Digging franchisees, lowering the franchise threshold, and expanding the market with over 1 billion...
The North and the South are fighting, a fierce battle over the head of a snack wholesaler
The "battlefield" between Snacks Busy Group and Wanchen Group (300972.SZ) has developed into social media platforms.
Recently, some franchisees of Snack Busy Group (including Snack Busy and Zhao Yiming brands) stated on social media that Wanchen Group (including Haoxianglai and Laiyoupin brands) asked them to make a remake of the "Haoxianglai" brand.
At the same time, many franchisees claiming to be Laiyoupin jointly issued a statement on social media saying that Snack Busy Group asked them to make a replica of the "Zhao Yiming" brand.
It is understood that flipping means that brand A uses subsidies, high-priced store purchases, etc. to make franchisees of brand B change their store signs and become brand A.
Both parties confirmed this to Red Star Capital Bureau.
Many industry insiders and experts believe that the snack retail industry should avoid vicious competition such as poaching franchisees from each other.
Poaching each other's corners
Recently, Snack Busy Group and Wanchen Group have invited each other’s franchisees to join
Close combat
Franchisees who join Snacks Busy and Zhao Yiming Snacks, if they encounter malicious discounts and promotions in competing stores, and the distance meets the standards of high-competition stores, the gross profit margin will be subsidized to 15%; any store within 100 meters of a high-selling competing store will be reviewed by the company Agree, an additional subsidy of 50% of the store's annual rent or 50% of the store's transfer fee will be provided.
For franchisees who have joined the Wanchen Group, the company fully supports and provides activity policy subsidies for all activities to increase store sales within 200 meters (walking distance of Baidu map navigation) of the busy store.
Fight for the market
Snacks Busy Group plans to invest more than 1 billion yuan in the next six months, focusing on the northern region. Among them, the North China region where Hebei and Shandong are located is the core market area of Wanchen Group.
Wanchen Group will invest about 1.2 billion yuan in the future, focusing on the southern market, pointing out that Hunan, the home base of busy snacks, has great potential.
01
Offer attractive terms
Snack mass merchandisers stage a battle for franchisees
Not long ago, both parties mentioned above announced that they would update their franchise policies, lower the franchise threshold, and directly target each other.
On social media, a group of franchisees of Snacks Busy, Zhao Yiming, and Haoxianlai and Laiyoupin all said that the other party’s investment recruiters called them and asked them to make the other party’s brand.
The Snack Busy Group also issued a "Notice" stating that recently, a competing brand Xianglai obtained the confidential personal phone information of our franchisees through improper means, and guided our franchisees to turn over in the name of offering attractive conditions. The brand was changed to a certain brand.
In order to safeguard the basic rights and interests of franchisees, we will definitely pursue the legal responsibility of a certain Xianglai brand and its related parties.
Snack Busy Group confirmed the authenticity of the notice to the Red Star Capital Bureau, and its franchisees also stated that they had received the notice.
The Snack Busy Group said: "We hope to create a good public opinion atmosphere and environment." As for whether any business personnel from the Snack Busy Group called Haoxiang to come to franchisees to turn over the cards, the other party did not respond positively.
The relevant person in charge of Wanchen Group also confirmed to the Red Star Capital Bureau that the Youpin franchisees wrote a joint letter to accuse Zhao Yiming. The person in charge said: "We call on our friends to stop the relevant malicious competition." As for whether there is Wanchen Group The franchisee called Snacks Very Busy about the franchisee's flipping of cards. The person in charge said: "He made an attack. I can't help but respond, right?"
According to public information, Snacks Busy Group and Wanchen Group are respectively the first and second largest in the snack food retail industry.
As for the actions of the two parties to let franchisees flip cards, catering analyst Wang Hongdong analyzed that only when one company regards another company as a mortal enemy, this kind of tit-for-tat and relatively extreme approach will take place. The purpose is to encircle and suppress the opponent, weaken the opponent, and at the same time rapidly expand. own scale.
