China Food

How the largest chain of pubs in China is made

A631 the rise of “night Starbucks”.

In February 2016, a small tavern by the East Lake in Wuhan city was unable to renew its lease due to the expiration of its storefront lease and was about to stop business. Unexpectedly, a large number of young people from all over the world came to this tavern full of Southeast Asian style and spontaneously held a large-scale farewell ceremony.

Some of them are college students who used to come here for gathering, chatting and even writing papers during their four years in University; some of them are husband and wife who met here in those years and now have children. At the farewell ceremony, they sang loudly, with laughter and tears, trying to draw a happy end to their youth and the memories left here.

These pictures were spontaneously recorded by a journalism college student in Wuhan as a documentary called “farewell to the East Lake”, which once caused a sensation.

For an offline chain store, this kind of high recognition from customers is very rare.

On March 29, the pub chain named “hailens”, the location of the documentary, submitted its IPO prospectus on the Hong Kong stock exchange.

It last appeared in the news more than a month ago: Helen’s pub, known as “night Starbucks”, was invested by termite capital and CICC with us $33 million. This has also triggered a upsurge of research on the “tavern” format in the primary market.

Why does a pub attract so much attention?

Smart offline formats are doing “space”

Founded in 2009, Helen’s Tavern has opened 372 offline stores by March 2021, covering more than 80 cities including Beijing, Tianjin, Shanghai, Xiamen and Hong Kong. It is the largest chain tavern in China. And this is just its offline “tangible” existence, and its online “intangible” influence is also amazing.

In December 2020, a challenge called “Helen” tiktok was put forward, and the total volume of the broadcast was over one billion times.

The practice of “coke bucket” originated in Europe. In short, it is to mix whisky and coke in the ratio of 1:5 to 1:10, and add the right amount of ice. The trend of alcoholic beverage, together with the “cute” point created by the container larger than the face, makes the coke bucket “the first cup of wine for young people”.

Because many young people will “underestimate the enemy” when they drink cola barrel, a refreshing and low alcohol drink. This has led to the birth of such “stalks” with spreading energy as “drunken behavior artists” and “don’t be careless in front of the coke bucket” on social platforms.

Tiktok administrative micro blog, or Helen’s official real feelings message, can be seen as a social symbol of this generation of young people, whether it is the “coke bucket challenge” that is very loud on vibrato or the spontaneous messages of true feelings of customers from Helen.

In the prospectus, Helens also clearly mentioned that the goal of building the store into a gathering space for young people has begun to take effect. 93.9% of the customers who come to the store are satisfied with the consumption experience. The company takes “offline social platform for young people” as the strategic direction of its future development.

In fact, similar figures can be seen in many offline chain service giants. Cafes, convenience stores, restaurants, and mainstream offline formats that can reach the goal are all doing the same thing – emotional space. In addition to providing retail services, they also create cultural, spiritual and social experiences.

Take Starbucks as an example. Howard Schultz, the current honorary chairman of Starbucks, was once a staff member of Starbucks. The Italian feelings for coffee made him realize that coffee shops should not only think about how to provide better coffee, but also become the “third space” for people’s gathering and leisure through coffee, a social adhesive.

When he tried to convey this idea to the founders of Starbucks at that time, they thought that Americans were too busy to waste an afternoon in a coffee shop. Many years later, Schultz’s own “Tiantian” coffee successfully acquired Starbucks, which enabled him to practice his “coffee philosophy” and start to build Starbucks into an interior space with strong emotional attributes and carry forward the business logic of “the third space”.

Suzuki minwen, the founder of 7-11, also explained what he thought of the success of 7-11 – because creating convenience has entered people’s lives and become the center of the community, and then we need to make people feel at ease. In March 2011, after the East Japan earthquake, infrastructure needs to be gradually restored. Although people can tolerate the inconvenience in life for a while, only when the 7-11 signboard lights are on again can they feel that society is beginning to return to normal.

In the fourth consumption era, Japan’s master of consumer observation Sanpu exhibition explains the trend of offline stores becoming social space. He believes that with the consumer society gradually entering a mature stage, people’s demand for material is becoming weaker and weaker, and the demand for relative enrichment of interpersonal relationship is becoming stronger and stronger. The goods placed in stores are just creating interpersonal relationship in people’s eyes The means and resources of the Department. As a result, when the Japanese society was in the transition from the third consumption era to the fourth consumption era (around 2005), the functions of convenience stores changed from “ordinary convenience stores” to “social convenience stores”.

