China Food

Capital is focused on “Luchuan”

after the pasta brand financing war, capital once again ignited a “series of battles”.

Text: Chen Chang; Editor: Lu Jia   

Source: Caijing Tianxia weekly (ID: cjtxzk)

In China’s snack food culture, string food is the preference of many diners. Now, capital is also keen on “string food”.
Recently, Beijing’s Kuafu Fried String announced that it had completed a round of A2 financing of tens of millions of yuan. Then, two years after its establishment, Nanjing’s Xijie Fried String also announced that it had obtained a round of a financing of 295 million yuan. The investors include happy capital, Jinding capital and source capital.
Previously, in July, the kebab brand “Yongdingmen electric kebab” also received an angel round investment of nearly 10 million yuan from Meihua venture capital and other institutions. A year earlier, “mutton kebab” also completed the round B financing exclusively invested by black ant capital.
It is understood that “Chuanchuan” belongs to a relatively subdivided field in snacks, and relevant brands also aim at young “night owls”. However, with more and more snack categories and more entrants, Chuanchuan stores should break the traditional “roadside stalls” It’s not easy to impress and get rid of consumers. How much room can these chain stores favored by capital have for development?
String start “high-end”
Speaking of “Luchuan”, many people think of the picture like this: roadside stalls, trolleys, Fried String masters’ hands full of oil stains. Sometimes, they may have to pay the price of stomach trouble after their mouth addiction.
However, there has always been a market for string business. Those who love “string” are mainly young people who are keen on night consumption. Uranus, a catering planner, told Caijing world weekly, “its consumer groups are mainly post-90s and post-00s, and will be younger people in the future”.
Lin Yue, a catering analyst and chief consultant of Lingyan management consulting, believes that the “string” business in the barbecue industry was originally insignificant. Because its customer unit price is low, the traditional roadside stall is also “unhealthy” in the inherent impression of consumers. Therefore, it is also difficult for it to break through the inherent business framework.
However, capital is optimistic about the business of “string” this year. According to Zhu danpeng, an analyst of China’s food industry, this is mainly because “string food is more loved by the new generation of consumers. Under the influence of demographic dividend, its audience and market expansion have attracted the attention of capital.”
At present, this wave of investment in catering is still in the ascendant. Ramen, rice noodles and baking are still standing at the “tuyere” of capital. It doesn’t seem very surprising that investment institutions fall in love with “Luchuan” now. But what more stories can be told about the traditional roadside stalls selling for a few yuan?
Serial brands that can get financing, whether it is Xijie Fried String, Kuafu Fried String, or Yongdingmen electric roasted string, have made the serial business “high-end”. Serial stores have also opened to a prosperous business district and began to become “advanced” in packaging and food materials, facing young people with higher consumption levels.
At the door of a Kuafu Fried String shop near Shenjing international cinema on Xueyuan Road in Beijing, a young man waiting for the opening of the film said: “I’ve been queuing for a long time, but it tastes good, and the materials inside look hygienic.” It is understood that the kitchen of this store is transparent. Behind the table where customers scan the code and order, there are masters frying on site. The work flow of the waiter is also streamlined. The process of packaging and sprinkling scallion, parsley and other ingredients has also been unified and standardized.
According to public information, Kuafu Fried String was founded in 2018. Its founder yuan Zelu was the co-founder and CMO of West young master rougamo, responsible for brand marketing and supply chain. In 2018, he left West young master and founded “Kuafu Fried String”.
Yuan Zelu once said that the seemingly low-end “Fried String” can be upgraded to high-end snacks. Kuafu Fried String also emphasizes the “advanced sense” of its IP, indicating that it should be improved in terms of visual presentation, taste experience and food material selection.
Kuafu fried string has also made an article on the string packaging. The packaging design is biased towards “ins fashion style”, which is printed with various trend propaganda words. According to Kuafu Fried String, its packaging is changed every two months to ensure the freshness of the brand. These constantly updated propaganda words also improve the popularity of Kuafu brand.
In high-end shopping malls and scenic spots, you can also see Kuafu Fried String stores, which are also divided into theme stores, black gold stores and other different levels. Yuan Zelu even compared in the circle of friends: “a large wave of Shanghai celebrities arrive at Kuafu at 6 p.m. instead of baogeli afternoon tea, they roll ‘Hermes’ Fried String.”
But Wang Kuan, the founder of another serial brand, Xijie Fried String, didn’t deliberately limit the brand positioning to high-end people at first. “Good business can’t pick people in particular. Xijie Fried String did well in the county area.” It is understood that sister Xi Fried String was established in 2019. Wang Kuan is a continuous entrepreneur. He has previously done snack businesses such as spicy hot and stinky tofu. At present, he focuses on Fried String.
Wang Kuan told Caijing Tianxia weekly: “consumers have always had a market demand for fried buns, but they have not been satisfied to a great extent. The key is that after tasting a new type of fried buns, consumers will no longer eat unsanitary roadside stalls.”
In terms of store design, new Fried String stores such as sister Xi are trying to get closer to young people to the greatest extent and try to “break the circle”. Therefore, building a brand and improving the “beauty” of packaging products have also become the common choice of the new generation of chain stores.
