On February 28, Nai Xue's tea, a well-known tea brand, made a major adjustment to its franchise policy, a change that marked a significant adjustment to the brand's strategy to expand the market. Previously, Nai Xue's tea was known for its relatively high threshold for joining, but the latest policy shows that the brand has significantly lowered the financial requirements for franchising, giving more entrepreneurs the opportunity to join its chain system.
According to the new franchise policy, the initial capital to open a tea franchise store in Nai Xue may only be 580,000 yuan, which is as much as 400,000 yuan less than the previous policy. This significant reduction has sparked widespread concern and discussion in the market. So, what caused such a drastic cost drop?
After detailed analysis, we found that although the core franchise costs, including franchise fees, service fees, training fees and security deposits, have not changed, there has been a significant reduction in the cost of equipment and props and decoration costs. Specifically, the cost of equipment and props has been reduced from 350,000 yuan to 250,000 yuan, and the decoration cost has been reduced from 400,000 yuan to 120,000 yuan.
The reduction of these expenses is directly related to the adjustment of Nayuki's tea to the area requirements of franchise stores. In the past, Nayuki's tea tended to open large stores with an area of 70-150 square meters, but the new policy lowers the area requirement to 40 square meters. This shows that Nayuki's tea is starting to adapt to market trends and turn to opening smaller stores. As the size of the store shrinks, the cost of decoration naturally decreases accordingly.
Why did Nayuki's tea make such a change? The answer lies in the pressure of competitive competition. Many brands in the same industry, such as Mixue Bingcheng, Shanghai Auntie, Tea Baidao, etc., have begun to promote the small store model, and their franchise requirements are usually within 30 square meters, as long as there is enough to accommodate equipment and employees. In addition, Nayuki's tea itself has also begun to try to miniaturize its directly managed stores in 2022.
It is worth mentioning that when Nai Xue's tea first launched the franchise policy in July last year, it was expected that the franchisee would be able to return to its original cost within 18 months. Through the franchise model, Nai Xue's tea is able to expand its store coverage and market share. However, so far, no franchise has achieved a return on investment, but despite this, Nayuki's tea has benefited from it. According to reports, more than 1,000 people have paid 100,000 yuan in intent money, with a cumulative amount of more than 100 million yuan.
In the tea industry, is it more profitable to sell tea or equipment? The answer to this question is given by Nayuki's tea competitor, Cha Mokamichi. It is understood that Chabaidao recently updated its prospectus, aiming to become the "second share of global tea drinks". Although the brand of Chabaidao mainly sells tea, in fact, the company's main revenue** is the sale of goods and equipment to franchisees, which accounts for 95% of the revenue.
In stark contrast, Nayuki's tea has been trying to make a profit by selling tea cup by piece, but its losses are increasing. At the same time, Chabaidao, which mainly sells equipment, has achieved profit growth for many years, and the compound growth rate of profits in the past three years has reached 216%, and the net profit in 2023 will be as high as 115.1 billion yuan. In contrast, Nayuki's tea has accumulated a total loss of 91.3 billion yuan.
In the face of such financial pressure, can Nai Xue's tea reverse the loss? In fact, in the first half of 2023, Nayuki's tea seems to have achieved a turnaround. Although its profit has not reached the level of 100 million, it has at least stopped the trend of losses. This shift is likely to be achieved through a price reduction strategy. According to the data of the 2023 semi-annual report, the average price of Nayuki's tea per order has increased from 367 yuan to 324 yuan, a decrease of 12%, and at the same time, the average order volume per store has also increased by about 5%. Through this ** adjustment, Nai Xue's tea may have found a new balance in the fierce market competition. As an important player in China's new tea market, Nai Xue's tea has attracted a large number of consumers with its unique products and brand image since its inception. However, entering 2023, in the face of increasingly fierce market competition, even well-known brands such as Nayuki's tea have to start adjusting their marketing strategies to adapt to the rapidly changing industry environment.
In 23 years, Nayuki's tea made a compelling strategic decision: to march into 9$9 market. This is not common in the modern tea industry, and is often associated with fast food or affordable beverages. In Shanghai, Nai Xue's tea even launched 9The 9 yuan monthly card activity, this strategy will undoubtedly attract more consumers who are looking for cost performance.
With 99 yuan has become the marketing strategy of more and more new tea brands, and this point seems to be becoming the industry standard. Other brands are also launching similar low-price activities, and some brands have even gone one step further and launched a fixed ** strategy of 9 yuan, even omitting 9 cents after the decimal point, in order to attract those who are very sensitive to ** customer groups.
However, can this strategy of lowering the number of customers really help brands stand out from the competition? Numerous brands in the market are adopting similar practices, does this make the choice more difficult, not easier, for consumers? For Nai Xue's tea, in addition to the ** battle, it seems that they need to find more ways to deal with the challenges of the market.
Nayuki's tea currently seems to be pinning its hopes on two fronts: one is by offering a more competitive **, and the other is to strengthen cooperation with franchisees. Attracting more customers through a lower ** while relying on the franchisee's network to expand the market coverage seems to be the main strategy of Nayuki's tea at the current stage.
Although Nayuki's tea has taken some steps to deal with market challenges, the road ahead is still long and uncertain. How to continue to expand market share and maintain profitability while maintaining brand characteristics and product quality will be a problem that Nayuki's tea needs to carefully consider.
In the future, it remains to be seen whether Nai Xue's tea can maintain its leading position in the fierce market competition, or whether new innovative strategies will emerge to help the brand achieve sustainable development. For observers who pay attention to the new tea industry, the next move of Nai Xue's tea is undoubtedly worth looking forward to.