This is in line with the classical Maslow’s hierarchy of needs theory. When people realize their basic physiological and security needs, they often desire the need of human empathy, also known as the need of belonging and love, which is embodied in the individual’s desire to get the care and understanding of family, groups, friends and colleagues, integrate into large groups, and establish a good social relationship with everyone.

Social interaction is a universal human need, social interaction = human empathy based on time + space + interactive resources. Its existence will not change because of the times, but will show different ways of existence because of the different times.

Historically, social interaction was mainly based on physical space. For example, in Europe, pubs are “social spaces” that existed before the appearance of CAF é s, where people of different classes can gather and exchange information with each other.

In the Internet era, virtual social space takes up more users’ time. Social Internet products are always exploring and studying the ways of human empathy triggering, and the resources of interactive interfaces and applications are greatly enriched. For example, when launching the new function “state” on wechat, Zhang Xiaolong explained: “the essence of social networking is to find the same kind, and state is also a way to help find the same kind.”

From Starbucks to Tencent, in the capital market, the business model of social networking is often considered to have a high business value imagination space, and the winners have a similar rule: focus on users, not competitors.

The value of “space”

The best business is to do all the business with a group of close people

When a consumer goes to Helens for a drink or chat with his friends on a weekend evening, the scene is likely to be like this: there are a large number of people queuing up at the door, but they are still willing to wait for the number, because Helens not only has tables and chairs to rest, but also has free beer, including 1664 and corona.

Enter the store, scan the code and place an order. TA will find that if it’s a new customer, the store staff in yishuier Sweatshirt will send 6 bottles of free beer; the most expensive product in the store is the wild beer with the price of 275 yuan, and all single bottles of beer are less than 10 yuan; if the snacks on the menu can’t meet the needs, TA can also order takeout.

When it comes to the late night, more and more people are coming, and the decibel of the noise will be increased. The decibel devices and sensors installed in the store will feed back to a place called “atmosphere control center” in real time, and automatically adjust the decibel number of music to a suitable level, so that friends at the same table can chat normally without being disturbed by the next table. Even if TA is concerned about the official account of Helen, he can choose the music he wants to play one day in advance.

In the relationship between users and Helen company, a two-way selection mechanism has been formed. Sticky users are concentrated in young people aged 20-30, with artistic and simple temperament. They come here to enjoy a day of relaxed time, get together with old friends, or get to know like-minded new friends. Helen company provides them with an atmosphere of peace of mind, freedom and equality for all People who show their status through consumption will feel out of place.

The atmosphere of “finding the same kind” makes Helens have the potential of “social space”.

The formation of social atmosphere is often difficult to quantify, but Helens has grasped an anchor point: continuously reducing customer orders to the extreme, weakening other social attributes of consumers, so that users can feel absolutely relaxed and comfortable.

In order to ensure the continuous low customer price, from the location, private brand, single store product and management system, team incentive mechanism and other dimensions, all the efforts of Helen company are clearly directed to this anchor.

The first is site selection. Helen is good at choosing the “worst” position and then doing business. When it opened its first store in Beijing in 2009, it was in a remote location in Wudaokou. At that time, the annual rent was 200000, while the annual rent of 500 meters away from here was ten times.

Because of this successful experience in the beginning, the site selection standard of “good location, poor location” has been followed in the later development. Good location means that the target users in this area can at least reach a certain amount, while the confidence of poor location lies in the concept and methodology of hellens’ whole user operation. The main channel of customers’ source is not based on LBS, nor random consumption, but purposeful and planned consumption, so that customers can come with excuses.

The second is private brand strategy. In the menu, the unit price of Helen’s own brand beer is only 7-8 yuan / bottle (275ml), and the sales proportion can reach 70%. In the consumer and retail industries, it is very valuable to realize the success of private brand strategy, because it can maximize the benefits to consumers, so as to realize the business success of enterprises. But the challenge is also huge, and the core lies in whether users recognize the brand. Most well-known enterprises in the retail industry, such as 7-11 and Costco, have achieved the success of their own brand strategy.

Not only is private brand beer very cost-effective, but after the store has a certain scale effect, hailunsi’s outsourcing brand beer can also be sold at a lower price. For example, 1664 and Budweiser’s selling price in hailunsi is less than 10 yuan / bottle. This bargaining power will be further enhanced with the expansion of the store scale. China’s beer industry has experienced great mergers and acquisitions in the past ten years, and the great leap forward of production capacity, which has created a huge opportunity for enterprises with channel discourse to develop their own brands.

