[Business Talk] Chagee: Opening 3,500 stores in 6 years

Many brands and companies had a hard time in 2023, but one brand was "soaring", opening more than 2,000 stores in 2023 alone. I heard that those who want to join have to wait in line for more than 10 months, and even if you have money, you may not be able to join. You also need to verify your capital and go through rounds of interviews.

That’s right, this brand is called “Chagee” and it is the hottest tea brand in the catering industry recently.

And it took only 6 years to open more than 3,500 stores. What does this mean? It took Heytea 12 years to break through 3,000 stores.

Although some brands can open stores at this speed, this is in the tea beverage market. Tea beverages are the most competitive market in the catering industry . In 2017, it was difficult for tea beverages to have a chance to become a phenomenal brand. However, Chagee was able to carve out a path when it was founded in 2017. Moreover, it opened overseas less than two years after its establishment, and currently has more than 100 stores in Southeast Asia and other countries.

The Overlord Tea Princess was like holding a big knife and riding a dark horse, charging into this fiercely competitive battlefield and quickly seizing one territory after another.

But generally, when opening stores quickly, the profitability of a single store is ignored. It is said online that the monthly turnover of a single store of Chagee can exceed one million. I also asked my friends who opened Chagee directly and indirectly, and they said that there are indeed million-dollar stores, but it also depends on the location of the store in the business district. Not all stores are like this.

Even so, what is even more surprising is that most of Chagee's store menus only have a dozen products , and they are basically a simple combination of tea and milk. This product efficiency is very enviable. You know, most milk tea shops can't achieve a monthly turnover of 200,000 with 100 products.

(Screenshot of the mini program menu at the Chagee store in Guangzhou)

In recent years, we have been getting deeper and deeper into the catering industry. I understand that the success of a brand is caused by many factors , and it is difficult to copy and learn directly. But when I learned about the Chagee brand, I found that there are many underlying logics and many brand strategies behind it, which are worth learning from for catering people.

Moreover, the brand strategy and development of Bawang is also a classic case of a restaurant brand combining capitalization, digitalization and branding, and it also reflects many current consumption trends . The business logic of the restaurant industry is no longer the same as it was in the past, and many things have undergone earth-shaking changes.

When we study a brand, we don’t learn its superficial actions, but the brand and business logic behind it, and think about how to apply effective practices to our own brand.

So today I plan to use an article to carefully analyze the brand strategy of Chagee, hoping to give some inspiration to friends who are in the catering industry (a few days ago, I also shared the brand strategy of Chagee in the form of a short video on my video account, but short videos are difficult to show a lot of thoughts and more content in detail, so it is more convenient for everyone to think about it by writing articles. Next, I will share whatever I think of, the full text without deletions).

This article will analyze and share the logic of Chagee from the perspective of the brand, and will also include some of my personal thoughts. It will mainly share from 0 to 1, 1 to 10, 10 to 1000 to 10000:

1. Strategic positioning: brand positioning that starts from the end

2. Model design: From 0 to 1, learn from the proven successful single-store profit model

3. Brand leverage: From 1 to 10, leverage and leverage to quickly increase brand power

4. Fission expansion: from 10 to 10,000 nationwide and global layout

(Special note: I have no vested interest in Overlord Tea Princess. This article is just for sharing and does not provide any investment or other reference advice. If there is anything wrong, please correct me.)

1. Strategic positioning: brand positioning that starts from the end

We have been focusing on brand consulting in the catering industry for many years and found that there are generally two ways to do catering branding in China:

One is that for some reason, you open a store with your family, and then you find it is quite profitable, so you open branches. As you have more stores, you start to build teams, supply chains and other standardized operations. The Mixue Ice City and Wallace that you see belong to this method. I summarize this method as the "from low to high" method.

Another approach is to go from high to low - first select products and tracks, then formulate appropriate strategic positioning to compete with differentiation. Then, it is necessary to build and optimize the profit model of a single store, build a team, attract investment, build a store opening rhythm and supply chain, introduce capital and other professional operations . This is also called the brand approach of starting from the end . Chagee belongs to this approach, and so does Luckin Coffee.

