Haidilao, is it about to open to the hometown of the county where the workers are working?
On March 4, Haidilao announced that it would implement the franchise franchise model of Haidilao restaurants, and at the same time, Haidilao has established a franchise division to formulate the details of the franchise franchise model and business cooperation process.
This "giant ship" in the catering industry, which currently has 1,362 directly operated stores, is trying to sail into a new channel.
According to the data of Narrow Door Restaurant, Haidilao's stores account for nearly half of the first-tier and new first-tier cities, while below the new first-tier cities, the lower the city line, the fewer the stores, showing an inverted pyramid shape. And throughout the past 12 months, Haidilao has only landed in one more city.
The opening of franchises seems to be a signal of large-scale expansion.
However, insisting on direct sales or open franchise has always been the "proposition" of catering enterprises.
Source: Picture Worm.
Giant ships change lanes
This is the first time that Haidilao has opened up to join in the 30 years since its establishment.
The announcement mentioned that Haidilao has always maintained the attention and evaluation of different business models in the market, and the catering industry has been constantly developing, innovating and growing in chain operation and franchise mode in recent years.
The announcement also said that the introduction of the franchise franchise model will continue to ensure the management level and customer experience, enhance operational capabilities, introduce more high-quality resources, improve operational efficiency, and help the Haidilao brand expand to more cities and provide services to a wider range of customers.
Prior to this, Haidilao had always resisted joining.
As early as 2019, Haidilao issued a statement saying that in order to ensure the company's service quality and brand reputation, the company has not accepted any form of franchise, cooperation, franchise and other applications since 2004, nor has it authorized or licensed any **, enterprise or individual to carry out franchise, cooperation and other work in the name of the company.
An important background for the change in Haidilao's concept is that franchise is becoming a trend in the catering industry.
In November 2022, Heytea opened to join, and the effect can be described as remarkable. According to the data released by Heytea, more than 2,300 new business partnership stores will be opened in 2023. By the end of 2023, more than 2,300 of the total Heytea stores exceeded 3,200.
However, if you want to talk about the power of joining, you have to look at Luckin Coffee.
As early as January 2021, Luckin launched the first round of the "New Retail Partner Recruitment Program", and then continued to lower the threshold for joining. In the past year alone, Luckin Net opened 8,034 new stores, bringing the total number of stores to 16,248, nearly doubling from the end of 2022. Among them, there are a total of 10,628 self-operated stores and 5,620 cooperative stores.
More stores also bring in more revenue. In terms of revenue, Luckin broke through the 20 billion yuan mark for the first time, reaching 2490.3 billion yuan, compared with 132 in the same period last year900 million yuan, an increase of 873%, and for the first time, its annual sales exceeded Starbucks' sales in China.
In fact, the number of fans of direct marketing is decreasing.
According to the data of Narrow Door Restaurant, there are currently 85 catering brands with more than 1,000 store sizes, of which only Starbucks and Haidilao are still insisting on direct sales, and the rest of the 1,000-store brands have opened up franchise cooperation or partnership joint operation models.
In addition, according to the "2023 China Fast Food Enterprise Development Research Report" released by 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, and the proportion of pure direct enterprises has increased from 291% dropped to 20%, and the proportion of directly operated enterprises increased from 302% to 52%.
Wen Zhihong, a chain management expert and partner of Hejun Consulting, said that the development of catering enterprises to chain is the overall trend, and joining is an important way to improve the chain rate.
I'm scared of falling in the past
In fact, "joining" or "direct sales" has always been a problem that makes the catering industry feel anxious.
In Wen Zhihong's view, joining and direct sales are not a matter of right or wrong, it is more of a choice of enterprises at different stages. There are pros and cons to joining and direct sales, joining is to use other people's money to do their own things, and other people's money is more, and it is easier to expand; Direct sales are to use their own money to do their own things, but their own money is limited after all, so the expansion is slow.
The difference between the two is that in the franchise model, the investment risk of the enterprise is low and the operation and management risk is high; In the direct sales model, the investment risk of enterprises is high, but the operation and management risk is low.
Specific to the subdivided catering categories, Wen Zhihong believes that if the product is complex and leads to a low degree of standardization, direct sales will be better; If the degree of standardization is high, it may be more conducive to development.
Of course, after so many years in the catering industry, Haidilao will not know the pros and cons of direct sales and franchise today, and what prompts its transformation is more related to market changes.
In February this year, Haidilao just handed over its best report card in history, and its revenue from continuing operations for the year ended December 31, 2023 is expected to be no less than 4140 billion yuan, with an increase of not less than 333%；The net profit recorded from continuing operations was not less than 440 billion yuan.
However, what this report card does not say is that Haidilao is involved in the "Red Sea" of first- and second-tier cities.
According to the data of Narrow Door Restaurant, as the brand with the largest number of stores in the hot pot category and the top three brands in the main meal category, Haidilao's stores are mainly concentrated in second-tier and above cities, of which the first-tier and new first-tier accounts for nearly half.
But looking at the whole hot pot track, the bigger market opportunities exist in second-tier and below cities.
