Editor’s Note: This article comes from WeChat WeChat official account Pineapple Finance (ID: kaiboluocaijing), author: Wu Jiaoying, editor: Jin Kun, reproduced by Entrepreneurial State with authorization.
The rushing honey snow ice city is finally going to be listed.
On the evening of September 22nd, Mixue Ice City Co., Ltd. (hereinafter referred to as "Mixue Ice City") pre-disclosed the A-share prospectus, and planned to list on the main board of Shenzhen Stock Exchange.
This prospectus of yet we called and urged a thousand times before she started toward us unveiled the layers of the tea "myth" which was founded in 1997 and moved from Henan to the whole country.
In the past, as we all know, the three axes of Mi Xue Ice City are: low price, sinking and joining. But how many stores it has opened, whether it makes money or not, and how to make money are all long-term concerns inside and outside the industry. Now, the answer is as follows:
There are three brands under its banner: the fresh tea brand "Mi Xue Bing Cheng", the fresh ground coffee brand "Lucky Coffee" and the fresh ice cream brand "Jilatu".
"Mi Xue Bing Cheng" is the brand of ready-made tea with the largest number of stores in China. As of the first quarter of this year, there were 21,619 stores, of which 21,582 were franchisees.
Making money depends not on selling milk tea, but on selling ingredients, packaging materials and equipment to franchisees and charging franchise fees. Stores sell a total of 20 billion yuan a year, and the annual revenue "falling" to the account is 10.3 billion.
The gross profit margin is low but the net interest rate is high, with a net profit of 1.9 billion a year.
Lucky Coffee copied the style of Mi Xue Bing Cheng, lowered the price, sank and joined, and opened 636 stores in more than two years.
To be a global ready-made beverage brand, we quietly went out to sea to Southeast Asia and opened 566 stores in Indonesia and Vietnam.
But obviously, there are still more problems to be solved around the honey snow ice city:
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20,000 stores, touch the ceiling?
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What is the mode of making money by franchisees?
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Lucky coffee, can you copy the myth of honey snow and ice city?
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Can you find a second growth curve when you go out to sea?
As the existing tea brand with the largest number of stores in China, there are more stores in Mixue Ice City than the second and third largest stores in the industry-ancient tea, book burning grass and tea hundred roads combined.
By the end of March, 2022, the whole Mixue Ice City Company had 22,276 stores, including 21,619 stores of the existing tea chain brand "Mixue Ice City", with 21,582 franchisees and only 37 direct stores.
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Two years after the epidemic, Mi Xue Bing Cheng stores ran wildly.
Look at the situation of the main brand first. In 2020, "Mi Xue Bing Cheng" added 5,757 franchise stores and 3 direct stores, more than twice that of the previous year. By the end of the year, its stores exceeded the scale of 10,000 stores, reaching 12,966.
Joining in 2021 is even crazier, with 7,058 new franchisees, which is close to the total number of stores in 2019, but the number of direct stores has decreased by one. By the end of the year, the number of stores exceeded 20,000, reaching 20,023.
In the first quarter of 2022, the expansion rate of stores slowed down, with 1,596 new franchisees, while the direct stores remained unchanged.
The rapid expansion of Honey Snow Ice City is largely due to the parity of brand positioning. The price of products is mostly between 6-8 yuan, which is far lower than other tea brands, which increases the purchase frequency and is also conducive to quickly seizing the sinking market with lower consumption level.
Gao Jianfeng, the founding partner of Shanghai Bogai Consulting, believes that for Honey Snow Ice City, which focuses on sinking the market and adopts the franchise model, 20,000 stores have not yet reached the scale ceiling. "The low price means a wide audience; A large number of stores are opened in non-central cities and non-central lots, and there is still a lot of space to cover, and the upper limit is relatively high; Moreover, the proportion of direct sales is very low, and there is a lot of room for expansion under the mature franchise model. "
Lin Yue, chief consultant of Lingyan Management Consulting, also believes that there is still room for expansion in the third, fourth and fifth tier cities and even counties and towns, and this has always been its "main battlefield".
More than 20,000 stores have created considerable revenue for Mixue Ice City.
In the three years from 2019 to 2021, the revenue of Mixue Ice City Company soared by 303%, from 2.57 billion to 10.35 billion.Among them, the revenue in 2020 increased by 82% year-on-year to 4.68 billion.
However, unlike other direct tea brands, the income of Mi Xue Bing Cheng does not directly come from product retail.