The third is the management system. A typical hailens store, with an area of 300-500 square meters, 45 tables and about 10 employees. In the case of full seat rate, the ratio of employees to customers reaches 1:20. In the field of catering services, this is almost an impossible number. Helen’s secret to making it impossible is that its store staff only need to do three things: keep the store clean, keep the store safe, and follow the system prompts from the “support center”.

For example, the store manager will give a simple prompt to the store manager, and the store manager will push out the key indicators. Or if the power of the music player is only 30%, a message will be sent to the store manager to remind him to pay attention to charging.

Behind the “support center” is the digital system of hellens, which can be divided into atmosphere control center, logistics control center and other functional departments.

If the chain is to be bigger, it must be digital. Hailun company has realized this for a long time. It has invested in the independent research and development of information system for many years, from the central music management system, store operation management to supply chain management, and has implemented the process and standardization in chain stores. Hailun company is known as the “digital management of the whole chain”.

Digital R & D and application achievements of Helens

Digitalization also makes it possible to flatten management. In Hailun company, there are only three levels: Support Center, region and store, forming a pyramid structure of big middle stage and small front stage. The top of the pyramid gives instructions on strategic direction and business objectives.

It is a common practice for the catering service industry to let the store manager take advantage of the store and operate the store. However, Helen company does the opposite. The evaluation of the store staff is not in the performance KPI, but in the “soft” indicators such as the atmosphere of the team and the care for users and partners.

Through all-round efforts, hailun company reduced the customer order to the limit value of 50-60 yuan, which is enough to meet the whole market from the first tier cities to the county.

Compared with the traditional system aiming at stimulating impulse consumption, this is a completely subversive approach. The bottom layer hides the business philosophy and ultimate goal of hellens. Under the logic of universal consumption, the brand of hellens will be built into an entrance and platform, so that users will no longer have brand preference and loyalty to the goods and services provided in the store, but will be loyal to the sea Rence builds trust and loyalty.

In this way, Helens can provide a similar group of people with similar preferences and constraints with a full range of goods and services with the highest coincidence of quality and price range, and always only earn appropriate profits.

For example, the rent of power bank in offline stores is becoming more and more expensive, and it is easy to deduct hundreds of yuan deposit. For users, this is a big pain point. Helens plans to launch its own power bank in the store, with a very low rent and a deposit equivalent to the cost of equipment, as a value-added value for users. In this way, the interests of users are the starting point.

When the value-added value continues to accumulate, mutual trust and loyalty will naturally be established between users and enterprises. It can be understood as a contract of consumer society. Our society is made up of countless contracts, and the biggest obstacle to human cooperation is the different interests of each other. Therefore, there are a series of sayings in China, such as “no business without fraud”, “buy without sell”.

But in the case of hailens, it uses a unique business model and corporate culture, as well as supporting operation strategy and internal incentive mechanism to ensure the maximum interests of users. That is to say, Helens and users “sign” a contract with the same interests, so that users have sufficient reasons and trust to enter the community called “Helens”.

“Starbucks at night”:

A possible sample of WanDian direct sale

In May 2018, Starbucks held its first global investor exchange conference in China. Chinese mainland city will not hide its ambition at the meeting. Starbucks plans to enter 100 cities in mainland China at the end of fiscal year 2022, and expand 18-20 City City annually, and finally cover 230 cities, and achieve the goal of 6000 outlets.

In fact, in January 1999, when the first Starbucks store in mainland China officially opened in China International Trade Center in Beijing, Chinese people’s knowledge of coffee still stayed in Nestle’s instant coffee. In the following nine years, Starbucks continued to lose money in China. Even Schultz once doubted whether such a large investment in the Chinese market was worth it.

In the end, he decided to gamble. He is gambling on the growth of China’s GDP and per capita disposable income, which can be called urbanization and consumption upgrading.

According to the consumption era theory of Sanpu exhibition, the characteristics of China’s consumption society in 2010-2020 are highly consistent with the third consumption generation (the third consumption generation in Japan is 1975-2004). Taobao has created the culture of “buy” and “double 11” has pushed this consumption Carnival to the peak. Starbucks also ushered in the rapid development in China at this stage. At this stage, Chinese people began to have the economic strength to embrace many imported consumption ideas and goods.

Helens is known as “night Starbucks”, only talking about their commonness. On the surface, their similarities lie in the business model and the concept of treating employees and customers. The difference lies in that one focuses on daytime business space, mainly selling coffee, and the other is night leisure space, mainly selling beer.

In the next ten years, most of them will be in the process of internationalization, that is to say, when they are in the third stage of China’s consumption era, they will be in the process of internationalization It’s getting more and more popular.

