The pioneer of the times, can Nayuki's tea make money?

The prospectus submitted by Nayuki on Lunar New Year's Eve officially opened the mystery of the hot tea industry on the streets in recent years.

On the face of it, this is a business of "popular but not popular".

In 2018 and 2019, Nayuki opened a new store almost every two days.

By the end of September last year, there were already 422 stores.
What's rare is that during this rapid expansion, Nayuki's customer unit price can grow steadily, and it has reached 43 yuan, which is close to the 48 yuan customer unit price of Meituan's food delivery platform.

Considering that the median monthly household income per capita in China is 1,500 yuan, and the family with a per capita monthly income of more than 5,000 yuan is the top 5% of China, this 43 yuan is not even for dinner, but almost pure afternoon tea.

, It can be seen that the spending power of core users is actually very strong.

But with the expansion of the store and the high unit price, Nayuki didn't seem to be so profitable.

In 2018, 2019, and the first three quarters of 2020, the total loss was 130 million.

This article will answer 3 questions:

1.

Can the combat effectiveness of the current tea drink work?

1.
Can the combat effectiveness of the current tea drink work?

2.

For the "Third Space" of Starbucks, will Nayuki repeat Luckin's "tragedy"?

2.
For the "Third Space" of Starbucks, will Nayuki repeat Luckin's "tragedy"?

3.

If Nayue wants to make a profit, what is the method?

3.
If Nayue wants to make a profit, what is the method?

1.

Product: Devil's details

1.
Product: Devil's details

Looking at consumer product companies, financial reports are often secondary, and researching through products is the first.

Nayuki's products are divided into two categories, one is freshly made tea, the basic composition is tea + fruit, and the other is freshly baked bread + cake.

If you take it apart and look at it alone, this is simply a product of hell difficulty.

Tea, there are dozens of famous teas that can be named in China.

They are not only typical non-standard products, but also have complex sales channels, highly asymmetric information, and opaque prices.
How many tea drinkers can drink Shifeng Longjing and Tiger The difference between running Longjing? What's more terrible is that there is a time limit for making tea.
After a certain period of time, the tea will not taste good or even can't be drunk.

The same is true for fruits.
Not only is it difficult to grow, it is difficult to guarantee the taste, and it is also laborious to peel and core when buying it.

Baking bread and baking machines not only occupy the storefront, but are also labor-intensive and time-consuming.
What's terrible is that the Chinese basically don't eat bread as a meal.
It seems to be a dispensable thing.

Therefore, if you look at it separately, China does not have large companies in the tea industry, and there is no large chain company before the fruit is standardized in the fruit garden.
After the listing of toast companies, either the financial report will be in doubt or the market value will always stay at 3 billion.
The company that sells cakes is prone to quality control problems as soon as it expands.

But if these hell-difficult businesses are combined, there will be miraculous effects.

Using tea as a base not only has the refreshing and addictive caffeine, but also gives full play to the sweetness of the tea itself, making it easy to match with almost any auxiliary material.
Not only will it not grab the taste, but it can also make people drink it in the mouth after drinking.
The remaining taste fades faster, so you can drink more.

This is amazing, almost everything can be added to the tea——

(1) Add desserts.
Mashed taro, coconut, caramel pudding, etc.
, make the urban beauties and dry rice beauties' afternoon life-saving water not only caffeine, but also a little sweet, and even colorful.

(2) Add fruit.
Fruit teas such as strawberries, coconuts, oranges, etc.
are simply commonplace, and smoothies can also be added.

(3) Add ice cream.
Cone cones, popsicles, ice cream cups, who would have thought that if you obviously want to drink tea, why would they become ice cream?

(4) Add alcohol.
I used Wuliangye, Erguotou, etc.
, with fruits and cheese to create alcoholic styles, such as Drunken Peach and Drunken Grape.

(5) Add bread.
Sandwiches, croissants, toasts and even cakes are all drunk, so stop struggling and eat more.

Freshly-made teas are products that have a great depth to open up space.
Once they appear on the street, they have the potential to sweep dessert shops, syrup shops, and fruit shops.
It also laid the foundation for the rapid development of Nay Xue and Hey Tea.

But before the scale is large enough, this kind of combat power also has the attribute of "killing a thousand enemies and hurting yourself eight hundred".

Take Naixue as an example.
In the first three quarters of 2020, the three best-selling classic teas, Domineering Cheese Strawberry, Domineering Orange, and Domineering Cheese Grape, contributed a total of 25.
3% of revenue.

Freshly-made tea drinks originally emphasized hand-made, freshness, plus a variety of milk caps, desserts and fruits.
This is a business with complex production processes and low automation, which requires a lot of manual participation.
Like the grapes in the three major explosions, manual peeling and core removal are required, and the production speed and labor cost are all at once.

In contrast, Starbucks products are highly standardized and easy to replicate.
As long as the ratio of espresso, milk and sugar in the machine is adjusted, the employees move their fingers and the coffee will continue.

If you compare the employees of Starbucks to the workers on the assembly line, each movement is standardized, then Nayuki's employees are more like junior chefs, although it is easier than cooking, but before the emergence of "fruit cutting suppliers", manual labor It's actually very heavy.

As a result, labor costs naturally became the bulk of Nayuki's costs.
In 2018, 2019, and the first three quarters of 2020, staff costs accounted for about 30% of revenue.
This ratio is similar to that of Haidilao, surpassing Cuihua and Taixing, which are chain tea restaurants, and even surpassed the critics.
It is one-Michelin-starred Tang Palace, the time-honored Guangzhou Restaurant and other old-brand restaurants.

2.
Stores: full of tricks

2.
Stores: full of tricks

It is difficult for companies that open existing beverage stores to circumvent the Starbucks demonstration.

