China Food

Coffee new force gambled after 00

the coffee war around young people is imminent.

Text: Miao Zhengqing

Source: billion consumers (ID: gjgc168)

Is radical expansion a poison or an antidote in the short term?
Manner coffee is ready to gamble on this issue. (manner coffee hereinafter referred to as manner)
On March 1, manner, the new local coffee force with the highest valuation, announced the largest “expansion war” since its establishment: more than 200 new manner stores will be opened at the same time in 72 hours from March 8 to March 10, which will be distributed in 10 provinces and 10 cities.
If manner’s battle plan is finally realized, it will gain not only new stores, but also new Jianghu status – with more than 650 stores, manner will surpass Tim Hortons and become the “independent” chain coffee brand with the third largest number of door-to-door stores in the Chinese market. (Note: the top two are Ruixing coffee and Starbucks respectively. The above ranking does not include the in store coffee brands of large chain restaurants and tea drinks in the statistics)
According to manner’s new plan, 2.7 new stores will be put into operation “on average” every hour, which is a rare expansion speed in Chinese coffee circles. In fact, manner has been dubbed “crazy shop opening” due to its rapid expansion in 2021. From June to October 2021, they added more than 150 stores in four months, with an “average” of 1.2 new stores a day. However, the “madness” in 2021 is conservative compared with the “new expansion” that manner will start soon.
Radical is not only reflected in quantity. According to informed sources, in the new round of expansion, manner will win multiple landmark points in key cities such as Beijing, Shanghai, Shenzhen and Chengdu, and even some “super points” of tea and coffee.
What makes manner dare to fight big is sufficient “military expenditure”. So far, manner has made five rounds of public financing, including three rounds in 2021, including “big factories” such as meituan Longzhu and byte beat strategic investment department. A source said that after the completion of financing in 2021, manner has become “the brand with the highest valuation and the team with the most cash in hand” among the new forces of coffee
But manner is not without trouble.
In 2021, the reduction of global coffee bean production, high logistics prices such as shipping, soaring labor costs of local coffee and the disappearance of rent dividends are putting pressure on manner’s existing profit model. Taking labor cost as an example, due to the use of semi-automatic coffee machine, manner’s own barista’s salary has been 1000 ~ 1500 yuan higher than that of his peers. With the big salary increase of barista in the whole industry, manner can only pay more costs in the terminal labor link.
In the aspect of rent, after going out of Shanghai, manner is difficult to find gold spots with low rent and small area in many cities, and higher rent costs have begun to erode the original manner “high floor efficiency model”. As some existing manner stores were signed from 2019 to 2020, while in some supermarkets, manner did not obtain long-term rental contracts like Starbucks, which means that some points will be re signed in 2022 – and the rent price is now higher than in the past.
And manner is also facing the challenge of innovation and retention.
In Beijing, Shenzhen and other cities, in 2021, some manner stores had problems of declining cup volume and fluctuating store passenger flow. In manner’s basic Shanghai market, Starbucks, Ruixing and Tim Hortons have entered the expansion period since 2022, and blue bottle coffee, known as “coffee circle apple”, has just officially landed on the beach
Expansion is seen as an option for manner to “solve the problem”.
“Manner has two key challenges: one is how to innovate and find an incremental market; the other is how to improve re purchase, increase customer unit price and optimize profit model.” Zhao Chengcheng, an analyst in the coffee industry, told huolf that the new stores and users brought by the expansion can also inject a booster into the capital market, which is conducive to higher valuation.
But will radical expansion in the short term bring sequelae?
An unnamed founder of the catering industry said that whether it is coffee, tea or catering, in the process of expansion, it will encounter the “company disease” caused by the rapid expansion of the organization in the short term. “When the number of stores and employees suddenly increases, you will be surprised to find that many things have changed and feel at a loss. This is the only way for every new consumer entrepreneur.”
