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the rapidly expanding Helens seems to have forgotten the mountains of raw materials, manpower and rent.
On March 28, Helen, the “first share of Chinese Bistro”, handed over his first annual report card.
According to the financial report, Helen’s annual revenue in 2021 was 1.84 billion yuan, a year-on-year increase of 124.4%. The adjusted net profit was 100 million yuan, a year-on-year increase of 32.33%.
It is worth noting that in the past year, Helen’s crazy opened 431 stores. It can be said that the money Helen made this year was basically spent on opening a shop.
Helen’s company, which focuses on social space, relies heavily on offline, so it is difficult to compress the rent and labor cost of opening a store. Helen, who made her debut with “cost performance”, was basically labeled as “cheap”. When the upstream barley and wheat raw materials rose and the midstream beer producers collectively adjusted their prices, Helen, who had to raise prices, poked the nerves of consumers.
The business of the tavern is hard to do.
The store doubled and didn’t make any money
The first annual report is not ugly, but it also exposed many problems.
Different from many pubs, Helen’s drinks are mainly self owned products, supplemented by third-party brands. In 2021, Helen’s own products and third-party brand liquor sales revenue were 860 million yuan and 170 million yuan respectively, with the gross profit margin of 80.2% for the former and 48.8% for the latter.
Subject to the general rise of raw materials in recent years, the gross profit margin of Helen’s own products increased by less than two percentage points, while that of third-party brands decreased by nearly three percentage points.
According to the financial report data, Helen’s loss in 2021 is as high as 230 million yuan. Helen explained in the financial report that the loss was mainly affected by the change in the fair value of convertible preferred shares.
Even without deducting the changes in the fair value of the converted preferred shares of about 200 million yuan and the share based payment of 90 million yuan, the adjusted profit margin was 5.4%, which was lower than the level of hellens in the first three years.
Helen, who relies on offline business, runs very fast, with an average of 1.18 new stores opened every day.
As early as the listing period, hellens mentioned in its prospectus that it would achieve the goal of 772 stores by the end of 2021 and increase the number of stores to 2000 by the end of 2023.
In order to achieve this figure, Helen opened 431 stores in 2021, exceeding the target. In addition, there were 72 new stores opened in the first quarter of this year. As of March 25, there were 854 Direct stores.
Rapid expansion has brought revenue and raised costs. According to the 2021 performance announcement, the raw material cost and labor cost of Helen company last year were as high as 580 million yuan, with a year-on-year increase of 115% and 222% respectively; The rental cost rose to 220 million yuan, a year-on-year increase of 120%.
In addition, Helen’s single store performance and profitability are far less good-looking than the speed of opening a store. According to the performance announcement, in 2021, its stores reached 782, but the number of same stores (referring to pubs that have been open for more than 200 days) is only 228.
According to the data, the average daily sales of the newly opened tavern of hellens in 2021 was 7300 yuan, far lower than 11100 yuan in 2020 and 11800 yuan in 2019. The performance of the “freshmen” on the expansion road is a little hip pulling.
In this regard, Helen explained in the financial report that this is because most stores opened in the second half of the year, are still in a climbing period, and some cities are affected by the epidemic.
Helen’s new stores are mainly concentrated in second and third tier cities. From the perspective of single store revenue, the average daily turnover of Helen’s new stores in first tier, second tier and third tier cities in 2021 was 11900 yuan, 6200 yuan and 8000 yuan respectively.
Although the average daily sales of pubs in the second and third tier cities are much lower than those in the first tier cities, the overall operating profit is as high as 16.92% and 23.25%, much higher than 0.01% in the first tier cities.
Starting from Beijing, Helen wants to keep her position by scale and speed. But accelerating expansion means declining profit margins and facing high losses. Eager to prove himself, Helen seems to have forgotten the mountains of raw materials, manpower and rent.
If you only rely on social networking, Helen may not be able to reach the level of becoming the “first stock in the pub”. In order to break through the siege of 35000 pubs, Helens also relied on two other trumps – low cost and large-scale.