With the development of the catering industry, there will be more and more catering brands that have top-level design and an end-to-end approach from the very beginning.

1.

Okay, let’s first take a look at why Zhang Junjie, the founder of Chagee, chose the tea beverage track.

We often say that choosing products is like choosing your life . If you don’t choose the right products, even the best people can only make a little money. If you choose the right track, a little effort may bring you dozens or even hundreds of times the return of others.

If you ask what kind of stores are the most common on the street, they must be tea shops, which are opened next to each other and are basically chain stores.

Mixue Bingcheng is the representative of brands with a price of less than 10 yuan, and brands with a price of 10-20 yuan include Cha Baidao, Shuyi Shaoxiancao, Guming, Yidiandian, etc., all of which have more than 1,000 stores. Heytea, which represents the mid-to-high-end price range, also opened for franchising last year, and has blossomed all over the country, with more than 3,000 stores.

Tea beverages are the most competitive sector in the catering industry, but they are also large in scale, having reached a market value of 300 billion by 2023.

However, the tea beverage industry is a track where the head effect is relatively obvious, and it is basically the same few who are fighting each other. What they compete for is the supply chain and limited business district resources . The rest can only be the boss in the region, or open stores in some places where competition is not fierce to avoid competition from big brands.

It can be said that before Chagee was established in 2017, the tea beverage market seemed to have little chance of producing another phenomenal brand.

Then why did founder Zhang Junjie choose the tea beverage sector when he founded Chagee in 2017?

From public information and personal analysis, I think there are two main aspects:

1) Familiar with and good at the tea industry

Zhang Junjie had been working in the tea industry before. He started working in a milk tea shop when he was 17 years old, and later became the regional director of a milk tea brand. Before founding Bawang, he had been working in this industry for nearly 10 years and had rich experience and knowledge in the tea industry.

I think this is the main reason. Most people who start a business will generally choose something they are good at and have an advantage in as their entry point, and the success rate will be higher.

2) Tea drinks are in line with the goal of becoming a global brand

Before establishing Chagee, Zhang Junjie went abroad for inspection and exchange. Seeing that Starbucks had opened stores all over the world, he thought to himself: Why can Starbucks, which sells coffee, open stores all over the world, but our Chinese brands can’t open stores all over the world?

So from the very beginning, our brother Jie had a strategic goal of globalization.

But if a category wants to be accepted by people all over the country or the world, it must have two basics:

First, the category itself must be addictive and acceptable to any human being.

Starbucks sells coffee, and coffee is addictive. And if you look at the top five brands in China with 10,000 stores, Mixue Ice City's milk tea, Wallace's fried chicken, Zhengxin Chicken's fried chicken, Juewei Duck Neck's spicy marinated food, and Luckin's coffee, they are all basically addictive products, and no matter where you are from, you can accept them.

Many regional specialties are difficult to sell across the country because their taste is not universal and addictive.

The second is the output of cultural potential.

When McDonald's and KFC opened in China, people didn't even know what a hamburger was. People didn't come to McDonald's for the hamburgers, but because they admired European and American culture at the time. This behavior of consuming because of admiration or pursuit of a certain culture is very common.

Behind the brand is the category, behind the category is the culture, and behind the culture is the economy. Only when the economy is good will people admire and consume your culture.

Sometimes I think some so-called fashion shows abroad are ugly, but the public still likes this kind of aesthetic. Aesthetics are transmitted from high to low, and this "high" is economic development. For example, more than ten or twenty years ago, Hong Kong's economy was developed, and Hong Kong movies were popular in the mainland. Although the taste of Hong Kong-style tea restaurants was not very addictive, they were also popular throughout the country.

If you open an African restaurant in China, even Africans in China may feel embarrassed to go in and consume.

With the rise of China's economy, Chinese catering brands have already possessed this cultural potential to go global . Tea is an element that can best represent Chinese culture, and tea is also addictive. Therefore, tea brands have the opportunity to open all over the world.

Bawang’s current brand slogan, “Meet friends from all over the world with Oriental tea”, directly states the purpose of the global brand.

2.