The inner volume of the industry behind the expansion
At Nanyang Road, Jing’an District, Shanghai, two manner coffee shops are 90 meters apart. Adjacent to SOHO Donghai Plaza, CITIC Pacific Plaza and other “gathering places for white-collar workers”, it has become manner’s heavy warehouse area.
Coincidentally, in the Shanghai World Financial Center (SWFC), the second tallest building in Shanghai, which has 101 floors and is regarded as a landmark point for middle and senior white-collar workers, manner has already set down the point on the ground floor originally belonging to the dessert store and decorated it as a super store with three product lines of baking, simple meal and coffee.
Nanyang Road manner store and global financial center store are manner’s “new point Representatives” in super cities such as Beijing, Shanghai and Shenzhen: they are located in business centers and office buildings where white-collar workers gather, and just need to realize store operation by relying on work traffic and work coffee. A person who once participated in the site selection of 2019-2020manner told huolf that the “white-collar work gathering area” in the super city inside manner is the most valued site selection area – the research inside manner found that these white-collar people can provide stable and high-frequency coffee consumption.
After the epidemic, these “super points for migrant workers” have become a battleground for manner. In Shanghai, in order to reflect the sense of existence at these points, manner will even “attack” some points with large area – which is different from the high floor efficiency model of 3 ~ 10 square meters at the beginning of entrepreneurship.
“Shanghai is a small area close to the white-collar work area, which is mainly distributed in the old urban area. When manner coffee began to expand to the urban areas around Shanghai, the high floor efficiency mode of small stores has changed. From my observation, from 2020 to 2021, manner focused on white-collar office buildings with high passenger flow, business centers adjacent to office buildings, and a small part close to medium and high “The point location of the white-collar residential area.” An insider who has worked in the real estate industry in Shanghai for 15 years told Hu olfactory that in 2021, these “migrant workers’ points” have become the key resources sought after by the coffee circle, and the rent has gone up.
With the expansion of area, manner’s small store high efficiency model is being improved, resulting in the change of store model. Up to now, manner mainly has four store models: one is the original manner with an area of 3 ~ 10 square meters, which is mostly distributed in the old urban area of Shanghai. Since 2021, due to the scarcity of new points, manner has no longer been the focus of manner’s efforts; The second is the main store type of manner with an area of 20 ~ 50 square meters. After the epidemic, more than half of manner’s new stores belong to this type; Third, coffee + baking stores with an area of 80 ~ 100 square meters. After trying to bake products in 2019, manner took baking as an important means to improve the customer unit price and repurchase rate. In some new stores opened in 2021, the proportion of baking products increased significantly; Fourth, manner’s latest coffee + simple meal + baking stores, which are generally more than 150 square meters and can eat simple meals in the hall.
It is worth noting that whether it is baking or simple meals, manner maintains the consistent underlying logic – the goal is to target white-collar workers. Take manner store, the largest in Shanghai, which provides simple meals as an example. The store is open from 10 a.m. to 17 p.m. – mainly to meet the needs of white-collar coffee, brunch, lunch and afternoon tea. During lunch, the price of simple meals provided by manner is generally 25 ~ 50 yuan. If you count a cup of after dinner coffee, the cost of a white-collar worker is generally 45 ~ 75 yuan.
Sun Chang, who studies urban consumption in Shanghai, believes that “white-collar meal time” is becoming the common focus of catering, tea and coffee in Shanghai. “One detail is that in 2021, most of the points in the lobby on the first floor of the office building have been won by coffee or catering brands, and the goal of these brands is to cut into the lunch period. Coffee and simple meal are the common choice of these brands. On average, a white-collar worker with repurchase intention can contribute at least 2 cups of coffee and a simple meal every day.”