It is estimated that more than half of Starbucks' 10%+ net interest rate is due to rent reduction.
Many Starbucks stores in China are located in business districts and office buildings.
They are not “social spaces” at all, but “second working spaces”.
This has also led to the fact that in China, coffee consumption is concentrated on working days.

On the other hand, tea is more social and leisure.
On weekdays, the consumption peak is concentrated in the afternoon tea time; and at the end of the week, it is concentrated on Friday and weekends.

Nayuki, Heycha, etc.
first opened stores, and they all focused more on shopping malls.
Nayuki even set the store at 180-350 square meters to strengthen the consumption scene of "party", but only the afternoon tea scene is obviously not conducive to the time utilization of the store.

However, due to the above-mentioned feature of "anything can be added to Riga" tea, the store categories and product categories of Nayuki and Heycha have become more and more: Nayuki pro shop and Heycha togo shop have reduced their stores.
The area is moving towards the office area; the products are also increased to bread, packaged beverages, snacks, alcoholic beverages and even coffee (hey tea has American and latte), etc.
, and the scene is constantly increasing, from afternoon tea to breakfast, overtime, and even night penetration.

The product depth and the changeable combination of stores have made ready-made tea beverages a highly competitive business——

(1) Gross profit space is higher than traditional catering.
Although it is difficult to save ingredients and rent, compared to cooking, on the one hand, the food supply chain is much simpler.
After the scale is up, if there is a fruit-cutting supplier, the flexibility will be greater.
On the other hand, it does not need to be like cooking.
Relying on the chef, this means that labor costs can be reduced, and it is easier to copy and open a store.

(2) The store compatibility is very strong.
Bread, cakes, drinks, coffee, sell whatever is good, and the diversified store format also ensures that more consumers can be reached.

(3) There are many scenes.
There are many products and many stores, which means that it can extend from afternoon tea to breakfast and supper to improve the efficiency of the floor.

Since the products and stores are very powerful, why is Nayuki still losing money? When will it be profitable?

3.
The future: two fronts

3.
The future: two fronts

Freshly made tea is actually very much like a restaurant.
One dimension of division is whether the store is taking the high-end or low-end route.

High-end like Liyuan essentially relies on commercial real estate, the so-called "eating environment".
And low-priced like fried chicken shops rely on standardized low-cost products.

From the perspective of Nayuki's situation, with the scale effect brought by sales, the supply chain is gradually taking shape.
At present, it can be said that it is divided into different categories: one is standard stores, the other is Pro stores, this is Nayuki A light-weight store launched in November 2020.

The "standardized" route can be seen from this kind of store.

First of all, the Pro store adopts a small shop model, removes the on-site bakery area, and focuses more on selling pre-made bakery products, such as cupcakes and cake rolls, which are produced by the central kitchen and deliver bakery products to the store in a unified manner.

Secondly, the location of the store is more flexible and diversified, and the network of Naixue tea shops will be expanded from the current basic shopping mall to areas with low penetration rates, such as office buildings and high-density residential communities.

Third, Pro has established a new retail area to provide a variety of souvenirs and retail product choices, such as fruit-flavored freeze-dried yogurt cubes, biscuits and French fries.

The prospectus revealed that in the next two years of Nayuki's new stores, it is expected that Pro stores will account for 70%, becoming the main force in its expansion.
Compared with the standard store type, the total investment of the Pro store is less.
For example, the single store investment of the standard store is about 1.
85 million yuan, while the Pro store only needs 1.
25 million yuan, which helps to improve the profit margin of the store.

Therefore, some people laughed and said that Nayuki's Pro shop is SE in the eyes of outsiders, and Pro in the eyes of insiders.

Tea shops will also encounter a common dilemma in the catering industry, which is the continuous expansion of the ceiling behind the store and the problem of diluting the flow of customers between the stores.
To break this bottleneck and avoid a downward slope, industrialization is needed, and the second growth curve can be found through standardized retail products.
Haidilao’s selling hot pot bottoms is the reason.

Nayuki made a similar attempt.
In March 2020, the Naxue Tmall flagship store went online.
The tea bases of Naixue Fresh Fruit Tea and Treasure Tea series products have corresponding pure tea or tea bags for sale at Naixue Tmall flagship store.
During Double Eleven in 2020, Naxue sold more than 150,000 boxes of "One Week Tea" online.
In addition, snacks, tea gift boxes, holiday gift boxes and other products are constantly being launched.

Although at the beginning, cold brewed tea could only sell a few cups a day, Peng Xin still insisted on selling tea retail gift boxes and cold brewed tea in stores.
In an interview, Peng Xin revealed that the sales of pure tea can now account for more than 10% of Nayuki's entire tea.

For Nay Xue and Hey Tea, selling cold brewed tea and bottled beverages is definitely just a preliminary attempt.
After the brand and channels are established, these products with low marginal costs will only emerge in endlessly, helping the company "swipe profits.
"

Fourth, the end

Fourth, the end

Whether it is fresh tea or restaurant cooking, standardization and industrialization are inevitable trends and historical mainstreams.

Chinese catering is a super track that has been growing year after year and there is no end in sight, but the competition in it is extremely fierce.
Dianping once disclosed a set of data that the iteration rate of catering stores is close to 100% per year.
In other words, on average, almost every catering store changes its owner every year.

Under the three mountains of divergent consumers, rising rents, and wages that can go up but not down, catering products with industrialization and rapid iteration can have a future.

Under this historical trend, ready-made tea shops with strong product depth, many changes in stores, fast iteration speed, and high consumption frequency are the forerunners of the times.

Source: Yuanchuan Business Review

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