Okay, here comes the second question. The competition in the tea beverage market is so fierce, what brand direction should we take in order to stand out?

When we look at a brand, we should not only look at its current success, but also look at how it got started, what problems it encountered, how it made decisions, why it did so, and what inspiration can we get from it?

In 2017, tea drinks were divided into two categories: Chinese tea drinks and modern tea drinks. Modern tea drinks are divided into three categories:

The first category is "pearl milk tea" . Many brands originally came from Taiwan, such as COCO, Yidiandian, etc.

The second category is called "drinks turned into desserts ", and the representative brand is Shuyi Grass Jelly.

The third category is "fruit tea" , which was also the hottest direction at the time. Because fruits have the advantages of "health" and high value, many brands that are not specialized in fruit tea have also launched fruit tea related products. Among them, Gu Ming and Cha Baidao are the representatives of the 10-20 yuan price range, and Heytea and Nayuki are priced at 30 yuan. Some social space scenes are also added.

There is also a category called new Chinese tea drinks, which is fresh milk tea , which is mainly milk and tea. Then some traditional Chinese elements are added, which is also called traditional Chinese fresh milk tea. In 2017, the most representative one was Cha Yan Yue Se, which has been opening stores in Changsha. With the trend of the traditional Chinese concept and Changsha's status as an internet celebrity city, it quickly became popular on social media, but it only opened stores in Changsha.

(Data source: DT Business Observation "Number and proportion of milk tea SKUs of different categories in 2023")

Seeing this, if it were you, which direction would you choose?

We all know now that Bawang has chosen the direction of traditional Chinese style fresh milk tea .

Many people on the Internet are saying that Chagee imitates the Chinese style fresh milk tea positioning of Cha Yan Yue Se. But when Bawang was first established in 2017, the most popular was the fruit tea represented by Heytea and Nayuki.

Why doesn’t Chagee make fruit tea but instead imitate the Chinese style fresh milk tea which has a relatively small market share?

Here we can see the ambition and strategic analysis ability of Zhang Junjie, the founder of Chagee.

First of all, the fruit tea market has already become a leader, and it will be difficult for you to surpass them if you try to compete.

There is a very important principle in our brand positioning.

Rather than being better, it’s better to be different.

Only by making a differentiated positioning can you have a chance to stand out.

Cha Yan Yue Se was founded just two years ago and has been in Changsha. So at that time, there was no national leading brand in the field of traditional Chinese milk tea. This was a potential market that had not been fully occupied, and there was an opportunity for a leading brand of traditional Chinese milk tea to emerge.

But I don’t think this is the most important reason. I think the more important reason is that as mentioned earlier, Ba Wang Cha Ji had the goal of becoming a global brand from the beginning.

Zhang Junjie hopes that Bawang can be opened all over the world like Starbucks. But for restaurants to be opened all over the world, there is another very critical issue, which is the standardization and stability of the supply chain.

Look at Starbucks, it is mainly coffee beans, and the supply chain is very simple, stable and standardized. The same is true for McDonald's chicken.

One of the important reasons why the Yu Ni Zai Yi Qi restaurant I worked for was able to open more than 2,000 stores in just a few years was the standardization of the Basa fish supply chain and the popularization of cold chain logistics, which ensured a stable supply of food ingredients to stores across the country and even the world.

Let's go back to the several directions of tea drinks. First of all, pearl milk tea does not conform to the overall changes in consumption trends. The raw materials of tea dessert products are relatively complex, and the standardized production efficiency and supply chain efficiency at the store end are not high.

Let's look at fruit tea. It is difficult to standardize the fruit supply chain, and the management cost is high. Although fruit is healthy and valuable, it has to take into account seasonality, logistics and transportation losses, and storage conditions. If it is not done well, there will be no profit, and it is not stable enough.

Just think about it, a box of mangoes is shipped from Yunnan to Singapore, and the whole process needs to be cold-chained and delivered, and then peeled and processed in various ways when it arrives at the store. How high is the cost and loss? This is also why fruit tea brands dare not expand blindly and quickly, because the fruit supply chain cannot keep up.

