the entire catering industry, the sinking market is a huge market that cannot be ignored.
Chen Zhi big data shows that from the fourth quarter of 2022 to the third quarter of 2023, the growth rate of catering stores in central and western regions such as Yunnan, Jiangxi, Qinghai, Xinjiang, Gansu, and Guangxi exceeded the national average, and it may become a new growth point for China's catering development in the future.
According to the 2023 Haidilao interim report, a total of 425 stores are in third-tier cities and below, accounting for 48% of the total number of stores in Chinese mainland, Hong Kong, Macao and Taiwan, and the proportion of sales has also reached 45%. And during the Spring Festival in 2024, the reception volume of Haidilao restaurants in second- and third-tier cities will increase by more than 60%.
Haidilao's 2023 interim financial report.
Therefore, if they want to further deepen the sinking market, franchisees with local property resources have better advantages.
This kind of brand is not a test of how much money the franchisee has, but how many assets and resources he has. According to the tea expert consultant of the Guangdong Chain Store Association, "Brother Leek", hot pot is currently the most complex category in the main meal. The first thing is personnel management, a hot pot restaurant often needs a team of twenty or thirty people, and under Haidilao's redundant service system, the number of people is often even more. Moreover, the quality of practitioners in the catering industry is relatively low, and only managing a few employees is a fairly high threshold.
In addition, as the brand with the highest degree of standardization in the entire Chinese food industry, service is one of Haidilao's core competitiveness. Haidilao's barriers are not in the kitchen, nor on the table, but in the back kitchen, personnel training, reward and punishment system and other places that consumers can't see. "Products are the easiest to solve, and people are the most difficult to achieve standardized management. ”
However, Brother Leek guessed that although Haidilao "raised its hand", there are still big variables about how and how much this child falls.
For example, Yum China, which owns KFC and Pizza Hut, has about 90% of its 14,102 restaurants that are directly operated, and only 10% are franchised. And Yum China CEO Qu Cuirong recently said that the company may give former Yum China employees the opportunity to become franchisees.
McDonald's, which has a higher proportion of franchised stores, has extremely strict screening conditions for franchisees. According to **, in addition to the overall investment of up to three or four million, franchisees will spend 9 to 10 months to complete pre-franchise training and evaluation. In other words, it takes at least nearly 1 year for franchisees to submit an application to receive training, evaluation, and officially operate a McDonald's restaurant.
Long Zhen guessed that with the complex operation difficulty of Haidilao, there is a high probability that the joint operation model will still be adopted, that is, the franchisee will pay and win the low-cost property, and Haidilao will be responsible for the daily operation. Only in this way can we ensure the cost, operation ability and comprehensive management level of the brand of the franchised stores to the greatest extent.
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The era of restaurant franchises has arrived
As Haidilao said in the announcement, the catering industry is indeed constantly developing, innovating and growing in terms of chain operation and franchise model.
In April 2023, the "2023 China Catering Franchise Industry*** data released by the China Chain Store & Franchise Association and Meituan shows that from 12% in 2018 to 19% in 2022, the chaining process of China's catering market is accelerating. However, compared with the 54% restaurant chain rate in the United States, China's restaurant chain rate still has a lot of room for improvement.
China's Catering Brand Power 2023 shows that the catering franchise market is shifting from a barbaric growth stage to a rational growth stage, and all aspects of the catering franchise process tend to be standardized and formalized. In the future, it will be difficult for quick recruitment brands that only want to earn franchise fees to survive. At the same time, it will also give birth to a group of professional catering franchisees with funds and teams.
In this process, the rapid expansion of a series of franchise brands represented by Luckin has verified the feasibility of a new generation of franchise chain model.
In the past, under the traditional franchise model, the brand side mainly earned the franchise fee and the first chain fee, which required the brand to have sufficient brand effect and product barriers.
In the new generation of franchise model, the brand can obtain more income in terms of "operating expenses" and "operating deduction points". Operating expenses refer to the expenses of entrusted operation and takeaway operation; The business deduction point is to deduct a certain percentage of the franchisee's income through a unified digital supply and marketing management system.
This not only means that the brand's income has increased, but also that under the new system and digital management system, the brand has a stronger ability to control franchisees. Under the digital first-class chain and cashier system, the brand can clearly see the purchase, shipment, sales of each single product, overall sales, etc. of each franchisee, which greatly reduces the self-picking behavior and also has a full view of the franchisee's expenditure and income.
More importantly, this will achieve complete benefits for franchisees and brands. In this situation, brands that are good at direct sales are more motivated to do this, it is easier to make money, the control is guaranteed, and the survival rate of my overall store is still very good, why don't I expand it? In Long Zhen's view, the franchise brand represented by Luckin has created an era, allowing the franchise to realize the iteration of the system, rules and digital management capabilities.
However, after solving the standardization of products, chains, and management systems, Haidilao, which has always been good at service, is still full of challenges if it wants to realize the standardized output of service capabilities.
In fact, as early as the beginning of the listing, Haidilao's mentorship system (also known as the family system) has become a major feature of the company's management model, and it has also become an important step in the standardized output of Haidilao's service capabilities. This is a first-class distribution model, the mentoring system binds the interests of the store manager and apprentices and apprentices, on this basis, the store manager can not only enjoy the performance commission of the store, but also get a higher proportion of performance commission in the store managed by his apprentices and apprentices.
As a result, the store manager, as a master, can not only link his income to the operation of his own store, but also link it to the performance of his apprentice and apprentice grandson store. Under such a bond of interest, the store manager does his best to teach the apprentices to better meet the service standards required by the brand.
According to Long Zhen, in fact, many old restaurant chain brands have had a variety of attempts, but limited to the factors of the times and the environment, most of them dare not go directly to this step. Now, the franchise model can be said to have reached the stage of the right time and place. "Haidilao left early, but slowly. From this point of view, Haidilao has taken this step, which really means that a new era is coming. ”
Qing Yong, the founder of Tomato Capital, believes that the core reason for the strategic decision of opening up to franchise is to reduce the kidnapping of heavy assets. Following the independent listing of Tehai International, Haidilao may further divest its domestic direct heavy assets into light assets. According to Qingyong's judgment, Haidilao's next step is to gradually sell its stores to franchisees at a premium in accordance with McDonald's operation method, so as to improve the return on assets and flexibly respond to uncertain risks.
In his view, most urban stores "can't open anymore", but this is another dilemma - the continued increase in store density will dilute the performance of existing stores, and the lack of density will leave more room for competitors. At this time, opening up the franchise can mobilize more partners with advantageous business resources to join, open more stores to occupy the market, and open more low-cost good stores. Based on the further increase in scale, the greater cost advantage can be obtained, and the ** can also be further reduced, and it can truly become an overwhelming business.
This is a decisive strategic adjustment, Qingyong said, "Haidilao is still a master in strategy, almost all of them have made the decisions that should be made at the right time, and the decision to open up to join is also at the right time." (This article was first published by Xie Xuan, edited by Fang Yu).