It is unlikely that the catering environment will change in the short term, and catering people should be prepared to fight a protracted battle. This article is a transcript of the speech of Han Dong, the founder of Spicy Temptation, at the "2024 Fourth China Catering Brand Festival", which was compiled and released by Red Meal.com.
My name is Han Dong, and today I will mainly share with you the story of my ascent and descent from the mountain. And from my point of view, I will tell you the true face of the "mountain" of catering.
△ Spicy Temptation founder Han Dong
It is unlikely that the food and beverage environment will change in the short term
When we talk about environment and innovation today, the first thing to consider is the general environment. For example, in 1947, 23 countries established the WTO. At first, there were only 23 people in the group, but then many people wanted to join the group, and in the end the group had more than 160 people in total. Some people will send red envelopes to the group, and some people will only receive red envelopes. Now, the group is almost obsolete.
However, there are also "new clusters" that have formed the TPP (Trans-Pacific Partnership) and the Transatlantic Trade and Investment Partnership (TIPP).
Why do you say this? Because I used to work in international trade, I spent a third of my time running around the world, and I learned that some of the problems in Egypt's factories were related to trade relations.
Therefore, if there is a company building an international supply chain, it is necessary to understand the general environment.
Regarding the medium environment, it is mainly reflected in the fact that the scissor difference between M1 and M2 in China continues to expand. The so-called M1 refers to the current deposit of the enterprise and the cash in circulation, and M2 is the resident savings deposit + the live/time deposit of the enterprise. Nowadays, M2 is still increasing, but M1 is declining, so the scissors gap between M1 and M2 is widening, which also reflects the declining desire of enterprises and households to consume and borrow.
On the morning of September 24, the People's Bank of China announced that it would create a new policy tool to guide commercial banks to provide loans to listed companies and major shareholders to buy back and increase their holdings of listed companies' shares and support the development of the stock market (hereinafter referred to as the "924 Policy"). This policy is undoubtedly intended to increase stock market liquidity, reduce the cost of borrowing, and thus promote consumption.
I expect that this policy should have a positive impact on the consumption of the whole society in the future, and it will also be good for consumer investment.
As for the small environment, it refers to the environment of catering. For example, in the first half of this year, the revenue of catering enterprises above designated size in Beijing was 49.2 billion yuan, but the profit was only 180 million yuan, and the net profit margin was only 0.37%; The revenue of accommodation and catering enterprises above designated size in Shanghai was 75.2 billion yuan, with a loss of 770 million yuan. These are the current environments of catering.
As of the end of August, 1.04 million catering companies in the national catering industry were revoked and cancelled, close to the level of the same period last year, and it is estimated that 70%-80% of catering enterprises nationwide are losing money.
In addition, the average average order value of the entire industry has fallen by 10%, and it is estimated that it will have to fall by 10% in the future. At the same time, there is a significant phenomenon this year, a large number of talents engaged in finance, education and other industries have poured into the catering industry with funds.
Overall, whether it is the large, medium or small environment, it is unlikely to change in the short term. However, we should also pay close attention to the deepening of the "924 policy" and the subsequent supporting policies in the future.
Improve the efficiency of people and ping, and realize the cost-effectiveness of catering
The future trend of catering must be cost-effective, and if you want to achieve cost-effective, you mainly rely on efficiency, which is embodied in human efficiency and ping efficiency.
In 2002, I put forward the idea of "one center, two breakthroughs". Among them, the "two breakthroughs" refer to the breakthrough of human efficiency and ping efficiency.
When I first opened a restaurant, I had no experience, and there were 13 private rooms in one restaurant. According to the calculations at the time, the ping effect of the private room was only a quarter of that of the scattered table, so the spicy temptation dismantled all 13 private rooms within half a year, and then the ping efficiency was greatly improved. In addition, I have adjusted the per capita and per table. The means to improve human efficiency and ping efficiency is to continuously polish the business model.
To polish the model, you need to learn to account for the revenue of each channel, and learn to use business intelligence BI, that is, to use modern data warehouse technology, online analysis and processing technology, data mining and data presentation technology to analyze data and solve problems.
Here, I summarize the underlying logic of a catering business: "two full and one more".
What is "both worlds"? "One many" refers to multiple customer groups. For example, Nancheng Xiang, each product is aimed at different users, and each product is grounded for a reason, and basically no product will overlap with another product in terms of function, and each product can be aimed at different users.
The first "all" of both is the full time, such as KFC, which has a 24-hour store, covering all the business hours of the day; The second "all" is omni-channel.