The core of the fresh milk tea supply chain is tea and milk. If you ship a box of tea to different parts of the world, the cost is relatively low and there won’t be much loss. Moreover, China’s tea supply chain is very mature and stable. Not to mention milk. This provides the supply chain foundation for Chagee’s global layout.

This is also why the hot pot market is so large. Everyone likes to make hot pot instead of stir-frying because the hot pot supply chain is simple and stable, and the store does not need a chef to ensure a stable taste.

So, if you want to become a national chain brand, you cannot just consider whether your product is popular, you also have to consider the back-end supply chain issues.

Some categories achieve relatively stable store-side products by solving the problem of kitchen staff and business model. For example, Xiaocaiyuan, a stir-fry restaurant, has opened 500 to 600 stores. It does not rely on the standardization of the supply chain, but relies on talent organization to solve the problem of stable products. However, it is difficult to quickly replicate the opening of stores. However, it is already very impressive for such a Chinese restaurant to open hundreds of stores.

3.

After solving the general problem, we need to solve another problem:

There are so many tea brands on the street now, why should customers choose Chagee?

You have to give customers reasons to buy from you.

Whether this reason for purchase is strong or not depends on the difference between customer value and price.

I think there is no such thing as expensive or cheap products in this world, only whether they are worth it or not. The more valuable a product is, the easier it is to impress customers and make repeat purchases.

Either you provide greater customer value than other competitors at the same price. Or if your meat filling is fresher and larger, I will choose you first.

Or you can offer a lower price for the same value. If you sell a cup of fresh fruit tea for 12 yuan and Mixue Ice City sells it for 6 yuan, many customers will naturally choose Mixue Ice City, which has a better price-performance ratio.

Ba Wang Cha Ji’s strategy is to set price first and then determine value .

After all, positioning comes before pricing, and pricing determines the world.

The higher the price, the narrower the customer base. The lower the price, the wider the customer base .

Bawang's price range is 15-20 yuan, which is a mid-range price. Although the customer base is not as large as that of the 15 yuan and below, the base of this price range is not small , which is enough to open 10,000 stores in China . This pricing also provides a certain gross profit to create a Starbucks-style social space experience.

Okay, now that the pricing is determined, let’s take a look at what customer value Chagee provides and see if it’s worth it.

The size of customer value depends on whether customer needs are better met.

Value that does not satisfy customer needs is not called value, it can only be called "self-satisfaction".

This has to do with Ba Wang Cha Ji’s accurate grasp of consumer demand.

What do today’s consumers fear most when drinking milk tea?

"China's New Tea Drinks Big Data Research and Consumer Behavior Survey Data" shows that 49.4% of consumers are worried that consuming new tea drinks is bad for their health, and 42.2% of consumers are afraid of gaining weight.

Concerns about gaining weight, too much sugar, high calories, etc. Behind this is the " healthification " that everyone has been discussing recently.

Consumers' health concerns are also forcing the tea industry to make a healthy transformation. This is not only true for milk tea, but many other categories are now pursuing this health trend.

But in fact, customers’ real demands are often to have more and more!

Drinking a cup of milk tea should be healthy, delicious, and satisfy the need to take photos and share, show off, and have emotional value.

Why has Dongfang Leaf not been popular for several years? It is healthy but not tasty. However, Yuanqi Forest has become popular all of a sudden. It has 0 sugar and 0 fat, is healthy and tasty. Of course, the word "healthy" is in quotation marks.

Therefore, whoever can better meet consumers' multiple demands for milk tea that must be healthy, delicious, and pretentious, consumers will choose you first.

It is not difficult to say that it is delicious, and the sweetness of milk tea itself is addictive. The key is who can make the health concept more perfect and more attractive to customers.

Let’s see how Ba Wang Cha Ji has taken health awareness to the extreme.

First of all, Chagee’s initial product development direction was: tea + milk, refreshing and non-greasy, which is in line with the health characteristics of the product.

At the same time, this healthy awareness is constantly strengthened.

For example, while others are still using creamer-like ingredients, Bawang has taken the lead in using a new base product, "Ice Brown Non-Hydrogenated Base Milk", which achieves 0 creamer, 0 non-dairy creamer, and 0 hydrogenated vegetable oil, allowing customers to drink healthily without burden.