This also leads to the difficulty of manner’s expansion. The brand head of a chain noodle restaurant told huolf that they competed with manner at two points in the second half of 2021. “We all like office resources. If they cut into simple meals, why can’t we cut into coffee?” It is reported that this brand has set up its own coffee research team and is ready to add coffee products based on the existing catering ecology. Another tea company, which has been deeply involved in the Shanghai market for many years, launched a series of packages of tea + European bag and coffee + European bag for white-collar workers from 2020 to 2021. In 2021, they also upgraded breakfast – coffee + sandwich package.
This constitutes the “inner volume” situation of Shanghai beach and even coffee high-speed cities: in 2021, tea, coffee and even catering began to compete with similar product systems around the same points and the same customer base. This not only leads to the gradual rise of point rent, but also the fierce competition for coffee talents. In 2021, the “average salary” of local baristas and tea drinkers in Shanghai increased several times, and the final salary of some store managers was 1.5 ~ 2.5 times that of the same period in 2020. Affected by fierce competition, passenger flow has become more precious. In Shanghai, Beijing, Shenzhen and other cities, where white-collar workers gather, there are often dozens of coffee or tea shops within one kilometer, while in some areas of Shanghai, coffee and tea shops are more intensive – there are even more than 100 coffee and tea shops on a street, which eventually leads to the challenge of difficult and expensive drainage.
An unnamed investor told huolf that manner maintained the “small store high floor efficiency” model of the early founding team before 2019. Manner began to try “coffee +” for white-collar groups in super cities (mainly Shanghai) from 2019 to 2020, and manner quickly extended this model to Beijing, Shenzhen and other markets from 2020 to 2021, And expanded the scope of “coffee +”. However, with the intensification of competition in the coffee track and the “extension of the investment return cycle of new stores”, manner also began to “expand” on another front.
“Manner is moving into multiple return cities.” According to the analysis of the investor, after the epidemic, there has been a more obvious return of young people in some “new first tier” cities and provincial capital cities: young people studying in Beijing, Shanghai, Guangzhou and Shenzhen University return to the provincial capital (or regional central city) of their hometown province or go to the central city of the provincial capital other than their hometown within two years after graduation. “These cities are characterized by developed economy, strong cultural influence, easier settlement than super cities, and more new employment opportunities with the rise of the Internet.” Among the 10 cities expanded by manner this time, Chengdu, Wuhan, Nanning, Haikou, Suzhou and Hangzhou are all regarded as places with “young people returning characteristics”.
Compared with Shanghai and other cities, manner’s store model is mainly manner’s main store with an area of 20 ~ 50 square meters in reflux cities, and the proportion of baking and simple meal products is relatively small.
“In Shanghai, manner increases the customer unit price and re purchase through baking and simple meals. They are striving for deep cultivation of existing white-collar users; while in Chengdu, Wuhan and other cities, manner is doing increment and improving market awareness by rapidly increasing points.” Zhao Chengcheng believes that behind manner’s two expansion fronts of “increment and stock”, there is actually a dark line: young people, especially Post-00 consumers who are about to enter the workplace.  
after 00 locked by manner
Manner attaches great importance to Post-00.
A person familiar with the matter disclosed that during the internal communication of manner, they had analyzed the coffee mind of users of different ages. One statement once mentioned is: post-80s consumers have a stronger understanding of Starbucks; Post-90s consumers have a strong understanding of Ruixing; After 00, consumers have not yet formed a “strong market awareness”, and manner has a great opportunity.
In January 2022, manner’s new store settled in Shanghai knowin building. From the architectural style of the knowin building, we can see its “youth flavor”: huge tide playing sculptures “sitting” on the roof. The knowin building is full of trendy games, trendy shoes, secondary elements, E-sports products and elements. It is worth noting that manner, who settled in the knowin building, launched a special menu to integrate wine and coffee – which is regarded as a key measure to please young users. Ekon, an urban trendsetter, told huolf that knowin in Beijing, Hangzhou, Shanghai and other places are mainly post-95 consumers, while the proportion of Post-00 users has continued to increase since 2021. “You will see a lot of favorite trend items after 00 appear near knowin, such as more niche tide cards, tide games, and more powerful electric sounds…”
Some insiders pointed out the potential opportunities around the Post-00 in 2022: the number of college graduates will reach 10.76 million in 2022, which will be the summer with the largest number of graduates in history – and most of them will be the Post-00 in the workplace.
