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Can Tai Er Pickled Fish, which returned to 7 years ago overnight, break the curse of Internet celebrities and return to the top?

Author | Gao Yuzhe

Editor | Liu Yang

Three days before Tai Er Pickled Cabbage Fish celebrated its ninth anniversary, on July 19, its parent company99A profit warning was issued.

The warning shows that the company's total revenue in the first half of 2024 is expected to be approximately RMB 3.064 billion, an increase of approximately 6.4% over the same period last year; however, the net profit attributable to the company's equity shareholders is expected to be no more than RMB 67 million, a year-on-year decline of 69.8%.

at the same time,The second quarter operation announcement released on the same day showed that the average customer spending of Tai Er Pickled Fish has dropped from 75 yuan in 2023 to 69 yuan, which is the same as the average customer spending 7 years ago., and it is the first time that the price has fallen back to the 60 yuan range since Jiu Mao Jiu was listed in 2020.

As the "ceiling" of pickled fish, the price reduction of Tai Er Pickled Fish quickly became a hot topic. However, in the chain catering industry, the trend of price reduction has already spread to major brands. For example,Xiabu Xiabu、Haidilao, Hefu Lamian and other brands have launched price reduction strategies to attract customers, and even high-end chain restaurants have launched "poor man's meal" for workers. In addition, Heytea,Tea 100 Ways, Gu Ming and other tea brands have also collectively entered the "10 yuan era".

For Tai Er Pickled Cabbage Fish, can returning to the price level of seven years ago help it regain its advantage in the fiercely competitive market? When its peers all start to offer low prices, can the former top-tier brand still retain its loyal customer base?

1. How is the internet-famous pickled fish made?

In 2020, Jiu Mao Jiu, the parent company of Tai Er Pickled Fish, successfully listed on the Hong Kong Stock Exchange, with a 50% increase on the first day of listing and a total market value of HK$13.8 billion. This stunning performance has made the market have high hopes for it, and "replicating the glory of Haidilao" has become investors' expectation for this company.

The first catering brand under Jiu Mao Jiu was a small Shanxi noodle restaurant founded in 1995. With the continuous expansion of stores, this noodle restaurant gradually developed into "Jiu Mao Jiu Northwest Cuisine" and entered a period of rapid growth in 2011 under the leadership of founder Guan Yihong. As of 2015, the number of stores nationwide reached 143.

However, the rapid expansion brought high costs, which caused Jiu Mao Jiu's business to fall into trouble, facing problems such as reduced customer flow and declining turnover. In order to reverse the decline, Guan Yihong chose a niche market at the time - "pickled fish", and established a second sub-brand in 2015 with "old-style pickled fish" as the core product.

This brand, which uses black and white as the main color and comic-style design, not only saved its parent company from "distress", but also led a new trend among young people across the country. Within a few years, Tai Er Pickled Fish stores were spread all over the country. Jiu Mao Jiu's prospectus shows thatFrom 2016 to 2018, the compound annual growth rate of Taier Pickled Fish reached 182.3%, it achieved revenue of 538 million yuan in the first half of 2019, becoming an important growth engine for the Jiu Mao Jiu Group.

This rapid growth is largely due to the fact that Tai Er Pickled Cabbage Fish successfully attracted the attention of young consumers with the help of the popular Internet gameplay at that time. The "Tai Er" slogan in the store, the unique slogan "Pickled cabbage is better than fish", and the brand image of "so focused on making fish that I forget to open the store for business" are all precisely in line with the marketing methods of Internet celebrity brands.

In order to highlight the uniqueness of the brand, the store implemented a series of regulations, such as no sharing of tables, no take-out, no extra seats, and no reception of more than four customers. These features set Tai Er apart from other catering brands and quickly made it the "top stream" in the industry.

