Original title: Michelle Ice City’s unstoppable expansion of 10,000 stores in one year
One || Not long ago Michelle Ice City cancelled the area protection for franchise, and franchise stores suddenly increased. When visiting a small city, the reporter noticed that three large Michelle Ice City stores were opened on a commercial street at the same time.
II || Michelle Ice City follows a franchise model. This model allows Michelle Ice City to rapidly expand the number of stores in a short period of time and push it further in the market. For fast food catering brands, the interception of consumers is very important.
Ⅲ|| Because of its “civilian” positioning, the price increase space for Michelle Ice City seems to be relatively narrow. In this regard, Yu Jian pointed out that it is easier for high-end brands to extend downwards, while it is more difficult for mass brands to make breakthroughs upwards. Yes, but price and value can be two things.
A set of numbers can compare the development speed of Michelle Ice City in the past year. In 2018, Michelle Ice City had more than 5,000 stores. In November 2019, the number of stores exceeded 7,000. In June 2020, the number of stores reached 10,000. In October of this year, Michelle Ice City’s stores doubled , Broke through 20,000. Michelle Ice City originated in 1997, that is to say, Michelle Ice City completed the total number of stores opened in the previous two decades in the past year.
The above-mentioned data is compiled from the Weibo of Hua Shan, chairman of Huayuhua Marketing Consulting Company. On October 1st of this year, Huashan introduced on Weibo that Michelle’s Bingcheng store has exceeded 20,000. The “Snow King” image of Michelle Ice City is the trader behind Hua Yuhua.
The release of the theme song “I love you, you love me, Michelle Ice City Sweet Honey” before Michelle Ice City, and the public opinion field of domestic product discussion a while ago, are the key moments for the development of Michelle Ice City.
At present, more than the above-mentioned operations and discussions, Michelle Ice City is about to go to the capital market.
Recently, Michelle Ice City has moved intensively in terms of capital. News on October 13th, Guangdong Huicha Catering Management Co., Ltd. has undergone industrial and commercial changes, and a new shareholder Xuewang Investment Co., Ltd. (hereinafter referred to as “Xuewang Investment”) has been added, and the registered capital has increased from 5 million to 6,172,800 yuan. Guangdong Huicha is a popular local milk tea brand in Dongguan. Snow King Investment is an investment company established by Michelle Ice City in September this year. Its business includes venture capital (investment in unlisted companies only) and investment activities with self-owned funds. The industry interprets this as Michelle Ice City is further incubating the brand, which is a shift from brand operation to capital operation.
On the eve of National Day, on September 30, the Henan Securities Regulatory Bureau announced on its official website that Michelle Bing City intends to IPO and list on the A-share market and is receiving guidance from GF Securities. It has been in Henan on September 29, 2021. The Securities Regulatory Bureau conducts counseling and filing.
Cheap and low prices are the obvious labels of Michelle Ice City. Michelle’s popular products are lemonade at 4 yuan a cup, milkshakes at 6 yuan a cup, and ice cream at 3 yuan. The average product price is 5-6 yuan, compared with the current ones. The new-style tea market often costs 30 to 40 yuan for a cup. The pricing of Michelle Ice City and its thousands of stores make it a representative brand of milk tea in the sinking market.
However, precisely because of the low price, Michelle Ice City’s profit is relatively thin. Take takeaway as an example. The franchisees of Michelle Ice City report that takeaway is not easy to make money. Some franchisees have calculated such an account. The gross profit of their products is 50%, and the commission from the takeaway platform accounts for 20%. After deducting the hard costs such as labor, water and electricity, the takeaway business can only achieve a balance of payments as much as possible. If there is a discount With sales promotion activities such as full reduction, profits have been cut again.
A franchisee of Michelle Ice City said that the take-out does not make money. The franchisee’s attitude towards the take-out is, “It is mainly for the promotion of the brand and the store. My principle is not to affect the offline catering business.”
In fact, Michelle Ice City is a tea brand that launched a take-out platform relatively late in the industry, and started to do take-out business around 2018. It is reported that Michelle is reluctant to open a take-out channel because the unit price of the product is low and the platform commission is high, so the profit of the take-out is too low. However, the gradual development of the takeaway market has squeezed the business of offline entities. Michelle Ice City has cooperated with the takeaway platform as its headquarters, and will also carry out marketing activities with the platform from time to time to drive online sales and improve store rankings. .
In addition, Michelle Ice City cancelled the area protection for franchise not long ago, and franchise stores suddenly increased. When visiting a small city, the reporter noticed that three large Michelle Ice City stores were opened on a commercial street at the same time.
Accelerated store opening, some franchisees will complain. Such as the increase in fine categories, the increase in the types of materials required to be purchased from the headquarters, the renovation and renovation of stores, and so on. “The company is very strict and has a relatively low profit margin.”
Regarding the fact that franchisees generally report that the headquarters requires replacement of equipment and refurbishment of stores, which will increase the cost burden, it is understood that Michelle Ice City’s approach is to ensure product innovation and breakthroughs. New products require new equipment. Therefore, in practice During the operation process, it is necessary to continuously optimize the machines and moving lines.
