China Food

When the pattern is opened, how to survive the transformation of traditional baking?


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Internet, digitization, private traffic, sinking market, transformation and survival of traditional baking brands.
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In the baking industry, more and more people are talking about the two names of panda buzou and Happy Cake recently.
 
Although now on the stage of “baking” category starring in the new Chinese style, the two produce slightly traditional cake brands and even appear to be somewhat independent, the successive financing news can not make people ignore their momentum.
 
On December 20, Happy Cake disclosed that it had completed a strategic financing of RMB 100 million, which was led by the old shareholder Yashang capital, followed by Fushan investment and Chunjian capital under Yunda. Before that, in September, panda, another Internet baking brand, also completed the round B financing of RMB 100 million invested exclusively by xvc.
 
Unlike many popular start-up brands, this financing is the fifth round of financing for Happy Cake. As early as March and July 2018, happy pastry successively won two rounds of financing: round B and round B +, with amounts as high as 300 million yuan and 400 million yuan respectively, setting a single financing record in the baking retail industry.
 
Throughout 2021, after tea and wine, the baking industry can also be regarded as one of the protagonists of “new consumption” in the eyes of capital. According to incomplete statistics, there have been approximately 22 financing events in the industry since 2021.
 
When snack brands such as Hutou Bureau and Momo dim sum Bureau occupy the big business district to build “wanghongmen store” through novel single products, high-value stores and Guochao style packaging marketing, Internet cake brands such as “panda don’t go” and “Happy Cake” silently cultivate online user groups.
 
So, the cake business with relatively low consumption frequency, high unit price and long been used to by people really has the imagination of capital?
 
pattern is opened, and the service radius of Jiefang cake shop is
 
For a long time, in the baking industry, especially in the subdivided category of cake, almost only regional famous products are seen, and there are few national brands. The number of Haoli is considered to be a large-scale traditional chain store, but it has also faced the business crisis in recent years. The original Mai Shanqiu, 85 ° C and other brands are also represented by bread products.
 
The main reason is that cake products have higher requirements for production, preservation and transportation, and ordinary store brands are difficult to radiate a wider market. To build a national brand, there are two problems to be solved. The first is the construction and maintenance of the supply chain, and the second is the standardized quality control.
 
Traditional cake brands mostly rely on opening one store after another to increase brand influence and service radius. However, this is always the business of “surrounding people”, and the rent, decoration and labor are huge fixed investment. Therefore, for each new store, these costs should be increased accordingly, which greatly reduces the ability of business expansion.
 
In the post epidemic era, the news of loss and closure of traditional cake shops can be found everywhere.
 
In August 2020, Marco Polo bread, an old brand of Shanghai baking industry for 26 years, officially withdrew from the historical stage; In December of the same year, beepluslife super bakery, the largest bakery in Shenzhen, announced the suspension of business. In June this year, yizhiduo, a Shanghai cake chain brand, was in deep cash flow difficulties and closed more than 30 stores overnight; Even Christine, the “first baking stock” in her head, continued to suffer from severe loss for seven years.
 
Isn’t selling cakes a good business? Of course not.
 
Looking back on the birthdays of relatives and friends, or romantic or grand festivals, people’s cakes on the table have never been absent. The demand has been increasing all the time, even with the Westernization of the eating habits of the younger generation.
 
At present, panda has been stationed in 24 cities such as Beijing, Guangzhou, Shenzhen and Hangzhou, with more than 20 million users and a monthly revenue of more than 70 million yuan, creating dazzling achievements in the industry. On the other side, happy pastry has covered more than 300 cities in China, and has established more than 400 distributed production centers in Shenzhen, Shanghai, Beijing, Guangzhou, Macao and other cities.
 
Internet plus baking is becoming an important way to revitalize traditional baking brands.
 
create a new machine in the Red Sea
 
According to youzan’s 2021 baking industry development trend report, in 2020, the scale of China’s cake market was 97.3 billion yuan, accounting for 41% of the total baking food market, and maintained rapid growth.
 
This is the fertile ground for brand growth, but it is not easy to break out of many brands in this not new field.
 
Generally speaking, traditional cake shops adopt two modes of operation.
 