The company also launched a tea product ID card . Starting from the ingredients of tea drinks, the company launched the first "tea product ID card" to disclose the product formula, nutritional information, and product flavor list in detail, directly addressing consumers' health concerns and allowing consumers to understand what they are drinking.

(Picture screenshot from Chagee official mini program)

Later, other brands also followed suit and launched product ID cards, such as Heytea and other brands.

We often say that first-class brands set standards, and second-class brands follow the standards. Bawang Tea Princess is on its way to becoming a first-class brand, taking the lead in proposing and setting standards for the industry.

Later, a calorie calculator was added to let customers know exactly how many calories a cup of milk tea contains.

(Picture screenshot from Chagee official mini program)

You see, it is delicious and healthy. You don’t have to worry about getting fat after drinking it. You can control your calories at any time, and you don’t have to feel guilty about drinking milk tea.

You say, if customers give priority to Ba Wang Cha Ji when selling milk tea for the same price of more than ten yuan?

At this point the product value seems to be almost there, but it’s not enough!

Because customers always want more and more, we also need to understand what other needs of consumers are not met. The more you can meet the needs of customers, the more you will be chosen by customers.

When we build brands, we need to pay attention to and understand the changes in consumer demand at any time. If your brand products cannot meet consumer demand, how can you make money? (Even if you are doing TO B business, you must pay attention to the changes in B-side demand. The nature of the demand is different, but the essence is the same)

What changes have taken place in consumers’ demand for milk tea?

Nowadays, consumers view a cup of milk tea not only as a drink, but also as a kind of social currency, which they use to take photos and share on WeChat Moments to show off, as well as to satisfy certain emotional values.

Therefore, your milk tea is not only delicious and healthy, but also needs to be packaged beautifully and convey a brand concept that can meet some emotional needs. For example, you can have a cup of Bawang Tea to kill time while slacking off at work, or have a cup of milk tea as a companion after get off work to watch TV series.

The packaging design and store design of Bawang Tea Princess combine elements of traditional Chinese culture with elements of international luxury goods, allowing customers to take photos and share the feeling of being tasteful and high-end.

It also collaborates with various brands representing young people and trends and launches various social activities, making consumers feel that Chagee understands young people and creates an emotional resonance.

Selling emotions and social value is one of the secrets to selling a brand at a high price.

The reason to buy is not a single point, but a combination of values.

This combination of measures can basically differentiate itself from most tea brands and give customers a strong enough reason to buy.

This is also the logic behind why we often say that "cost-effectiveness" is not as good as "quality-price ratio".

After reading this, you may also want to think about this question: With so many choices now available to customers, why should they choose your brand? Are the reasons you provide for purchase strong?

If you are running a social restaurant with a dine-in model, you cannot just think about your reasons for purchase based on the product value. You also have to design your differentiated positioning and customer value from multiple dimensions such as your service experience, environmental experience, business district location, store model, etc.

Just like when we do brand positioning for a skewers hotpot brand, we not only say that the product is fresh and delicious, but also how is the service and scene experience. After all, customers come to a hotpot restaurant to eat not only to eat hotpot, but also to socialize.

Different product categories have different customer demands.

OK, after solving the positioning direction and customer value problems, if you want to replicate the store and build a chain brand, the next step is to create a replicable chain single store profit model.

2. Model design: creating a replicable chain store profit model from 0 to 1

Why is it that many people become successful after opening one store, but start to lose money after opening the second or third store?

Why is it okay to open a business in a shopping mall, but you can’t make money in a community?

Why do others need 500,000 to open a store, but you need 1 million?

Why can others make back their investment in half a year, but it takes you three years?

……

This is mainly due to the different profit models of single stores.

No matter how big your restaurant business is, a single store is always the smallest competitive unit. No matter how big a brand is, if your single store cannot compete with the stores next to it within a few kilometers of the nearby business district, it will die.

If a single store is not profitable, the chain will also go bankrupt.

This is why it is difficult for the catering industry to be monopolized by the leading brands . The catering industry is a relatively fair industry with low barriers to entry among many industries. It does not matter your background and resources. As long as you have the ability, you can make money in the catering industry and realize your dreams!