Price friendly is an important reason why Helen company can be sought after by college students and young people who have just graduated. However, from the perspective of industry attributes, Helen company actually goes against common sense.
As we all know, the bar is an industry with heavy investment in assets, and the rent, labor and drinks are indelible expenses. Compared with catering, the turnover rate of the bar is very low, resulting in limited customers. Therefore, the prices of drinks in traditional bars are often very expensive.
The reason why Helen can do the opposite and press the wine price to the extreme is mainly because the cost side is controlled in place.
As far as pubs are concerned, they usually face three kinds of costs: drinks, rent and labor. Helen can keep the price to the lowest, mainly from these three aspects.
First of all, the rent is related to the location of the store. Unlike most bars in high-quality areas, Helen’s location style is unique.
Its first store is opened in Wudaokou, Beijing, where many foreign students gather. As a foreign culture, the bar will not be ignored here. However, due to its remote geographical location, Helen’s company was few and far between. The company didn’t become famous until it made several influential marketing.
This site selection style can also be continued. Careful observation of the site selection characteristics of Helen’s company can be found that Helen’s stores often choose places with large traffic but inconspicuous themselves.
But this does not affect the passenger flow of Helen’s store.
For the site selection strategy of hellens, the founding partner of day-to-day capital once gave his own view: “what hellens needs is a business district with a high concentration of target people, but it does not need a good position in the traditional sense such as the street or intersection, because consumers with such needs will naturally come to the door.”
In addition to the rental cost, Helen’s most popular product is cheap wine. In the product portfolio provided by hellens to customers, its own products are the main, supplemented by external supply. Helen division gave up the idea of fine wine and boldly adopted standardized products, thus greatly reducing the production cost.
Another killer mace of hellens is scale. Helen’s ability to expand rapidly depends on the ability of standardization.
In 2018, Helen gave up the store opening form of “direct marketing + franchise” and only did direct marketing without franchise. The advantage of “direct marketing” mode is that it can efficiently realize standardization and scale. A central system can monitor the operation status of each store in real time, and timely adjust the music, personnel and other arrangements according to the customer flow of different stores.
But at present, Helen’s maces are gradually starting to stall.
At the end of October last year, hellens announced a price increase. Although the price increase did not exceed 1 yuan, Helen issued a letter of apology for this. The cost performance instilled in consumers repeatedly appears “cautious” in the face of price rise.
Moreover, under the slogan of “encircling the city from the countryside”, it is not easy for hailun to grab business in the first tier cities with an operating profit margin of only 0.01%; On the other hand, although the price is “sinking”, it is not the business of small town youth. Most of the expanded stores are in the provincial capital cities, and it is difficult to sink in recent years.
Most importantly, although there are many stores, the Helens moat has not been established. With the rise of the slightly drunk economy, many people are eyeing the pub business, and start-ups have even been financed. In January this year, the chain restaurant and bar brand “commune” completed hundreds of millions of yuan of a + round financing; RISSE Ruisi tavern has obtained two consecutive rounds of financing in half a year.
In addition to the real pubs, many liquor enterprises have also come to an end. Tsingtao Beer began to enter the bar industry as early as a few years ago; In addition, Haidilao, Naixue, Starbucks and even one-way space in the publishing industry have also crossed the line to try to take a share.
After all, at present, Helen company, the first in the industry, only accounts for about 1.1% of the market share. The dispersion of the industry gives more intruders the opportunity to catch up from behind.
“No one goes to Helen’s for a drink”
“I don’t like drinking at all. I just want to play with everyone.” Every weekend, I went to the recruitment of Helen’s company and said to the new consumer of tide watching, “in fact, everyone doesn’t like drinking, but we meet in Helen’s company every week.”
As the first stock listed in the pub, Helen’s does have many differences from traditional bars. If the traditional bar is dedicated to wine, Helen is more focused on the pub itself. In other words, it doesn’t matter whether the wine is good or not. The important thing is to give young people a place to drink so that they can socialize.