One is “central factory + wholesale”. This method solves the quality problem of product standardization, and has a high degree of automation and significant scale effect. However, it also relies heavily on the relationship between the distribution team and retail merchants and has low flexibility.
 
The second is the “chain store model”. Through special logistics distribution, semi-finished products or finished products produced by the factory will be sent to urban stores for on-site processing and sales, or on-site production in the pattern of front store and back factory. This mode has strong control terminal ability, can provide higher quality products and flexibly respond to customer needs. However, the operating cost is high and the occupation of the market is slow, so it is difficult to expand the influence of the brand.
 
In contrast, Internet baking takes the mode of online order + factory warehousing and distribution to accelerate its growth.
 
According to the official website, panda did not go. At the beginning of its establishment in 2018, it achieved the top three categories in Huizhou market in four months, the top three in Foshan market in Guangdong in three months, and the top five in Panyu, Guangdong in one month. By establishing the mode of “central factory + satellite factory + self built cold chain logistics”, Happy Cake ensures the standard production and real-time distribution of cake. After users place orders on the online platform, the distributed production center can realize efficient distribution of professional cold chain within the coverage of 2 ~ 5 hours.
 
What are their advantages favored by the capital and market?
 
1. Lock the scene and enter the market segment
 
It is different from our traditional impression that the bakery sells cakes and makes cream cakes. New baking brands are good at entering the market with representative products of a single segment category, which makes the current baking industry derive multiple segment tracks.
 
Pandas do not go is one of the representatives. It aims not only at the cake, but also at the birthday cake, a more subdivided market combined with the scene.
 
Such positioning determines that its products are logically different from other brands. When most similar brands focus on how the cake itself is full of tricks, the entry point for panda is to create a more special experience for users’ birthdays.
 
In the eyes of Yang Zhenhua, the founder of panda don’t go, “the process of making cakes and delivering them to the door can only be regarded as semi-finished products. Helping everyone complete emotional expression and atmosphere construction is the real essential demand hidden in the situation of birthday party. Therefore, we choose to provide two minute interactive performance service at the end of distribution, so as to realize the integrity of the overall product.”
 
This o2o + situational culture seems to create a moat of brand uniqueness.
 
2. E-commerce thinking reconstructs cake business
 
“All businesses are worth doing again in the way of the Internet”. Is it still established today when Internet traffic has peaked?
 
To survive in the Internet environment, we must first abide by the rules of the Internet game. User thinking is undoubtedly the core issue to be considered by Internet enterprises. In the case of Internet baking, it is not a simple change to put the cake on the surface of online platform sales. Its essence is to change the whole cake consumption process.
 
In traditional cake shops, customers often can’t buy cakes immediately even if they go to the store, so they can only complete the process of selecting and booking. This process can actually be completed online. Therefore, the brand that takes cake as the main product can be more separated from physical stores to form a closed loop of business logic.
 
At the beginning of its establishment, happy cake also followed the traditional chain store model. In those years, happy cake also opened more than ten stores in Shenzhen, but in 2014, its founder yuan Huohong made a difficult decision – to stop offline orders, take the existing stores as experience stores, and make every effort to transform into e-commerce.
  
This is the time to step on the key node of o2o transformation in the traditional industry, which was unique in the baking industry with offline as the main channel at that time.
 
In the Internet age, in the face of a large number of choices, users are less and less patient. If you want to seize users in a short time, you must use simple thinking to save simplicity and polish the ultimate products.
 
The Internet baking brands represented by Happy Cake and panda don’t go are precisely subverting the cumbersome traditional purchase process and the vague brand positioning, so as to achieve a more perfect experience for a relatively single category.
 
3. Deeply cultivate the private domain and pry the target customer group
 
In an era when ROI is more and more difficult to guarantee, the ability of brand “autobiography” almost determines whether it can become popular and how far it can go. The feeling of mastering its own destiny is undoubtedly full of temptation.
 
In an interview with the media, Yang Zhenhua, the founder of panda don’t go, once said, “the bonus is not to spend money to buy traffic. No matter how many orders you put into live broadcasting, the brand has not been really improved, and the users are still in the hands of wanghong. The only real traffic bonus is the continuous output of high-quality content, so that users can spontaneously help you spread.”
 
