How catering franchise was "eaten" by celebrities
"China News Weekly" reporter / Zhao Yiwei
Issued in the 981th issue of China News Weekly on January 18, 2021.1
In less than a year, the number of stores nationwide exceeded 600.
This is the investment result of the star Chen He's own hot pot brand Xianhezhuang, setting a new record for franchising brands in the hot pot category.
When Xianhezhuang launched advertising bombings on major social platforms, people came in admiration: in the face of the two-hour waiting time, diners were still willing to line up in the cold wind.
Behind it, the initial investment of 2 million yuan in a store still makes franchisees scrambling to wait for the signing.
Stars are starting a new round of enthusiasm for catering.
Since June 2020, many celebrities have entered the catering industry one after another, opening star brand catering stores across the country.
In June, Sun Yizhou launched the barbecue brand "Zhao Menkan"; in September, Guan Xiaotong launched the milk tea brand "Natural Dai"; in November, Huang Xiaoming launched the barbecue brand "Shao Jiangnan".
Their marketing and promotion methods are exactly the same: when the new store opens, celebrities come to the store and co-produce videos with various Internet celebrity bloggers. After two or three days, Internet celebrity bloggers add brand-related topics to post videos, and they form a tendency to swipe the screen for a while.
In fact, although these star catering brands have been open to join in large numbers, they do not have the qualifications to open franchise.
"China News Weekly" inquired on the commercial franchise information management platform of the Ministry of Commerce and found that none of the above-mentioned star catering brands had a record of franchise activities in the Ministry of Commerce.
In other words, these brands are not compliant with the open franchise.
"According to the provisions of the'One Two Laws' for franchising ("Commercial Franchising Management Regulations", "Commercial Franchising Information Disclosure Management Measures" and "Commercial Franchising Recording Management Measures"-Editor's Note), these star brands have not been registered , And opening franchise without information disclosure is completely illegal.” Li Weihua, director of the Franchise Research Center of China University of Political Science and Law, told China News Weekly, “Brand owners and franchisees are at risk when franchising is opened in violation of regulations. "Franchise Recording Management Measures", if there is no record, the brand will be subject to administrative penalties; if the information is not disclosed in time, the contract may be invalid; if there is exaggerated publicity during the open franchise process, commercial fraud will be suspected."
Quickly earn hundreds of millions of yuan in franchise fees
In any Xianhezhuang store in the country, the walls are covered with photos of Chen He and various celebrities and Internet celebrity bloggers without exception.
Under normal circumstances, only when the regional representative of Xianhezhuang opens a new store, Chen He will airborne in the store to create a wave of opening publicity. The general franchise stores do not receive such treatment.
And after the new store entered the daily business track, the celebrity influencers did not reappear, but replayed Chen He and the celebrity influencers’ store-exploring marketing videos on the TV in front of the store.
In less than a year, Xianhezhuang has recruited more than 600 franchise shop owners across the country.
If calculated based on the franchise fee of 380,000 yuan to 480,000 yuan per store, the Xianhezhuang brand has received more than 240 million yuan in franchise fees.
Not only the initial fee.
Xianhezhuang requires the store area to be no less than 300 square meters, and all the primers, primers and halogen materials, front office business appliances, and all the facilities and equipment of the back kitchen in the operation are purchased from the company, and a 2% monthly business flow is charged for management fee.
"China News Weekly" learned from the Xianhezhuang brand investment manager that, taking Tianjin as an example, in the initial investment of a 300-square-meter store, the brand service fee and deposit exceeded 500,000 yuan, and the decoration design cost exceeded 500,000 yuan. For miscellaneous expenses such as rent, facilities and appliances, advertising and marketing, a store opening requires at least 2 million yuan.
"Whether it is the initial fee or the percentage, Xianhezhuang is considered to be very high in the franchise catering." Wang Yajun, founder of Pengshou Foods, told China News Weekly, "There are few brands that only cost 500,000 yuan for the initial fee. , And 2% of the business turnover is drawn, which is equivalent to 5% of the profit."
According to the initial total investment of 2 million yuan in a store in Xianhezhuang, the franchisee directly pays for the brand's franchise money, decoration design fees, facilities and equipment costs, advertising and marketing expenses, etc., accounting for more than 50%, and the franchise money alone accounts for up to 25%, and the monthly management fee charged at 2% of the business turnover may be as high as 20,000 to 30,000 yuan.