“Tiktok is the first and at the same time Yan value is also important.” no one is willing to eat, but we will go hungry. “Our team has put great effort in the design of bags and shop space. Customers who come to Xi Jie store will take photos with their sister, and then send them to their little red books or their voice to get some praise and attention. It seems that eating Xi is a great face. Wang Kuan said.
For this approach, Wang Kuan summed up in one sentence: “it is to turn the product into a communicable content. The higher the appearance rate of the content, it means that sister Xi can obtain more traffic at a lower cost.”
Source: Xi Jie Fried String official website
In this trend, the “Yongdingmen electric barbecue string”, which began in 1998, can be called the “time-honored brand” in the barbecue industry in Beijing, but it has not fallen behind the pace of “encircling” young people.
Tiktok has been linked to the new trend of the country in the brand promotion since the new CEO took office in 2020. It also proposed the goal of “Yongding gate baking string” brand to become “Beijing city name card”. It began to use the new media platform such as jitter, Xiao Hong Shu, micro-blog and so on to publicize the brand of Yongding.
A consumer living near Liujiayao in Beijing told Caijing Tianxia weekly that he had just opened a Yongdingmen electric barbecue chain store near his home this summer. He noticed that, unlike the previous night barbecue stand, this store has its own unique decoration style and the store surface is relatively clean as a whole; In addition, he also noticed that many young people now come here alone for consumption, and they no longer seem to follow the traditional consumption habit of “hanging out together”.
Why does capital fall in love with “Luchuan”
It is understood that sister Xi has raised nearly 300 million yuan in the two years since its establishment; Kuafu fried string has completed three rounds of financing in half a year, and the cumulative financing has exceeded 150 million yuan.
Why is capital optimistic about and invested in this segment?
In Wang Kuan’s view, the trend of “consumption upgrading” is an influencing factor on the one hand. With the change of economic structure and the improvement of people’s living standards, in the aspect of “eating”, consumers began to pay attention to food hygiene and food safety, and the demand for food has changed from simply “full” to “good”. Emerging brands also use higher value ingredients and create better taste to attract consumers, and build stores according to the style loved by young people.
What makes capital dare to “bet” is the possibility of large-scale effect behind them. Emerging catering brands have injected Internet genes and are moving closer to the “ten thousand store model”.
Lin Yue told Caijing Tianxia weekly that there are two trigger points for the rise and financing of emerging brands such as Kuafu Fried String and Xijie Fried String: first, they have implanted the gene of Internet marketing in marketing, such as trying to create a sense of “online Red IP” through packaging and paragraph copywriting on bags, and integrating the national trend in design, which can grasp the consumption psychology of generation Z group; Second, their operation mode tends to be Internet-based. Under the mode of “small store, full chain and full supply”, these stores can better control the operation cost and improve the efficiency in product R & D and distribution. In his opinion, “from these two aspects, the string class has great potential to make the scale of WanDian”.
Wang Kuan also said that in the process of contacting investors, he realized that sister Xi’s Fried String attracted investors in several aspects. From the perspective of corporate profitability, the first thing capital values is the gross profit margin of the Fried String industry. “I can say for sure that sister Xi’s Fried String can give franchisees a gross profit margin much higher than duck neck and other snacks”.
Secondly, fried string is a category worthy of deep exploration. “No matter where the world is, the public’s taste is basically spicy, without obvious regional, which is a national business and has a large market.” Wang Kuan also said that the taste of Fried String and spicy is actually “addictive”, which is also helpful to improve the repurchase rate.
“Financial world” weekly found that the market potential of fried string can not be underestimated. In a questionnaire survey, the research department of CITIC Securities mentioned that whether students or office workers, barbecue / kebab shops are the first places in their nighttime consumption choices, accounting for 73.2% and 65.0% respectively, far exceeding KTV, bar, hot-pot/" 22375 rel="nofollow" target="_self">hot pot, bath center, etc.
In addition, according to the data of meituan Research Institute, in 2019, the year-on-year growth rate of orders for fried chicken and fried string was as high as 146.9%, putting pressure on steamed stuffed buns, rice noodles and marinated duck neck, ranking first in the snack category. In terms of the number of merchants, Wallace, Zhengxin chicken chops and fried chicken are among the best. In this regard, yuan Zelu, founder of Kuafu Fried String, predicted that fried string will be the next “chicken chop” in the snack industry.
The “addictive” snack with high repurchase rate of capital preference is also interested in it. After “starting volume”, it will gradually build a mature supply chain and realize the scale of catering stores.
“To put it bluntly, capital investment is for young people with the ability to lead fashion consumption in the future. The intervention of capital can undoubtedly speed up the opening of stores and help brands expand the scale and effect of marketing,” Wang Xing added.
“Our most important point is that revolutionary changes have taken place in the supply chain. The new Fried String shop does the supply chain through standardization and hands over the tedious work of food material procurement and food material production to the central kitchen. The franchisees of Fried String shop only need to do ‘fool’ processing operations to sell finished products, which effectively improves the efficiency of the store,” said Wang Kuan.