As an imported product from the west, pubs have been a space for public communication since their birth, and social communication can be regarded as the background of pubs.
It’s Helen’s rising demand for social networking that catches the attention of young people.
In the consumption format of night economy, the public is more familiar with nightclubs or KTVs, but both of them are more to meet the entertainment needs of young people. Young people can fully vent their life pressure in the environment of singing and dancing, but their inner loneliness is difficult to be relieved between singing and dancing.
The satisfaction of social needs is what hellens is good at. According to He Yu, a partner of black ant capital, hellens’ competitiveness lies in providing users with a free and relaxed universal social space without threshold.
Compared with the bar, it is less noisy, and customers can fully experience the fun of chatting here; Compared with Qingba, it is not so quiet and dare not speak loudly, and the scene of frightening the surrounding people will not appear here.
As bingpin said, no one goes to Helen’s for drinking. Young people here mostly want to get rid of loneliness by offline social networking.
In addition to social orientation, Helen’s another major feature is cheap.
As a heavy asset investment industry, almost all the income of the bar depends on the drinks sold offline. The price corresponds to the high rent, labor and wine costs. Therefore, in traditional bars, a cocktail often costs tens or even hundreds of yuan.
Some high-end bars often hire bartenders, DJs and even stage bands to attract passengers. Taking hutaoli pub as an example, it adopts the mixed mode of restaurant + bar + cafe. It can not only eat, drink and listen to music, but also hold various theme activities, and the business hours can reach 15 hours.
But Helen is different. There is no bartender, no DJ, no low consumption, and even no significant appearance. The clerk will not actively promote wine products. In front of customers, Helen is more willing to hide her identity and really return the pub to users.
The end of the tavern is not just social, but wine and drink should eventually return to quality, even value and culture. What is the cultural value of Helen’s company?
In the winter of 2004, Xu Bingzhong went south alone to investigate the site selection. Yangshuo, Guilin, Dali, Lijiang… He ran all the places where Backpackers have been, but the rent cost is too high to afford.
“Or try opening a shop in Laos.” A joke from his comrades in arms made Lao Xu really go from Vietnam to Laos Vang Jung the next year. The Mekong River has both western style and Oriental mysterious pub, which has become the origin of Helen’s design style.
In the United States, whether Manhattan or small towns, the beer in pubs only costs 7 or 8 yuan, while the price of domestic pubs is generally 30-40 yuan. Lao Xu, who was investigating the market in the United States, was deeply touched and buried a small goal in his heart: in the future, young people in China will be able to drink high-quality beer with friends for a few yuan in bars like young people in the United States.
More than ten years later, Helen has become a space for young people to communicate freely offline. Lao Xu has achieved the goal of that year, but cost performance no longer seems to be the focus of the new generation, and Helen can’t be trapped in endless shop opening.
If a brand cannot form user stickiness with excellent product strength, it will inevitably fall into a dead end of being fond of the new and tired of the old. How to truly connect the cultural tradition with the brand may be the path that every pub needs to think about.
It is undeniable that pubs targeting young people are a good business. After all, there will always be young people. Push the cup and change the lamp room, a new story opens, and everything is the young people’s own choice.
Author: Qing Ling; Editor: Eucommia ulmoides; Source: tide watching new consumption (ID: tidesight), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] in line with the original intention of providing the whole value chain and one-stop industrial innovation services for the industry, foodaily Expo 2022 (2022.05.31-06.02, Shanghai) is further upgraded. In addition to the upstream and downstream of the food industry, it also covers and gathers multiple resources such as e-commerce, social media, traffic, channels and capital, aiming to bring you an annual innovation feast. Here, products, content, technology, marketing and other aspects related to food & brand innovation will be presented in the form of “professional exhibition + innovative content + interactive experience”, breaking through and differentiating in the consistent form of industry exhibition.
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