From the perspective of revenue composition,There are three main sources of income for Honey Snow Ice City. One is to sell franchisees the ingredients, packaging materials, equipment and facilities and operating materials needed to make products. The second is to collect management fees from franchisees; The third is the retail income of products from direct-operated stores.However, this part only accounts for less than 1% of the total revenue.
Source/Prospectus of Revenue Composition of Mixue Ice City
That is to say,99% of the money earned by Mi Xue Ice City is the money of franchisees.
In 2021, the revenue of Honey Snow Ice City was 10.35 billion, of which 7.23 billion were sold to franchisees, accounting for 70%. Selling packaging materials to franchisees, 1.78 billion, accounting for 17%; Selling equipment and operating materials, there are 1.05 billion, accounting for about 10%; The franchise management fee is nearly 200 million, accounting for about 2%.
The sales of brand terminals are more than that.
According to the prospectus,The terminal sales of the company’s "Mi Xue Bing Cheng" brand stores in 2021 is about 20 billion yuan.. In comparison, Naixue’s tea, whose revenue mainly depends on product retail, earned 4.3 billion yuan in 2021, almost one-fifth of that of Honey Snow Ice City.
Although there are over 20,000 stores and retail sales are as high as 20 billion, the market share of Honey Snow Ice City is not as high as expected. According to the prospectus,Its sales in 2021 accounted for about 7.15% of the market size of the existing tea industry; The number of stores accounts for about 5.13% of the total number of existing tea shops.
Tea itself is a relatively low concentration industry. In 2020, the market share of Naixue’s tea, the "first stock of new tea", was only 3.9%.
"The industry is still developing rapidly, and there is still a lot of room for growth in brand potential." Gao Jianfeng said, but for Mixue Ice City, it is necessary to provide support and services to franchisees, ensure the quality of ingredients and product innovation, and control the cost and price of raw materials in order to remain attractive to franchisees.
Under the current revenue structure, it is actually difficult to discuss Mi Xue Ice City with the tea brands in the direct mode on a track. “It is more like a brand of beverage and food supply chain in the name of tea brand.. "
"You can compare it to Sanquan and Missing in quick-frozen food, Mengniu and Yili in ice cream, or Yanjin Shop and Laiyifen in snacks. In essence, stores are sales outlets. What Mi Xue Ice City needs to do is to manage the brand well, the products are innovative and the quality is guaranteed. " Gao Jianfeng analyzed, therefore, the prospectus will inevitably emphasize the franchise management ability, supply chain ability and commodity distribution ability.
This non-heavy asset operation mode, which is different from other direct brands, has directly refreshed the financial performance of Honey Snow Ice City.
Because the revenue mainly depends on selling ingredients, packaging materials and equipment, the gross profit margin of Honey Snow Ice City is not high, only about 30%, far below the industry average of more than 60%.
However,Because 99% of the stores are franchise stores, the brand does not have to bear the store rent and employee salary, which directly saves a lot of cost.. In terms of employee salary, the employees of Mixue Ice City are mainly production personnel and sales personnel. In 2021, the employee salary is only 150 million, while the employee cost of Naixue tea is as high as 1.4 billion a year under the store direct mode.
Moreover, unlike some new consumer brands,Mixue Ice City affects consumers by store coverage, and does not need to spend too much money on marketing and advertising.Even in 2021, when "You love me, I love you, honey snow and ice city are sweet" resounded all over the Internet, its advertising expenses and brand building expenses added up to only 43 million.
In this way, the honey snow ice city, which spends half a penny, has a net interest rate of 18% on the premise of a gross profit margin of only 30%.From 2019 to 2021, Mixue Ice City achieved net profits of 440 million, 630 million and 1.91 billion respectively, and made a net profit of 390 million in the first quarter of 2022.
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When the brand is full, can the franchisee drink soup with it?
Many franchisees of Honey Snow Ice City have revealed to Kaipineapple Finance that the purchase of materials accounts for about 50% of the store’s turnover, the rent and employee’s salary are close to 20%, and the profit is 15-20% excluding other expenses.
Franchisees buy raw materials from the brand, but because the product price is low, the ratio of cost to revenue becomes higher. However, affected by the epidemic, the profits of franchisees who bear the rent and labor costs are affected.
Gao Jianfeng pointed out that under this business model,Part of the risk of Honey Snow Ice City was passed on to franchisees."Of course, if you can make money, franchisees are willing to take risks, and ensuring the interests of franchisees is the key. However, it is difficult to generalize whether you can make money."