02
Fighting head-to-head, they entered the opponent's hinterland and opened a new store without taking money and giving away money.
On January 17, Snack Busy Group announced that it plans to invest more than 1 billion yuan in the next six months for national market development, focusing on the northern region.
Snacks Busy Group told Red Star Capital Bureau that the northern market planned for this time includes Henan, Hebei, Shandong, Shanxi, Shaanxi and many other provinces. In these provinces, Snacks Busy and Zhao Yiming have few stores and have a large expansion. space.
It is worth noting that the North China region where Hebei and Shandong are located is the core market area of Wanchen Group.
On January 18, Snack Busy announced a new franchise policy: From January 22 to April 30 this year, franchisees of Snack Busy and Zhao Yiming Snacks nationwide can enjoy 0 franchise fee, 0 management fee, 0 Training fee, 0 service fee, 0 decoration fee, 0 profit, and a one-time subsidy of 100,000 yuan for opening a store.
In the new franchise policy, Snacks Busy Group directly targets competing brands: if it encounters malicious discounts and promotions in competing stores, and the distance meets the standards of high-competition stores, the company will fully support it and subsidize the gross profit margin to 15%; For a fabric store within 100 meters of the store, upon review and approval by the company, an additional subsidy of 50% of the store's annual rent or 50% of the store's transfer fee will be provided.
In the videos posted by the accounts of "Snacks Are Busy - National Investment Promotion Center" and "Zhao Yiming Snacks National Franchise Service Center", the competing product "Wanchen Series" was directly highlighted.
Wanchen Group is not to be outdone.
Wanchen Group recently announced that it plans to invest approximately 1.2 billion yuan in the future for brand building in the development of the national market, with a focus on the southern market.
In mid-December last year, Wanchen Group held an investment conference in Hunan, the snack base.
The Douyin account "Haoxianlai Brand Snacks National Investment Promotion Center" of a subsidiary of Wanchen Group also released a video saying: "The current situation of the Hunan market has great potential!"
In addition, the account also released a new franchise policy for the first half of this year. The content shows that there is 0 franchise fee, 0 service fee, 0 management fee, 0 delivery fee, and the store can be moved within 100 meters (walking distance on Baidu Map Navigation) Stores with better locations or expanded business areas will be rewarded with a one-time decoration subsidy of 120,000 yuan (one-time payment).
In the new franchise policy, Wanchen Group also pointed out that snacks are very busy: all stores within 200 meters (walking distance of Baidu Map Navigation) of busy stores, all activities to increase store sales, the company fully supports and provides activity policies subsidy.
From a geographical point of view, the base market and expansion area of Haoxianlai are located in the north, while snacks are busy in the south, thus forming a situation of "busy in the south and Wanchen in the north".
This time, the Snack Busy Group went north and the Wanchen Group went south, which shows that they have begun to fight at close range.
03
Accelerating the scale of national stores for leading brands is still regarded as key
For Beishang, the Snack Busy Group said that at present, the scale effect and synergy effect of snack mass merchants are particularly important. The greater the number of stores, the stronger the bargaining power with the upstream supply chain. For franchisees, the product categories and prices are more Competitiveness.
As for going south, the relevant person in charge of Wanchen Group told the Red Star Capital Bureau: "There are currently super top players, top players, middle waist players, and tail players. We believe that the market is far from saturated. We welcome orderly and fair and competition that does not harm the interests of all parties.”
Wang Hongdong believes that the models and products of snack wholesale companies are almost highly similar, so scale and brand are very important.
Only brand can attract consumers, scale can reduce costs, and gain profits.
Jiang Han, a senior researcher at Pangu Think Tank, said that in the current snack food retail industry, store expansion is still important, because the number of stores directly affects the geographical scope and consumer groups covered by the brand, thereby affecting the brand's market share and profitability.