Therefore, if you want to be a chain brand, you need to create a replicable chain single-store profit model.

Polishing a single store's profit model usually takes time and effort. Is there a faster and more efficient way?

Here we have to talk about the strategy of the Overlord.

The single-store model directly borrowed from the then proven successful Chinese-style fresh milk tea brand Cha Yan Yue Se, and quickly completed the chain single-store profit model from 0 to 1. No trial and error, just one step.

But I think Bawang's goal is to become the Starbucks of the East, and the global brand is just a direct reference to Cha Yan's many models that just happened to match at the current stage. If you look at it, you will find that Cha Yan is just a passer-by in Bawang's goal of achieving a global brand. After all, before they grow up, the eagle and the dove look similar.

Now Bawang’s single-store profit model is different from Cha Yan’s.

So what is a good chain single-store profit model?

Everyone has different perspectives and standards. From the perspective of chain stores, I will look at it more from the perspective of customer value and investment efficiency - whether your single-store profit model can better meet customer needs and provide better value to achieve a higher return on investment. To put it bluntly, both C-end consumers and B-end partners benefit more, and that is a good profit model.

The single-store profit model involves a lot of content, including product structure, business district location, pricing, cost structure, customer selection, investment cost, etc. I will have the opportunity to write an article to explain it in detail in the future.

Here I will first talk about the product strategy of Chagee.

The catering industry is generally divided into two product strategy directions: fast fashion and classic.

Have you noticed that McDonald's, KFC, Starbucks, Nanchengxiang and other brands have not changed their core products for decades. This is the product strategy of choosing classic models. New products are only used to stimulate and awaken old customers or for marketing promotion to tell them that there are new products to try, but most of the profits come from classic models.

Recently, I visited Chengdu to inspect a hotpot brand called "Wuliguan", which also has this kind of product strategy.

Among them, the most representative brand is Uniqlo in the clothing industry. They sell the same type of clothes for several years, but their profit margin is higher than other fast fashion brands that sell trendy items.

The advantage of the " fast fashion" product strategy is that there is a constant influx of new traffic, but the disadvantage is that there is no supply chain accumulation and it requires continuous new product development capabilities. Once it fails to keep up with customers' demand for new products, it will be eliminated.

For example, the hot pot brand "Zhu Guangyu" which has a relatively high potential online recently adopts this product strategy, which requires launching various new products to attract customers to check in and try them out. Once customers have nothing new to attract them, they will no longer choose you.

According to statistics, the profit margin generated by the classic strategy is almost twice that of innovative products.

The "big single product" strategy chosen by Bawang Tea Princess from the beginning is this classic strategy - focus on quality rather than quantity, and make classic products based on common tea and milk bases.

Most of Bawang's store menus mainly have three series: original leaf fresh milk tea, snow top series, original leaf fresh brewed tea,

There are about a dozen flavors in total (Yunnan stores have some fruit teas and other products).

(Screenshot from Chagee Guangzhou store mini program)

However, the top three products account for about 70% of the total sales. The sales of the signature product Boya Juexian account for about 20-30% of the total sales.

After all, the more concentrated the products, the more streamlined the supply chain , which improves the efficiency of front-end stores and back-end supply chains.

So does it mean that the fewer products you make, the better?

uncertain.

The product structure design should match your single-store profit model and strategic positioning.

The key is that the store can make money and improve overall efficiency.

I have to say a little more here: in the end, when it comes to branding, we all hope to achieve economies of scale - the more stores we have, the lower the total cost.

But we are not afraid of not reducing costs, but we are most afraid of increasing costs . This is also what Zhang Junjie said about anti-scale gravity - the bigger the scale, the higher the cost.

The three major costs of catering are: ingredients, labor and rent.

As the scale increases, the cost of ingredients will indeed decrease. As the brand power increases, the rent may be a little lower, but not much.

The key point is that labor costs will not necessarily decrease as the number of stores increases, but may increase instead.

