According to the news from China Central Broadcasting Corporation on October 27, Michelle Ice City Co., Ltd. (hereinafter referred to as “Michelle Ice City”) currently has 20,000 stores, with annual revenue exceeding 6.5 billion yuan, and a valuation of more than 200. 100 million yuan, second only to the 60 billion yuan valuation of Hey Tea. The rapid expansion in first- and second-tier cities has allowed the number of stores in Michelle Ice City to once again achieve considerable growth. Although Michelle Ice City’s products are mainly low-priced and cost-effective, the standards of Michelle Ice City are still no lower than Nay Xue and Hey Tea in terms of marketing strategies and new product iterations. Behind this is not only the exploration of the future of freshly-made tea drinks, but also the anxiety of various brands about their own development prospects.
Recently, Michelle Ice City has also become increasingly intensive in capital. According to the Henan Securities Regulatory Bureau, Michelle Bingcheng intends to make an initial public offering and listing on the A-share market, and it has been counseled and filed with the Henan Securities Regulatory Bureau on September 30. According to an enterprise search, on October 13th, Guangdong Huicha Catering Management Co., Ltd. (hereinafter referred to as “Guangdong Huicha”) had an industrial and commercial change, the registered capital increased from 5 million yuan to 6,172,800 yuan, and the new shareholder was owned by Michelle Ice City Snow King Investment Co., Ltd. (hereinafter referred to as “Snow King Investment”). Earlier, news of the listing of tea and tea colors were also reported. Following Nayuki’s “running”, the tea industry’s listing competition has begun.
Stores expanded to 20,000
In June 2020, Michelle Ice City announced that its number of stores worldwide exceeded 10,000, and set a new expansion goal: to have 20,000 stores by the end of 2021. On October 1, 2021, this goal was achieved three months earlier.
Few people would have thought that this white and fat “snowman” could actually run so fast. From the perspective of the speed of store opening alone, Michelle Ice City is undoubtedly the “flying man” in the industry. In the first half of 2021, Nayuki’s Tea opened 87 new stores, bringing the total number of stores to 578; the number of Heytea’s stores is only more than 700.
In Michelle Ice City, the number of stores has doubled in more than a year, and the speed of opening stores is dozens of times faster than that of Naxue and Heycha.
According to information from China Central Broadcasting Corporation, the current annual revenue of Michelle Ice City has exceeded 6.5 billion yuan, with a profit of more than 800 million yuan. Michelle Ice City can lay down today’s world, it is inseparable from its franchise model. Under the direct store model of Hey Tea and Naixue, the rent, personnel, materials and other costs of each store are borne by the company, and Michelle Ice City transfers the above costs to the franchisees through the franchise model.
It is obvious that the franchise and brand fees ranging from 7000-11000 yuan are far from enough to support Michelle’s 6.5 billion yuan in revenue. This money comes more from equipment and raw materials purchased by franchised stores. Among them, the raw materials used by Michelle Ice City are supplied by Henan Dajia Food Co., Ltd., which is in charge of Zhang Hongchao, the brother of Zhang Hongfu, the actual controller of Michelle Ice City.
Michelle Ice City makes a big profit with the scale of 20,000 stores, but its products generally have a low price of 4-8 yuan, which also compresses the profit margins of grassroots franchisees. Looking closely at the franchise model of Michelle Ice City, it is different from the direct operation model of Naixue and Hey Tea. This difference is essentially that Michelle Ice City delegates the operation and management power of the basic store to the franchisees and cooperates with the franchisees. Share profits. While gaining power and profits, the franchisee also bears the risks of improper location selection of stores and unpredictable weather.
In short, in addition to the food safety issues of the grassroots stores that will affect the brand reputation of Michelle Ice City, the company earns relatively fixed costs for franchising, raw materials and equipment.
Expand the “third space”
History is a circle, and Michelle Ice City is no exception. In October 2021, Michelle Ice City opened a “Michelle Ice City Experience Store” in its base camp, Zhengzhou, Henan Province. In this shop, consumers can not only drink Michelle Ice City’s beverages, but also eat them. Braised noodles and buns with Henan characteristics. After going around and around, Zhang Hongfu, who had experience of opening a restaurant in his early years, led his own beverage store to walk the same way.
Such exploration is related to the rise of the “third space” business model. It is understood that the concept of “third space” was proposed by the American urban sociologist Ray Oldenburg in his book “The Wonderful Place”, referring to the informal public occasions between home and workplace. People can relax freely here. Drink shops, libraries, urban green spaces and other places that can provide people with rest can be called the third space.
Affected by this, a number of domestic tea brands have recently started a new round of imagination about new-style tea shops.