The business logic that pandas don’t go is doomed that this is an extremely heavy operation mode. Therefore, its product processing plants and logistics distribution in various cities are all direct mode, so as to ensure the quality of products and services. Its interactive performance, magic display, personalized surprise packaging and other services naturally have the attribute of “autobiography”.
 
Their existence can stimulate users’ desire to share and stimulate them to naturally complete private domain exposure. At the same time, with a series of community operations and membership systems, it has become an earlier group of brands that have grown rapidly through playing with private domain traffic.
 
According to relevant data, panda’s private domain revenue accounts for more than 60% and the user repurchase rate exceeds 50%.
 
where is the sinking road of Internet baking going
According to the analysis report on the competition pattern and consumption behavior of China’s bakery industry in 2021 released by iimedia research in September 2021, the scale of China’s bakery market is expected to reach 260.08 billion yuan in 2021, with a year-on-year increase of 19.9%. In the future, it will maintain an annual growth rate of about 10%. It is expected that the scale of China’s bakery market will reach 306.99 billion yuan in 2023.
 
Thus, the bakery market still has a strong attraction.
 
At the same time, the main consumption of China’s baking market is still concentrated in the first and second tier cities, and the next brand expansion is gradually penetrating into the third, fourth tier and lower tier cities.
 
Under the influence of western catering culture, baked goods such as bread and cake have gradually become one of the main breakfast choices of Chinese residents. At the same time, consumption scenes such as afternoon tea and business tea break have been derived, which are more and more widely covered in all age groups. Against this background, many Internet baking brands invariably aim their next strategic goal at the consumption upgrading of the sinking market.
 
For example, yuan Huohong, chairman of happy cake, who has just completed financing, said that this round of financing will be mainly used for the supply chain layout and whole chain digital construction of “county, town and village plan”, and the listing plan will be launched in the future.
 
But in the face of the sinking market which is more sensitive to the price, can the cake business with higher unit price and lower frequency go smoothly? Each brand also has its own considerations.
 
For example, in terms of product categories, happy cake has achieved full coverage from birthday cake, bread, afternoon tea, Shenzhen specialty packaging handwritten letter to ready-made tea. Yuan Huohong stressed that “cakes belong to the category of high customer unit price / low frequency. Low customer unit price / high frequency categories such as bread and afternoon tea can meet diversified needs and improve user retention.”
 
At the same time, after effectively occupying a certain market share at present, Happy Cake timely adjusted its development strategy as: return to offline + deep ploughing products, which is also to alleviate the uncertainty of expansion and profitability, sinking and innovation and continuous deep ploughing under the business model of relying solely on the Internet.
 
At present, among the more than 300 cities that have been opened, the coverage rate of third tier and above prefecture level cities has reached more than 80%, including remote areas such as Lhasa, Xinjiang, Urumqi, Heilongjiang and Jiamusi. By 2024, Happy Cake plans to expand to more than 80% of counties in China, covering more than 2000 county-level cities in China.
 
On the other hand, the iteration of creativity and the grasp of cost are also the problems that these brands must face to further expand the market and increase user stickiness.
 
With the existing service model, pandas may encounter more problems in the sinking market. For example, the first mock exam has been verified by service, but how much energy this model can release on this fast moving product is not yet known.
 
To make a breakthrough, we should return to enriching the taste and types of cakes, and continue to increase the service content at the same time.
 
It is reported that the panda will continue to take the birthday scene service as the fulcrum, and gradually extend more rich and common scene experiences such as party celebration and parent-child interaction, in order to create “the first brand of China’s party service” and further strengthen the difference of the brand, so as to take this as the basis for a foothold in the market.
 
In the cake market with low brand monopoly rate, there is still a dividend period for pandas who take advantage of emerging ideas. It may take more time to prove whether we can continue to find a balance between characteristic services and reasonable prices in the sinking market in the future.
 
*The pictures in this article are all from the Internet
Original title: how far can the happy “money” path of small cake go?
Author: a Mao; Editor: Wen bin; Source: business data (ID: business data), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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