Because the labor cost of a single store cannot be reduced, if you need 10 people for a store, you will still need 10 people for the 1,000th store. However, the personnel management cost of each store will increase, and the human factor is the most uncertain, which will also affect the stability of the overall customer experience.

So what can you do? Either improve labor efficiency through organizational management, or minimize reliance on manpower in your single-store profit model design to reduce uncertainty and management costs.

Therefore, Chagee simplifies its product structure by making classic models, reduces the difficulty of store operations by standardizing the upstream supply chain, and uses intelligent milk tea making machinery and equipment, etc. These are all aimed at reducing dependence on people and reducing store management costs.

You see, the chain brand that has done the most extreme in this regard is Juewei Duck Neck. The store employees do almost the same job as cashiers. The store does not require any processing. Products are delivered to the store and put on display for sale, which greatly reduces the cost of human management.

The opposite example is Chinese food. Restaurant products rely heavily on chefs and manpower, which is why few Chinese cooking brands can quickly open thousands of stores. Many Chinese food brands are working on product standardization and robot cooking to solve this standardization and labor cost problem.

What we need to note here is that in the single-store profit model, if you do less in one aspect, you will have to do more in other aspects.

So where should we do more? We should do more and invest more in areas that can increase customer value.

There is another important strategy in Chagee's single-store profit model: opening large stores

Most mid-range and lower-end milk tea shops are less than 50 square meters, but Chagee stores were between 50 and 100 square meters at the beginning. Although this will increase costs to a certain extent, the tea brand in the price range of 15-20 yuan has a better experience , and the price is lower than Starbucks and it also enjoys a certain "third space" scene experience.

By opening large stores in this price range, Bawang Tea Princess has been able to quickly differentiate itself from other brands in unfamiliar markets, which is also very helpful in enhancing its brand power.

(Pictured is the overseas concept store of Chagee)

Just like we ask some of our fast food chain brand clients to provide fruit buffets in their stores. Because fruit brings high value to customers, the cost has to be increased, and then the corresponding cost is offset by reducing and cutting out areas that do not generate much value.

Moreover, the single-store profit model is not static and needs to be adjusted according to the brand development needs and market changes.

At the current stage, an extreme single-store profit model like Bawang can better meet the needs of rapid brand development.

However, this model will encounter problems in the future. For example, as Bawang has more and more stores, there will be a diversion between stores. In addition, the single product will also lead to a single demand being met, resulting in a decrease in the repurchase rate.

As competition becomes increasingly fierce in the future, the Overlord team needs to continuously iterate and optimize to balance efficiency and market demand.

I believe that friends who can see this really want to build their own brand.

When you have no problems with brand positioning and single-store profit model, then everything is ready except the east wind, which is brand leverage.

3. Brand Leverage: From 1 to 10, use brand leverage to increase brand potential

The higher the brand potential, not only will customers and franchisees be more willing to choose you, but when you go to select a location and get a shop space, those property investment people will see you as if you were the God of Wealth and may even waive rent for you.

If you don’t have brand power, you won’t be able to command a premium and you won’t get a good store location.

What brand leverage does Bawang use? Some people say it is because it has money and capital. That’s right, capital is a kind of leverage .

Today's catering brands are increasingly combining capital to accelerate brand development.

Whether or not to join capital depends on the individual. After all, capital has its pros and cons, and everyone’s goals are different.

The addition of capital also shows that the competition in the catering industry is no longer limited to single-store competition and brand competition. Catering has become an industry with comprehensive competition . The capitalization of brands such as Chagee, Luckin Coffee and Kudi has shown that the catering industry has fully entered an era of professional, branded and data-based competition. In the future, more and more catering companies will be listed.

The era when you could just rent a shop, hire a chef and open a restaurant to make money is over.

In addition, there are cultural elements, such as celebrity endorsements, various brand collaborations and other levers to quickly increase brand awareness and enhance brand power.

You see, the brand name Chagee has been leveraging from the very beginning - leveraging the potential energy of the name of the classic Chinese story "Farewell My Concubine". Then, in the design of the brand symbol, we refer to cultural elements such as Chinese opera characters, the charm of Buddha statues and Western geometric lines, leveraging the leverage of the cultural matrix.