According to the prospectus, after the number of Mi Xue Bing Cheng stores exceeded 10,000, the reshuffle continued. In 2020, there were 331 closed franchise stores, and in 2021, 585 were closed. In Gao Jianfeng’s view, the renewal rate of franchise stores in Mi Xue Bing Cheng is relatively fast. "There are too many stores, and some of them may not really make money."
Lin Yue believes that Mi Xue Ice City is highly dependent on the franchisee model, which is difficult to manage, and it also tests the rationality, synergy and overall strategy of the store layout.
In the past two years, the involution of tea is serious, and many brands have opened up the second battlefield, marching into coffee, ice cream, bottled drinks, etc., and Honey Snow Ice City is no exception.
Its brand "Lucky Coffee", a freshly ground coffee chain, almost completely copied the style of Mi Xue Bing Cheng: low price, sinking and joining.
According to the prospectus, the average product price of Lucky Coffee is 8 yuan. This is almost the lowest price coffee brand on the market, and the store menu shows that its cheapest product, a cup of freshly ground American coffee, is only 5 yuan.
By the end of March this year, there were 636 lucky coffee shops.Among them, 629 are franchise stores, most of which were opened in 2020 and 2021. Last year, the expansion was the fastest, with 323 new stores opened a year. Except for universities in new first-tier and second-tier cities, most of these stores are located in third-tier and below cities.
The prospectus did not disclose the revenue of lucky coffee. Kaipineapple Finance learned at the beginning of this year that most lucky coffee shops have a single-day revenue of around 2,000 yuan, 70% of which is profitable, but the return period is about one and a half years.
Zhang Hongfu, general manager of Honey Snow Ice City, once said, "Lucky Coffee should be cheap coffee in county towns and even small towns, and a coffee version of Honey Snow Ice City will be reproduced within five years". At present, since most stores are newly opened in the second half of 2021, the future expansion prospects have yet to be verified.
Narrow-door dining eyes show that there are currently 1,143 stores of Lucky Cafe, compared with 463 at the end of last year, an increase of 680 in three quarters.
High addiction, high repurchase and high gross profit have made coffee a red sea after tea in the past two years. However, in the third-tier and below cities in China, the brand of freshly ground coffee is vacant, the penetration rate is low, and there is demand for services. The sinking of coffee is considered as a major trend in the industry.
However, Lin Yue believes that "it is difficult to copy the model of tea drinking to operate if cheap coffee is to gain a foothold in the county". He believes that "this has something to do with product characteristics. Coffee and ice cream pay more attention to consumption scenes and atmosphere, and products should also be differentiated and have their own style." Fair-priced coffee has a market in third-,fourth-and fifth-tier cities, but it has not shown the potential to grow in a second curve at present.
Gao Jianfeng analyzed that, first of all, the coffee and tea markets are different. Young people are the main drinkers of milk tea, and the possible consumption power and consumption potential of drinking coffee are higher. It is difficult to incite consumers’ trust with low prices.
Moreover, the concentration of coffee industry is higher than that of milk tea, and the sinking consumer group is not as huge as expected. Before the expansion model is implemented, it takes time for market education.
In contrast, Gao Jianfeng thinks that tea going out to sea may be more attractive to the capital market.
According to the prospectus,By the end of March this year, Mixue Ice City had opened 317 stores in Indonesia and 249 stores in Vietnam.
"Honey Snow Ice City is in Southeast Asia, and the main market is also the Chinese market. Moreover, Southeast Asian countries have their own cold drink consumption habits, and China tea has the opportunity to complete local brand substitution." In his view, in the Southeast Asian market, China tea brands such as Mi Xue Bing Cheng still have more room for growth.
In the eyes of many analysts, coffee going to the countryside and tea going out to sea are the expansion of the battlefield, but on the main runway, Honey Snow Ice City needs new stories.
Lin Yue believes that the huge joining in the empire has created the myth of a snow-covered ice city, but with the rising operating costs, the bottleneck may become more and more obvious. Nowadays, the first-line head brands in the track are also extending downward, including the layout of sinking channels and product categories. Coupled with the new cross-border players, market competition continues to intensify.
In his view, listing can alleviate these problems to a certain extent, but with capital investment, more investment should be made in product research and development, sub-brand cultivation and channel layout upgrading.
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