Catering, tea and coffee circles have paid attention to these young people. A tea founder told Hu olfactory in January 2022 that when these post-00s enter the workplace from June to July, they will enter a “stable period” after 4 to 5 months of adaptation, and there will be a world cup in November this year – due to the climate impact of Qatar, this will be the “winter World Cup”, and these post-00s with full-time income are likely to show strong consumption power during the world cup.
For the coffee track, the opportunity after 00 may be greater in 2022. Consumption insight research from meituan and other life platforms shows that the average daily coffee consumption of generation Z consumers has increased significantly, while the coffee awareness and consumption enthusiasm of Post-00 consumers have reached a higher level, and these consumers have higher acceptance of local brands – in short, this is a group of young people who are willing to drink coffee without excluding local brands.
“Manner’s expansion in March may also take this into account.” An unnamed market leader of a chain coffee brand told huolf that Starbucks, Ruixing, Tim Hortons, Piye coffee and seesaw coffee all started expansion or planned expansion in the first quarter of 2022. Most new coffee stores on the market have “return on investment cycle” and “new store running in cycle”. After several months of adaptation, these new stores, From July to August, it will be in a better state – at this time, fresh students after 00 will pour into the office buildings and supermarkets where these coffee shops are located
In this key battle around the Post-00 era, the balance of victory did not tilt too much to manner. It is worth noting that since its inception, manner coffee has been pursuing lower publicity costs – they have not launched large-scale in television, billboards and other channels, nor hired expensive spokesmen, which means that the store has become manner’s most important “mental port”.
“Essentially, manner’s current model is still driven by products and word of mouth. In the stage of rapid brand expansion, this model is a little difficult – if consumers can’t go to your store to feel the products, it’s difficult to form cognition.” A person in charge of a marketing company who asked not to be named told Hu olfactory that this “voice disadvantage” may form resistance to manner’s rapid expansion, “especially after 00 today, it is a generation deeply affected by traffic.”
From the vibrato and micro-blog end, maybe tiktok one or two. On the microblog side, Starbucks, Ruixing and manner have 1.72 million, 750000 and 25000 fans respectively; At the shaking end, the number of fans of Starbucks, tiktok and Manner is 1 million 190 thousand, 425 thousand and 139 thousand respectively.
“Manner has not yet become a national brand. While expanding its stores, it needs to make a voice in the traffic world at the same time.” Wang Bin, a consumer insight researcher, believes that the event of “manner announcing the opening of 200 stores” in early March did not achieve good marketing results – in essence, it is a topic marketing event, but manner chose to make a voice through the official subscription number, “When manner’s words are missing, it may not have a key influence on the world. When manner’s words are missing, it will only have a key influence on the brand.”
Right now, manner’s challenge in the young world is not just the traffic circle. A number of regional online red coffee brands are rising rapidly in the reflux cities where manner is making efforts. In Nanning, while manner is preparing to continue to expand here, the local bird coffee has become a punch in resort for young people. A coffee lover living in Nanning said that her work is not as stressful as that in Shanghai. She doesn’t need to drink several cups of coffee every day to alleviate the depression of life. “My view of coffee is not to drink after buying and then work overtime. I need to taste coffee slowly in a cafe and then eat some snacks. I don’t need to worry about things like working overtime.”
This is also the key proposition that manner is facing in the world outside Shanghai: can manner’s “white-collar myth” last without a city full of “ordinary young people’s final human hormones”? In those living resorts with “Bashi spirit” naturally, does manner’s coffee and simple meals go smoothly? Maybe manner needs to make himself more relaxed and trendy.
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