According to the prospectus, hailun plans to expand its offline stores to about 2200 by 2023, and continue to adhere to the all direct business model. In the long run, the company’s store network is expected to reach 50 million or even 10000 stores.

WanDian direct marketing in the Chinese market, has always been like a “legend”, only heard, never seen. Starbucks has about 20000 Direct stores in the world, and will enter the critical stage after passing the 5000 mark in China.

Does Helens have a chance to become the first enterprise to realize direct operation of WanDian in China?

From the saturation point of view, the scale of Chinese liquor scene consumption market is similar to that of coffee shop chain market, but the current brand concentration is significantly lower than that of coffee shop chain. The market share of nearly 5000 stores of Starbucks is about 3%. At present, the scale of more than 300 stores of hailens is in an absolute leading position in the industry, and there is considerable room to improve the market share.

From the perspective of penetration, Starbucks has been working in China for 20 years, but it still has no breakthrough in cultural integration, which means that it needs to continue to “break the circle” when it continues to expand to low tier cities. The wine consumption has inherent advantages in the cultural level. The layout of taverns is theoretically normal distribution with different levels of cities in China. What Helens has to do is to upgrade and improve the supply side.

In Britain, which has a national pub culture, pubs actually exist as community centers, and have more influence in sociology than cafes. In 2019, Li Ka Shing’s Cheung Kong Industrial Group purchased Greene king, a chain tavern enterprise, for us $5.6 billion. During the peak period, the company had more than 9000 chain stores, while the population of the UK was only about 60 million.

Back to itself, Helen spent more than ten years iterating out the best store type, testing the market in different levels of cities, creating a team with high discipline and cohesion, early layout of informatization, and establishing control in the key links of the supply chain, in order to have the ability to open stores quickly. For example, the renovation process of Helen’s store only takes about 40 days, and the break even period of the new store only takes 3 months.

Now, the east wind is coming.

The penetration rate of China’s mobile Internet ranks in the forefront of the world. When online consumption and social interaction reach a peak, the demand for Chinese people to return to real experience is extremely strong, and the consumption period will inevitably extend from day to night. At the same time, night economy is also a major feature of consumer society entering the mature stage.

Tokyo is a pioneer in the development of night economy in East Asian society. There are 24-hour taverns, late night canteens and convenience stores everywhere. The abundant supply of night economy not only meets the domestic consumption demand, but also makes Tokyo a “never night city” for tourists all over the world.

These nighttime businesses began to blossom in the 1990s, when the baby boomers’ children came of age. This generation pursues personalized consumption and begins to think deeply about the significance of being a person. At the same time, the society is running fast. Young people’s work and rest time is getting later and later, which naturally leads to the development of night economy.

The road of Japanese consumer society has also appeared in China.

According to public information, in the first tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, the proportion of night consumption has accounted for more than 50% of the whole day consumption. According to the survey report on consumption habits of urban residents by the Ministry of Commerce, 60% of the consumption takes place at night, and 85% of the respondents express strong willingness to spend at night.

As of October 2020, China has issued a total of 197 policies highly related to night economy, which has a significant driving force to promote economic internal circulation. There is demand and policy, which means that the best time has come for the night commercial form that meets the taste of the new generation of consumers.

At the end of the paper. Thank you for your patience.

reference material:

[1] 36 krypton: Night Starbucks Helen’s Tavern completed $33 million financing, led by black ant capital

[2] Black ant capital: dialogue with Helen Xu Bingzhong

[3] The fourth consumption era, Sanpu Exhibition

[4] Philosophy of retailing, minwen Suzuki

[5] Heart into heart, Howard Schultz

[6] Costco Costco: I’m not a supermarket. I’m an intermediary you can’t refuse

[7] People’s Daily: why should China develop night economy?

[8] Xinhuanet: the current situation of China’s night economy

[9] Interface: 20 years of Starbucks in China

[10] International experience of night economic development and management

[11] Analysis of China’s economic development scale in 2021: it is expected to exceed 36 trillion yuan

Author: Chen Mo, Yang Tingting; source: Yuanchuan Institute (ID: caijingyanjiu), reprint authorized. Joining the community: Cherry (wechat: 15240428449); business cooperation: Amy (wechat: 13701559246). It is recommended to read the secret selection column of Vitasoy coffee master, vinegar beverage, cherry fashion trend, female tea brand, new trend of dairy products, high-tech restaurant vegetable protein beverage, NMN, Mengniu’s eight new takeaway packaging brands, keeping alive for a week hot news, innovation interview, new Xiu brand, trend insight, packaging outpost fbic 2021

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