Nayuki upgraded the Pro store again. As early as October 20, 2020, Nayuki and BranD magazine opened the “Nayuki Bookstore” pop-up store in Shenzhen. One year later, on October 15, 2021, the Naxue Tsinghua South Gate Pro store with the theme of “Book House” officially opened. In addition, Nayuki has also tried stores such as “Nayuki’s Gift”, “Nayuki Restaurant”, and “Nayuki Dream Factory” to enrich her business.
In addition, Cha Yan Yue Se is also testing the new retail store type in 2020-the “Garden Party”. Apart from its own drinks, it also includes tea and tea sets, snacks, daily stationery and other products. It has also cooperated with Sandun Ban in the “Sudden Co-branded Store”. “. Hey Tea has also recently added a “Hey Tea Handmade Store”. The store includes more than 50 SKUs (stock-keeping units), most of which are exclusively for hand-made stores, and there is also a small garden where customers can rest.
For a time, the new tea drink market was full of freshness, and more and more brands are no longer willing to exist as a single drink shop. But behind the excitement, an embarrassing fact cannot be concealed: the growth space of tea brands depends on sales, but the essence of sales anxiety is traffic anxiety. Relatively speaking, issues such as food safety have not received enough attention.
Since the beginning of this year, a number of new tea brands have been exposed to food safety vulnerabilities, including Michelle Ice City with bugs floating in their cups, tea with spiders, and even higher-end brands such as Heytea and Nai Xue. Was fined by the regulatory authorities. It can be seen that food safety issues have become a stubborn disease that may occur in any price range.
Whether it is Heycha, Lelecha or Naixue, these brands have been born with internet celebrity genes, which means that the brand’s desire for traffic is also engraved in the genes. In the past, Michelle Ice City itself did not possess the genes of internet celebrity, but after Snow King’s theme song “Out of the Circle”, its popularity rose rapidly.
To create hot spots for themselves, enhance the appearance of products, and strive to become a “social currency”, brands including Michelle Ice City are trying their best to grab the attention of consumers. Because losing traffic means losing eyeballs and losing business. In the first echelon, the tea of Hey Tea, Michelle Bingcheng, and Naixue stand together, and behind them are rookies such as the Hundred Paths of Tea and the Beauty of Tea. The players started a battle without gunpowder in the flowing pond.
“Volume” into the capital market
According to iiMedia Consulting’s data, in 2019, the national new tea drink market scale was 204.48 billion yuan, and by 2021, the market size is expected to reach 279.5 billion yuan.
From the new frequency to the supply chain, and then to the flow of competition, tea brands have launched a full range of competitions, and new teas are still a variety that is worth looking forward to. At present, the focus of various competitions is not only the eyeballs of consumers, but also the favor of the capital market. Nayue, who rushed to go public, performed unsatisfactorily in the capital market. Since its listing, its stock price has fallen by 47.7%. As of the close of October 28, it closed at 10.36 Hong Kong dollars per share. However, the capital’s enthusiasm for the new tea-drinking track has not faded.
From the perspective of financing frequency, Michelle Ice City does not seem to be short of money. In the past few years since its establishment, Michelle Ice City only carried out a round of 2 billion yuan of strategic financing in early 2021, which attracted the attention of Hillhouse Capital and Meituan Dragon Ball, and received a valuation of 20 billion yuan.
According to the company’s investigation, on October 13, Guangdong Huicha had a business change, the registered capital increased from 5 million yuan to 6,172,800 yuan, and the new shareholder was Snow King Investment, an investment platform established by Michelle Ice City in September 2021. .
In this regard, Michelle Ice City expressed the hope that through this investment, Michelle Ice City’s organizational experience, operational experience, and chain technology will be empowered to the chain industry and the tea industry.
It is reported that Guangdong Huicha was established in 2015, focusing on making bubble milk tea, which can form a differentiated layout with Michelle’s main “ice cream and tea”. The brand’s products are priced at 8-15 yuan, which is mid-range in the industry, and will also help fill the gap in Michelle Ice City’s own products in this price range. More importantly, it can gradually reverse the public’s inherent impression of “cheap and low-end” products.
The new-style tea company that wants to go public is not the only one in Michelle Bingcheng, but there have also been news of the listing of Tea Baidao and Tea Yanyue Se. In addition, Michelle Bingcheng is not the only company in the industry that is investing in other brands. In July this year, Hey Tea led Seesaw’s A+ round of more than 100 million yuan in financing, and Cha Yanyue Se also invested in Changsha’s local fresh fruit tea brand Guo Yeah. .
At present, the competitive landscape of new-style tea drinks is becoming clearer, and the phenomenon of “big fish eating small fish” has begun to appear. Even the “unsophisticated” brands like Michelle Ice City have begun to try to improve their product sequence through capital means and explore more feasibility. (Produced by Thinking Finance)■