In the official website of sister Xi’s Fried String, it was introduced that “three people can open a store with an area of 30 square meters”. At the same time, it said that its supply chain has covered 29 provincial administrative regions, with more than 1400 chain stores and an average monthly sales of 60 million strings. Kuafu Fried String also said that it has 21 logistics centers, 3 integration centers, covering more than 1100 cities and more than 1800 stores in the supply chain.
Source: official account of Kuai Fu Fried String
Similar to the expansion mode, “Lu Chuan” is facing the test
In the stress and pursuit of “eating”, the consumption demands of the post-00s and post-90s are becoming more and more personalized, time-consuming and fast-paced. It seems that it is the trend of the times to transfer the consumption scene from families to fast food restaurants.
In the “snack” industry, the last wave of capital bet was still focused on pasta brands. Brands such as Hefu fishing noodles, meeting noodles, Wuye mixing noodles and fun noodles have surged up a wave of financing tide. There are many head investment institutions such as Sequoia Capital, Shunwei capital and Gaoling. At present, fried string, roasted string and other string are also likely to become a “dark horse” in the snack industry.
It is understood that both Xijie Fried String and Kuafu Fried String highlight the ambition of “one hundred cities and ten thousand stores”. They both plan to open about 5000 stores in three years and achieve the goal of “ten thousand stores” in five to six years.
Similarly, Yongdingmen electric baking string also put forward its own goal. However, since it is not a franchise model and the target store opening area is limited to Beijing, the target is expected to open 50 stores by the end of the year on the basis of having 15 Direct stores at present.
In the catering field, the snack track is easier to achieve the goal of “one hundred cities and ten thousand stores” to meet the requirements of rapid capital expansion. But a string of brands are also facing external doubts under the heat of capital.
Chain snack brands mostly adopt the franchise mode, which is obviously more conducive to store expansion, but the problem also follows: there are more franchisees, which also means that it is difficult to guarantee product quality and more difficult to manage.
Not to mention 10000 stores, a study by Guotai Junan Securities shows that when the number of franchise stores is more than 300, the brand side needs to face a great test. The more the number of franchise stores, the more difficult the management is, and the more the brand side needs to have strong management ability.
In this regard, both Xijie Fried String and Kuafu Fried String said that in the future, they will build their own factories to improve the in-depth service capacity of the supply chain and avoid such problems.
However, Caijing Tianxia weekly observed that among the two fried brands, not only the franchise expansion mode is similar, but even the SKU is the same. Kuafu Fried String products include golden tenderloin, palm chicken chop, real beef, a whole squid, streaky pork, palm treasure, etc. at present, there are more than 30 kinds of string products. There are about 35 SKUs for sister Xi’s products. Sauce stinky tofu is a signature product. In addition, there are also real beef, streaky pork, palm treasure and so on.
For this problem, Wang Kuan said that sister Xi focuses on Fried String in the short term, but “everything can be fried”. In the future, she will continue to expand the consumer population, consumption scene and consumption frequency, so as to increase the revenue of a single store, strive to be the “string King” in the Fried String industry, and even launch the “first brand of fried snacks” after Fried String, which is a long-term strategic plan of the company.
However, in addition to self evolution, a string of brands must also look directly at the threat from the big track in the snack industry.
According to the 2019-2020 China snack industry development report released by meituan Research Institute and China Hotel Association, in the top list of snack categories, the top 10 domestic snacks include Zhengxin chicken chops, Wallace, DEX, Burger King, ordered chicken, Ziyan Baiwei chicken, etc. The number of Zhengxin chicken chop stores at the top of the list has exceeded 20000.
In other words, if “kebab” wants to win a living space among snacks, it is necessary to have a “shopping”. Before that, the first thing these online Red brands have to do is survive. “Generally speaking, the life cycle of a brand net red is about two years,” said Wang Xing.
Lin Yue said from a professional point of view, “In order to maintain the popularity of the online Red catering brand, marketing depends on great efforts. Dish research and development and content creation are the two most important starting points. Consumers will not faithfully come to the door for many times because of your use of oil and sauce. Snack categories pursue freshness and fun. Therefore, from the perspective of development path, first, brands should constantly expand the size of stores and use the scale effect to expand the market Cost reduction; second, there should be hot models and hot spots to maintain the popularity of the brand. “
“Constantly strengthening IP and accelerating category updating are all short-term and effective ways to maintain franchises and win customers. As for the long-term, it really depends on enterprise organizations,” Wang Xing said, “For example, the problem of location selection is a big challenge for chain stores. After all, the places with high passenger flow are limited. The fear of fried chain items is that there is no popularity. If franchisees can’t do it, the brand reputation will decline, resulting in the decline of brand potential energy.”
Zhu danpeng analyzed that there are six elements to maintain the vitality of snack brands, including fried string, including supply chain integrity, quality stability, brand tone, scene innovation, service system and customer stickiness. For an excellent and long-term enterprise, each of the above points is very important, which puts forward a severe test for string brands.
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