"Take the Xianhezhuang store in Beijing as an example, the peak daily turnover is about 50,000 yuan, about 1.5 million a month. If the management fee is charged at 2% of the turnover, the annual management fee will be as high as two or three hundred thousand. Yuan." Bai Mo, founder of Damo Catering Brand Consulting, said to China News Weekly, "The common catering franchise brand in the industry has a one-year brand service management fee of 5,000 to 10,000 yuan."
“Restaurant brands with star platforms have better traffic and popularity resources, and their franchise prices will be higher.” Li Weihua, director of the Franchise Research Center of China University of Political Science and Law, told China News Weekly, “Generally speaking, franchise franchise fees It is usually 1% to 10% of the initial total investment of a single store. For example, it costs 200,000 yuan to open a store, and the franchise fee is generally between 2,000 yuan and 20,000 yuan."
Unqualified "brand cooperation"
In fact, Chen He's Xianhezhuang hot pot was established as early as 2015, but due to the subsequent poor operation, it was once faced with a crisis of closing the shop.
It was not until the end of 2019 that Xianhezhuang reached a cooperation with Sichuan Zhishan Catering Group. The latter was responsible for brand operation, investment promotion and supply chain management to help Xianhezhuang turn losses into profits.
In May 2015, the hot pot brand Xianhezhuang, jointly invested by Fuzhou Changle actor Chen He, Nanping singer Ye Yiqian, and host Zhu Zhen opened.
By the end of 2017, there were already 6 branches in Fuzhou alone.
However, according to Sichuan Zhishan Catering Management Company, around August 2019, "Almost all Chen He's stores in Fujian were closed, and then transferred to Zhishan Group to take over and operate."
Chen He also has an equity relationship with Zhishan Group.
According to Tianyan Check data, Chen He, the ultimate beneficiary of Fujian Xianhezhuang Catering Management Co., Ltd., holds 33.25% of the shares.
Fujian Xianhezhuang and Sichuan Zhishan jointly own and control Chengdu Xianhezhuang Catering Management Co., Ltd.
It is under the blessing of Zhishan Group's professional catering management that Xianhezhuang embarked on the triumphant road of joining and attracting investment.
Celebrities use their own reputation and traffic to attract popularity, charge merchants high brand service fees, and then hand over to professional catering management companies to solve supply chain problems. This is a common approach adopted by recently emerging star catering brands.
According to the information on Zhishan Group’s official website, in addition to Xianhezhuang, the company’s catering brands include Shaojiangnan, Tianrandai, Zaomenkan, Xianghexuan, Zaoerge, etc., and these brands happen to be tied to some stars in front of the stage. To determine the relationship, Huang Xiaoming, Guan Xiaotong, Sun Yizhou and others are sparing no effort to promote these brand platforms. The marketing methods and franchise models almost completely replicate Chen He’s Xianhezhuang.
"China News Weekly" learned from the investment manager of the "Natural Dai" brand that to open a "Natural Dai" milk tea franchise store in a second-tier city, it will cost 88,000 yuan for the brand, about 100,000 yuan for equipment, and about 100,000 yuan for store decoration design. In addition to various miscellaneous expenses such as milk tea raw materials, training, labor, etc., the initial total investment of a 35 square meter milk tea shop without rent needs at least 500,000 yuan.
“The franchise fees of these star catering brands are high in the industry.” Bai Mo said, “Generally, the franchise fee for a catering brand with an area of 300 square meters is more than 100,000 yuan, while a star brand needs hundreds of thousands of yuan. Generally 40 A milk tea brand with an area of square meters costs three to fifty thousand yuan to join, while a star brand needs more than ten thousand yuan."
“At present, Tiandai has opened 245 stores nationwide, with 56 preparatory stores, and 1,343 franchising willing merchants are under review.” The aforementioned investment manager told China News Weekly, “When the franchise just opened in September 2020, The threshold is relatively low, and you can basically do it after you apply. But now there are too many people applying to join, and the threshold for joining has to be raised, and additional conditions such as tea drinking experience are added."
The same hot investment promotion situation also appeared in star catering brands such as Shaojiangnan and Zaomenkan.
But behind the fanatical pursuit, the fact that these star brands do not have the qualifications for open franchising (franchising) is not well known.
According to the provisions of Chapter 2 of the "Commercial Franchise Management Regulations", a franchisor shall have at least 2 directly-operated stores to engage in franchising activities and operate for more than one year.
The franchisor shall file with the Ministry of Commerce for the record within 15 days from the date of signing the franchise contract for the first time.