The impact of channels on profits, the following chart can be used for your reference.
As you can see from the chart above, the first horizontal line represents the fixed expenses, the slash with a small slope is the variable cost, and the slash with the largest slope is the sales amount.
As can be seen from this table, there are 9 channels for the source of customer flow, including offline cooked food self-pickup traffic, offline raw food self-pickup traffic, Douyin store verification traffic, Douyin takeaway traffic, Dianping platform entry traffic, Meixing platform entry takeaway traffic, Douyin hourly traffic entry, private domain access to stores and various self-pickup takeaway traffic, offline natural in-store consumption traffic.
Which channel has revenue, and how to account for it? I dare to say that at least 50% of the bosses here today do not know how to allocate the costs, including the cost of the front office, the cost of the back kitchen, the cost of rent, the cost of personnel, etc., and they do not know which channel makes money and which channel loses money.
In simple terms, the private domain is the most efficient because it has the lowest cost.
There is also a simple sales formula: S (sales) = average customer value X gross profit X number of visitors X repeat purchases (within unit time). Among them, the number of visitors = new customers + repurchase + referral, and repurchase is the most important.
Repurchase mainly comes from the transfer value, which is an economic principle that refers to the actual value transferred by the enterprise and felt by the customer. It is generally expressed as the difference between the total value of the customer's purchase and the total cost of the customer's purchase.
If the transfer value is negative and cannot be enhanced, it means that it is not sustainable.
To sum up, user repurchase is the most important, and if you just use traffic to cut leeks, it is difficult to generate long-term sales.
The second formula, S=A*D*P*MS, is a formula proposed by Coca-Cola, and it is also a very important formula for correctly interpreting sales.
Among them, S is sales, A is user awareness, P is cost performance (user satisfaction), D is channel, and MS is market share. Channel D can be broken down into three parts: market share (C); Terminal performance (T); Channel satisfaction (R).
Case dismantling, why does Haidilao want to join?
We also use the formula mentioned above to interpret why Haidilao wants to join?
From the perspective of market share, the total market share of Haidilao is about 75.8 billion, and the market share is only 4.2%; From the perspective of channel share, nationwide, there are about 97,580 hot pot restaurants in China based on statistics of 10 million/year/store, and the number of Haidilao stores accounts for only 1.4% of the total number of hot pot restaurants in China, which is a very low data. This is also an important background for why Haidilao wants to join.
From the formula S=A*D*P*MS, the C (market share indicator) in channel D is very low, but its terminal performance T is very good, and the performance of channel R is also average.
Therefore, improving channel satisfaction and increasing market share C will be the most important strategic strategy for Haidilao in the next 10 years.
Specifically, channel satisfaction mainly refers to the satisfaction of channel participants, which can be divided into four categories:
First, employees; the second is the channel of investors; the third is the owner of the channel; Fourth, the person in charge of store operation and store manager. These four groups of people determine the size of the brand.
Especially in terms of store manager income. We have seen that the income of the store managers of brands such as Rice Village Bibimbap and Drunken Noodles, which are running relatively fast now, is very high. Brands will even compete for high-quality store managers across the country, and Mimura bibimbap also offers a high salary of 10,000-40,000 yuan.
Yonemura Bibimbap once mentioned at an internal meeting that it would open 10,000 stores in five years because he was driven by the store manager. I learned that there are now at least 3,000 store managers who want to join Yonemura bibimbap.
So what is the core of Haidilao's franchise? It is necessary to do D (channel), and after the channel is done, its terminal performance (T) will not be bad.
In essence, the core of the franchise chain is terminal performance. Once the terminal performance is poor, it will hurt user satisfaction, and after user satisfaction is poor, the franchise system will face a decline. If it continues to decline, it may lead to cash flow problems and even lead to Ponzi schemes.
Finally, as for the possibility of a future supply chain with a low unit price, I think it must be "vertical integration". That is, to do a good job in the construction of vertical supply chain and distributed supply chain. Spicy temptation used to be at the forefront, and it was also because of the vertically integrated company, the crayfish we sold at that time was 60% lower than the cost of other people's crayfish. At present, Zara, IKEA, H&M, Decathlon, Uniqlo, and Saliya are all examples of "vertical integration".
In addition, I would like to share with you the two tracks that may grow the fastest in the future, in my opinion, in the future, fast food will be a regular meal, and a regular meal will be fast food. Nationally, whether it's fast food or a full meal, prices are likely to drop further.