In August 2019, Jiu Mao Jiu Group began to sprint for listing on the Hong Kong stock market. Influenced by the Internet celebrity brand Tai Er Pickled Cabbage Fish, Jiu Mao Jiu's entire process from IPO, subscription to listing has received high attention from the capital market. Whether it is on par with "Haidilao" or successfully listed on the Hong Kong Stock Exchange, Tai Er Pickled Cabbage Fish has made an indelible contribution. In the first half of 2019, Tai Er's revenue accounted for 43% of the parent company's performance.

While Tai Er Pickled Fish is booming, many internet-famous restaurants of the same period are gradually declining.In November 2018, the first generation of Internet celebrity "Huang Taiji" was listed on the list of dishonest persons subject to enforcement for failing to repay loans from suppliers; in August 2019, Meng Xing, the founder of "Diaoye Beef Brisket", announced that he had sold his brand Diaoye Beef Brisket. With the closure of the first generation of Internet celebrity restaurants, Taier Pickled Fish successfully took over the traffic of Internet catering and successfully crossed the industry cycle.

2. Go back seven years in one night

For the catering industry, 2020 faced severe challenges brought by the epidemic. Under heavy pressure, Jiu Mao Jiu's performance is still remarkable. Although the net profit decreased in the first half of 2020 due to the suspension of restaurant operations, the net profit in 2021 reached 340 million yuan, an increase of more than 174% year-on-year, turning losses into profits.

Jiu Mao Jiu was able to achieve such results mainly thanks to Tai Er Pickled Fish. As the top student in the industry, Tai Er Pickled Fish has taken up the revenue banner of the entire group and driven the revenue growth of the entire group. At the same time, in order to meet the needs of the new generation of consumers, Jiu Mao Jiu has also launched a number of new brands, including 2 Egg Pancakes, Uncle That Wei is a Chef, Shuang Hot Pot, Lai Meili Sour Soup Grilled Fish and Shan De Shan Wai Wai Sour Soup Hot Pot.

As of the end of 2021, Jiu Mao Jiu had 470 stores worldwide, including 453 directly-operated restaurants and 17 franchise stores.From the revenue structure point of view, the contribution of Tai Er Pickled Fish is increasing day by day, its revenue reached 3.285 billion yuan in 2021, accounting for 78.8% of the group's total revenue.

However, the performance of Jiu Mao Jiu Group declined significantly in 2022. The financial report shows that Jiu Mao Jiu's total revenue decreased by 4.16% in 2022, and its net profit shrank sharply from 340 million yuan in the previous year to 49 million yuan, a decrease of 85.50%. Tai Er Pickled Fish's revenue also dropped from 3.285 billion yuan in 2021 to 3.098 billion yuan.

In fact, before the performance decline in 2022, Tai Er's turnover rate had been declining for four consecutive years. According to financial report data, from 2018 to 2022, Tai Er's turnover rate was 4.9, 4.8, 3.8, and 3.4 respectively, and in 2022 it dropped to 2.6, almost half of that in 2018.

By 2023, with the gradual recovery of the catering industry, the profitability of many restaurants has been restored, and Jiu Mao Jiu's performance has also begun to pick up. The financial report shows that Jiu Mao Jiu's revenue in 2023 reached 5.986 billion yuan, a year-on-year increase of 49.43%, and its net profit attributable to the parent company was 453.5 million yuan, a year-on-year increase of 820.17%. However, in sharp contrast to the increase in revenue is the continued decline in Jiu Mao Jiu's stock price since the beginning of 2023.

From the perspective of the capital market, although Jiu Mao Jiu continues to expand new product categories, the problem of relying on a single brand has gradually become prominent.Tai Er’s development is not satisfactory, and it mainly attracts customers through price cuts and promotions.

In 2023, although Tai Er's table turnover rate rebounded, it was still lower than the 4.4 times/day during the epidemic in 2021. In order to improve cost-effectiveness, Tai Er changed its previous strategy and launched takeaway single-person packages, allowed shared tables, and opened tables for 5-6 people. In addition, per capita consumption also dropped from 80 yuan in 2021 to 75 yuan.