According to the 2023 Hot Pot Industry Status and Development Analysis Report, as of April 7, 2023, the total number of hot pot restaurants in China has reached 482593, and 124144 new stores have been opened in the past year. According to the distribution of city levels, the second, third and fourth-tier cities accounted for 55 percent94%。
Therefore, it is imperative for Haidilao to approach the sinking market as soon as possible.
However, in the past year, Haidilao has only added 12 new stores and only 1 new city, which is far lower than the speed of its peers.
Wang Po prawns, which ranks second in the number of stores behind Haidilao, have a total of 1,238 stores, only 124 fewer than Haidilao, and the number of new stores will exceed 400 in 2023, while in the previous three years, the average annual number of new stores was 200; Xiabu Xiabu, which ranks third in the number of stores, will also open more than 100 new stores in 2023, a new high since 2020.
Conservative development" may be related to Haidilao's "scared fall".
Here we have to mention its "blind expansion" during the epidemic: in 2020, the number of new Haidilao stores reached 544, and in the first half of 2021, it added 299.
Under the direct sales system, the money you make from opening a store is your own, but once you don't meet your expectations, you need to bear the losses.
In the end, Haidilao will lose more than 4 billion yuan in 2021. At that time, Zhou Zhaocheng, executive director and chief strategy officer of Haidilao, admitted that Haidilao's current bitter fruit stemmed from the rapid expansion strategy formulated in 2019. Haihai also wrote in the open letter: "The current bitter fruit can only be swallowed by ourselves. ”
As a last resort, Haidilao came up with the "Woodpecker Plan" and closed as many as 302 stores.
It's not that easy
However, joining Haidilao is far from being as easy as joining a bubble tea shop.
In the newly launched franchise cooperation section of Haidilao's official website, it is specifically mentioned that "it has a financial foundation for multi-store development".
Source: Haidilao official website.
According to Wen Zhihong's judgment, Haidilao's requirements for franchisees should be more than 10 million assets.
According to the data, in 2021, the loss of accrued assets brought by the closure of Haidilao stores will be about 3.3 billion yuan to 3.9 billion yuan. If calculated according to Haidilao's 300 stores closed in 2021, its average asset loss of store closure is at least about 11 million.
The interesting report noted that in the specific application for joining**, Haidilao business funds (excluding loans) can be invested, and 10 million yuan is a watershed, which is also regarded by the outside world as the threshold for joining Haidilao.
Source: Haidilao official website.
From the perspective of the whole industry, this threshold greatly exceeds that of peers.
According to the Times Weekly, Zhu Guangyu hot pot joined to open stores in second-tier cities in Guangdong Province, and the cost of joining the store (excluding rent and other costs) started at 2.5 million yuan; In addition, according to the South China Xiaolongkan franchisee, its franchise landed a Xiaolongkan store of more than 500 square meters, with a cost of more than 5 million yuan.
Another important condition for joining Haidilao is "having local property resources and corporate management experience".
In the view of Mu Yichen, a franchise expert and author of "Mu Liao" in the ready-made tea industry, what Haidilao needs is to combine brand requirements with local market characteristics to achieve optimal operational results. This means that the franchisee is not only the investor of funds, but also the integrator of local resources.
The role of franchisees has become more important, and their success depends not only on the support of the brand, but also on their own in-depth understanding of the market and the effective integration of resources. Mu Yichen said.
It's just that with such a high threshold, will it dissuade franchisees?
The number of franchisees is highly linked to the threshold for joining. Taking Naixue as an example, since the announcement of the opening of franchises in July 2023, Naixue has opened more than 200 franchise stores in the past 7 months, with an average of less than 30 new stores per month, which is a huge gap compared with Heytea's 200 in a single month.
In the eyes of the outside world, Naixue's excessively high franchise fee is an important reason why the franchise effect is not as expected.
In the 2023 franchise rules announced by Naixue, the age requirements for partners are 25-45 years old, the amount of capital for joining a single store is about 1 million yuan, the threshold for partner capital verification is 1.5 million yuan, and the threshold for regional partners is 4.5 million yuan and above.
In this way, the joining standard ranks first in the industry. You must know that the vast majority of milk tea brands only cost between 35-400,000 yuan. The capital cost of joining Heytea is about 500,000 yuan, joining Mixue Bingcheng is 370,000 yuan, joining a little bit is about 380,000 yuan, and joining Tea Baidao is about 350,000 yuan.
In February this year, Nai Xue adjusted the threshold for joining to 580,000 yuan, almost halved. At the same time, stores that complete the contract in the first half of 2024 can also enjoy a marketing subsidy of 60,000 yuan.
More importantly, after the entrepreneurial boom of "retaliation" franchise last year, how many high-quality franchisees are available for Haidilao to choose from, also need to put a big question mark.
In Mu Yichen's view, Haidilao's initiative to open up franchise not only promotes the rapid expansion of its own business, but also a big test for practitioners in the franchise industry.
Reference: 1 million to open a Naixue, franchisees really can't afford to open it, new entropy, 2024-03-05
Daniel Zhang is looking for a group of "partners", Time Weekly, 2024-03-05
Author: Qu Boyang.