There are also collaborations with Grave Robbers' Chronicles and Super Monkey Fitness Platform, and the organization of Frisbee activities, all of which are constantly strengthening the healthy and youthful brand tone of Chagee.

This series of operations has made Chagee's brand potential increasingly stronger, and its premium rights in franchisee screening and business district site selection have also become increasingly higher.

What many people are talking about now as the cultural matrix is ​​actually leveraging the collective subconscious and elements that are already known to everyone to leverage the brand.

But it should be noted that it depends on who your target customers are. Some so-called cultural matrices are not sensitive to them. Just like if you want to do business with post-00s, and your decoration style is like Hong Kong style or 90s style, these post-00s will at most try it out and check in, but will not repurchase, so it is difficult to resonate with them.

Well, in the end, it is a rhythmic and rapid fission expansion. From 10 to 10,000 global layout

4. Fission expansion: from 10 to 10,000 nationwide and global layout

I looked at the brand store opening path of Chagee. Its store expansion rhythm is mainly:

First, he created the world in Yunnan.

Then Chengdu stood tall and proud.

Then the whole country was flooded with

Finally, the world launched a comprehensive effort.

The most critical moment was that the company acquired a shop with an annual rent of 7 million yuan in Chunxi Road, the most prosperous business district in Chengdu . It became famous overnight and had the brand potential to go nationwide.

Later, the entire headquarters was moved to Chengdu. After all, Chengdu is a city with high catering potential in the country. Occupying Chengdu means occupying the national potential, which further increases the brand's premium and attracts many franchisees and cooperation resources.

But it costs money to build brand potential. So Bawang Tea Princess’ strategy is to build the brand in core cities and make profits by expanding the scale in other cities.

The same logic applies to opening stores in a city. Flagship stores are opened in core business districts to build brand potential, while other business districts quickly expand scale and reap profits through franchising and joint ventures.

In 2024, Bawang's focus may be on opening stores overseas quickly. The Bawang team may be selecting locations in Europe and the United States.

(A side note: The globalization of Chagee has also given many domestic catering brands great confidence to go overseas. So I also wish that Chagee's global development will get better and better, and I hope to see Chagee's stores and products in different countries)

The Overlord strategy is a high-profile strategy, which involves first penetrating the region, then increasing the potential, and finally rolling out across the board . If you have money, resources, and strength, you can adopt this strategy.

But if the resources are not enough, you can try another strategy.

For example, the region is king, and resources are concentrated on a certain region, and it is steady and cautious . For example, Chengdu's Kaojiang Grilled Fish and Fujian's Xiaojiaotian brand in Fuzhou use this approach.

Or they can use the strategy of surrounding the cities from the countryside, starting with the surrounding cities or counties where the competition is not fierce, and then slowly penetrate into the core market . Mixue Bingcheng and Wallace used this strategy in their early days.

Let me summarize at last.

Looking at the six-year brand development history of Chagee, we can find that building a chain brand is not as simple as giving it a name, thinking of a slogan, and creating a super symbol.

Instead, it includes various aspects such as strategic positioning, creation of chain store profit model, brand building and store opening rhythm.

Either optimize and upgrade on the existing basis, or learn to think about your development path from the end to the beginning, and then optimize as you go.

No matter what you do, some things remain constant.

First, you need to understand consumer needs and develop or optimize your brand strategic positioning

Consider the competition in the market, whether it is a stock market or an incremental market, what is the market trend, what are my own advantages, and how can I differentiate myself from my competitors?

How can my core advantages be prevented from being imitated by competitors, such as your brand power, supply chain and organizational management.

Then create a replicable chain single-store profit model, and then use various levers to enhance your own brand value, increase brand premium, and avoid getting involved in price wars.

The brand is the result of this series of complex operations. There is still a lot of room for development in China's restaurant chain, which is also an opportunity for many restaurant people.

Of course, the process of brand development is ever-changing and requires specific analysis based on specific circumstances.

But what never changes is that we keep advancing with the times——

Only by keeping up with the changes can you avoid being eliminated.

Only by adapting to changes better and improving yourself can you be welcomed by the market and gain more rewards.