Currently, Michelle Ice City’s stores have entered the seventh generation. The stores are developing more sales space, and peripheral products are beginning to appear. Franchisees can naturally replace stores after the three-year contract expires. For all of the above, Michelle Ice City is thinking about how to survive the fierce competition.
Judging from the positioning of Michelle Ice City, it is the way Michelle must go in order to grow in scale. Yu Jian, general manager of Kantar Worldpanel Greater China, pointed out in an interview that Michelle Ice City follows a franchise model. This model allows Michelle Ice City to rapidly expand the number of stores in a short period of time. Advance in depth. For fast food catering brands, intercepting consumers is very important. Therefore, the density of stores is large enough and the number is large enough. Compared with other competitors, the advantage will be greater and it is easier to occupy the minds of consumers.
But the diversion of business among franchisees is also inevitable. “Nowadays, more and more stores are indeed gathered. What it reduces is the average flow of all stores. The business of owners with fewer stores is declining, and the owners with more stores have to pay more in the short term to open stores.” The franchisees who already have two franchise stores told reporters this way.
It is reported that Michelle Ice City’s investigation concluded that within the scope of regional protection, especially within the scope of regional protection of high-performance stores, the brand no longer opens stores, which will cause competing products to get together, and ultimately lead to a decline in store performance or even closure. Store, so the brand gradually canceled the regional protection.
Yu Jian also pointed out that the middle and low-end tea market itself is a fully competitive market, and other competing products will follow this route.
Not only in the low-end and mid-end, but in the context of the current low advertising conversion efficiency that has become recognized by the industry, channel encryption is a common choice in the industry. Take Nayuki’s tea as an example. In the first half of this year, Nayuki opened 87 new stores, and the total number of stores reached 578. Nai Xue said that it will continue to implement the “encryption” strategy, focusing on increasing the density of stores in first-tier, new first-tier and key second-tier cities.
When sharing a report on the Chinese tea market, Xiao Yao, the Chinese partner of Rees Strategic Positioning Consulting, said that the current tea market is in a stage of fierce competition, and the brand is still in the early stages of formation. The differentiation of the. Now it is more about scale, growth, and whose speed is faster.
In terms of encrypted stores, Michelle Ice City’s approach is that multiple densely populated stores actually belong to the same franchisee. It is reported that for some high-performance stores, Michelle will evaluate their turnover based on the complexity of the business district and the traffic volume. Whether it exceeds the maximum reception capacity of the store, if so, the franchisee will be advised to open a second store nearby as soon as possible.
But is this a game of big fish eating small fish? The franchisee mentioned above added to reporters that in a county, for example, in the past, only two owners had two stores each, so business was naturally good. However, the company arranged for eight stores to come in. The same owner is behind the scenes. The newly opened store is very close to the original store, making it difficult for the old franchisees to do business.
The countryside surrounds the city
In the past few years, Michelle’s CEO, Zhang Hongfu, likes to write work diaries on the short book, but also to record his entrepreneurial journey with his brother, Michelle’s founder, Zhang Hongchao. Zhang Hongfu once wrote in the record: It is only a phased strategy to face the middle and low end. If you want to be well-known in the industry, be respected, and become a well-known brand, you must continue to work hard and forge ahead, and finally occupy the high ground of first- and second-tier cities.
Because of its “civilian” positioning, the price increase space of Michelle Ice City seems to be relatively narrow. In this regard, Yu Jian pointed out that it is easier for high-end brands to extend downwards, while it is more difficult for mass brands to break through upwards. But price and value can be two things. Commercial value depends on whether the brand can create consumer value and shareholder value through a good business model.
It is 30 years for Zhang Hongfu to become a first-class brand. In the record, Zhang Hongfu wrote, “I think it will take 30 years for us to be away from a truly great first-class brand. During these 30 years, part of our youth will be spent here. Then I hope these 30 years will be burning. 30 years.”
Between cheap brands and whether to improve brand tonality, you can see from Zhang Hongfu’s sharing that Michelle Ice City has also experienced confusion. He wrote, “Today the teacher said that no matter how much makeup we put on, we can’t make tea. , Nayuki. It’s really striking and impressive. In the process of development, many people tend to panic. When they see others are good, they panic. They tend to deviate from their original direction and begin to deform their movements. Headless flies.”
In the confusion, Michelle Ice City also thought about the two things, price and value, because Zhang Hongfu wrote this paragraph: Our genes determine that we are more suitable for making high-quality and affordable products. At this stage, we belong to the medium-quality low-price category, and it takes a process to go from the medium-quality low-price to the high-quality parity. Because the demand and income of Chinese consumers are imbalanced, and the operating capabilities and product development capabilities of everyone in the industry are also unbalanced. Balanced, the level of our franchisees is also uneven. “
To a certain extent, this piece of art answers the way for the brand after Michelle’s countryside encircles the city: raise prices, improve quality, and build brands.
(Source: Economic Observer, Author: Ye Xinran)
(Edit: Ye Yingcheng)