"China News Weekly" inquired on the commercial franchise information management platform of the Ministry of Commerce and found that only "Tan Duck Blood" under Zhishan Group has the record information of the Ministry of Commerce, while Xianhezhuang, Tianrandai, Shaojiangnan, Zaomenkan and other star catering brands There is no record information.
“In fact, more than 90% of franchise brands in the catering industry have not been registered with the Ministry of Commerce. In terms of catering brand franchise registration, the illegal costs of enterprises are too low.” Li Weihua pointed out, “There are three main situations in which companies do not do registration. One is that it does not meet the filing requirements of "one year and two stores"; the other is that the brand itself does not know to do the filing; the third is that the brand deliberately does not make the filing because it does not want to follow the franchise’s “one two laws”."
In the actual investment process, the investment managers of brands such as Xianhezhuang, Tianrandai, and Zaomenkan also deliberately avoided the word "join" in their words, and replaced them with words such as "brand cooperation" and "technical output" in the application form. In the process of determining franchise, various documents, contracts and banner slogans also use words such as "signature" and "cooperation", without mentioning "joining".
"These celebrity brands are doing a typical quick-recruitment model, which is called brand cooperation to the outside world, and obviously avoids the rules of joining." Bai Mo bluntly told China News Weekly, "This type of quick-recruitment brand has a very high initial marketing cost. Once the launch is launched, funds need to be returned quickly, so it is almost impossible to open two direct-operated stores for more than a year to attract investment."
Can the star effect make money?
Under the conditions of both the film and television industry and the catering industry, the flow star and the catering group hit it off and grabbed a large piece of cake during the market downturn.
But most of the money they make does not come from consumers, but franchisees.
In the investment return analysis table provided by the investment manager of Xianhezhuang to China News Weekly, the expectation of operating income and investment return is very good.
Calculated on the basis of 22 tables in a 300-square-meter store, the number of seats is 130, the turnover rate is 2.2, the average daily turnover is 24310 yuan, the average monthly turnover is 729,300 yuan, the gross profit rate is 60%, and the investment return period is only over 9 month.
"Anyone who has done hot pot category understands that every table is filled with 5 people and turned over 2 times a day, it is almost impossible to achieve, the investment return analysis data is obviously inflated." The aforementioned senior catering industry person said bluntly, "This kind of brand doesn't really want to do catering, nor is it really earning consumers' money, it just cuts off franchisees' leeks, and what they earn is franchisees' money."
According to statistics from the third-party data agency Rui Yide, 60% of celebrities choose to do catering, 10% choose to open a bar, and 15% choose to sell clothing.
Hot pot is the most common type of food.
The hot pot, barbecue, milk tea and other categories are the first choice for stars to enter the catering, precisely because these categories also have the characteristics of not relying on chefs, unified management of the supply chain, and easy to join.
"Star catering will choose categories that are easy to standardize and earn fast money. They also hope to earn fast money." Bai Mo said bluntly to China News Weekly, "To engage in star catering is not only a growth point for the star's own business, but also for catering. The industry attracts fans. But for the majority of franchisees, it is likely not a good business."
Bai Mo pointed out that hot pot, barbecue, milk tea, etc. are all relatively conventional categories, and the market is fiercely competitive, and they can rely on celebrity traffic and attention in the short term.
However, the life cycle of these categories is usually only two or three years. After a brand's popularity has subsided, a new brand can be used.
In the end, celebrities and brands make money, but franchisees may not make money or even lose money.
"Star catering projects are not necessarily good projects." Li Weihua said bluntly, "Star value cannot determine the franchise value of a catering brand. There are too many celebrities with popularity and traffic, but very few can really do a good job in catering. In addition to fame, the actual operating ability, market competitiveness, and profitability of the brand are the indicators that franchisees need to value."
But the popularity of celebrity dining has not diminished.
More and more franchisees are being tempted by stars with a halo over their heads, and celebrities are being tempted by this easy and profitable business and are rushing to enter.
On December 19, 2020, Zheng Kai launched the Huofengxiang Hot Pot Beijing Headquarters. Several celebrities including Wen Bixia, Wang Likun, Naiwan, Zhang Xiaolong came to join in. A group of short video celebrity bloggers holding scripts and waiting in line Co-produced short video promotion with Zheng Kai.
"Complete the goal of opening 500 stores in three years." Zheng Kai said on the day the first store opened in Beijing.
Obviously, Zheng Kai's Huo Fengxiang concocted Chen He's Xianhezhuang in the same way, and another star restaurant was on the road of investment promotion.
China News Weekly, Issue 3, 2021
Statement: The publication of "China News Weekly" manuscript is authorized in writing