"For chain enterprises, scale is one of the most important contents and directions of efforts, because with scale, purchase prices are lower, profits are higher, bargaining power with upstreams is stronger, market share is higher, visibility is higher, etc., the supply chain Stronger." Chain operation expert Li Weihua told Red Star Capital Bureau.
A research report by Guotai Junan Securities analysts Zi Meng and Chen Liyu believes that the growth of store scale can reversely stimulate the efficiency of the supply chain.
In order to increase its scale, on September 12 last year, Wanchen Group integrated its four major brands into Haoxianlai and launched a unified Haoxianlai brand. In the same month, it acquired the Zhejiang snack wholesale brand Wife.
On November 10 last year, Snacks was very busy and Zhao Yiming announced a strategic merger. After the merger, the organizational structure of the two companies will remain unchanged and their respective brands and businesses will operate independently.
There is no doubt that there will be mergers and acquisitions, integration and optimization, as well as national expansion into weaker markets.
Each brand has launched a nationwide layout, with "territories" constantly overlapping and store density superimposed, inevitably leading to market competition.
Regarding the future of the snack retail industry, Zi Meng and Chen Liyu believe that the key to competition in the industry will gradually shift from seizing store locations and rapid expansion in a horse race to improve management capabilities and operational efficiency.
In addition to ensuring the profitability of stores and franchisees, mass snack companies must improve efficiency to truly achieve a standardized profit model. Specifically, in addition to increasing the number and scale of stores, each company should also further standardize, process, and normalize operation management. Achieve improvements in management efficiency.
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Only by eagerly competing for market scale can the capital market perform better.
"From a capital perspective, being number one in the industry can attract more investors' attention, increase the company's valuation, and be conducive to future development and financing." Regarding the above two parties' eagerness to compete for market size, Jiang Han said.
Li Weihua also believes: “Many investment companies or capital usually prefer to choose the number one or two in the industry.”
In fact, the Snack Busy Group has made frequent capital moves in the past year: it first merged with Zhao Yiming, and then introduced 1.05 billion yuan of funds from two snack companies, Yanjin Shop (002847.SZ) and Hao Miss You (002582.SZ), for Snack supply chain warehousing construction, market development and brand building, etc.
Behind Snacks Busy, in addition to the two listed companies mentioned above, there are also many capitals such as Gaorong Capital, Sequoia China, and Wuyuan Capital.
Wang Hongdong predicts that after the merger of Snacks Busy and Zhao Yiming, the next step will definitely be to go public.
Therefore, being number one in the industry is extremely important.
"Only by being number one can we have a greater say and perform better in the capital market (such as stock price)."
Although Wanchen Group is already a listed company, it faces problems such as performance losses, low net profit margin of its main business, and downward stock price trend.
In 2023, Wanchen Group is expected to suffer a loss of 89 million yuan to 69 million yuan, compared with a profit of 47.7656 million yuan in the same period last year.
The annual operating income of its mass-selling snack business is expected to be 8.5 billion to 9 billion yuan. After excluding the share-based payment expenses, the annual cumulative net profit of the mass-selling snack business is expected to be 28.5 million to 37 million yuan.
Red Star Capital Bureau noted that the net interest rate of Wanchen Group’s business in 2023 is expected to be 0.32%-0.44%.
In the secondary market, starting from the second half of 2023, Wanchen Group's stock price has been on a downward trend, and it fell for 5 consecutive days at the beginning of 2024.
"If Snacks Busy Group becomes number one in terms of scale, it will definitely affect Wanchen's performance in the secondary market, so the current thinking of both parties is to surpass their opponents with absolute advantage." Wang Hongdong said.
Seizing scale will not only allow it to improve supply chain efficiency, reduce costs and increase profit margins, but also boost confidence in the secondary market.
However, regarding the two parties' initiatives to poach franchisees from each other to expand scale, industry insiders and experts interviewed believe that the industry should try to avoid similar vicious competition.
Chengdu Commercial Daily-Red Star News reporter Zhang Luxi