By mid-2024, the performance of Jiu Mao Jiu Group was even more worrying. Although revenue in the first half of 2024 increased by about 6.4% year-on-year, net profit fell by nearly 70%. The per capita consumption of Tai Er Pickled Fish dropped to 69 yuan, returning to the level of seven years ago; the turnover rate further dropped to 3.6 times/day.

In addition to Tai Er Pickled Fish, the performance of other brands under Jiu Mao Jiu Group has also declined to varying degrees. According to Jiu Mao Jiu's second quarter operation announcement, in the three months ending June 30, 2024, the turnover rates of Shuang Hotpot and Jiu Mao Jiu were 2.8 and 2.6 times per day respectively; in the first half of 2023, these two figures were 3.9 and 2.8 times per day respectively, indicating that the downward trend of these two secondary brands is also quite obvious.

Obviously, after a period of rapid development and expansion, the stamina of Tai Er Pickled Fish does not seem to be enough to support the overall growth of Jiu Mao Jiu Group.

3. How to break the low-price curse?

Looking back at the popularity of Tai Er Pickled Fish, the founder accurately grasped the advantages of a single category and made it a popular restaurant on the Internet with the help of the Internet.In the entire catering industry, the "sour fish" category is still relatively niche compared to large hot pot categories such as Haidilao.

The "Sour Fish Category Development Report 2023" shows that the chain level of the sour fish category is relatively low, and the store scale of most sour fish brands is relatively small. As of November 2023, 32.9% of sour fish brands have less than 5 stores, accounting for the highest proportion; while the number of sour fish brands with more than 200 stores accounts for only 5.1%, and the overall distribution of the category is still relatively scattered.

Tai Er's inherent internet celebrity attributes have helped it expand its brand communication and influence, and played a role in driving consumption for a long time. However, with the rise of various types of restaurants, Tai Er's declining table turnover rate and seat turnover rate in recent years show that the appeal of a single category to consumers is declining year by year.

This is related to the fierce competition in the industry. The popularity of Tai Er has led to the rapid replication of the sauerkraut fish category. The emergence of more cost-effective brands such as "Yu Ni Qi Yi Qi" has divided the originally limited market.

According to the "Sauerkraut Fish Category Development Report 2023",As of November 2023, the number of pickled fish stores nationwide has exceeded 50,000. However, the taste period of pickled fish has passed, and how to create a continuous sense of freshness has become a problem facing pickled fish brands.

Therefore, Tai Er Pickled Fish changed its previous "tsundere" image and focused on strengthening brand affinity. It not only arranged six-person tables in some sinking markets and launched takeaway channels, but also adjusted dishes and lowered prices in an attempt to gain more market share.

After the latest financial report was released, in order to celebrate its ninth anniversary, Tai Er launched a meal for two at a price of 135.9 yuan on July 22. This package activity wasMeituanThrough in-store promotion, the average price per person dropped to 67.95 yuan.

However,Consumers seem to be accustomed to brand price cuts.Since last year, tea and catering brands have cut prices, giving consumers a wider range of choices. In addition, the quality of Tai Er Pickled Fish has also been criticized, with many consumers believing that the quantity of the dish has been reduced, and even complaining that it is "a clear reduction in price but a hidden increase in price."

In 2022, a consumer reported that when ordering food at a Tai Er Pickled Fish restaurant in a shopping mall in Chaoyang District, Beijing, they found cigarette butts in the pickled fish soup. This incident caused controversy after it was exposed. In 2023, some netizens questioned whether Tai Er Pickled Fish used pre-prepared dishes. To this end, Tai Er once live-streamed cooking in the kitchen to respond to the doubts.

Obviously, what is more serious than the decline in table turnover rate is that Tai Er Pickled Fish is facing a huge challenge to its brand image.

Regarding the decline in performance, He Chengxiao, CEO of Jiu Mao Jiu Group, mentioned in an interview with "Daily Economic News" that the company will focus its efforts, open stores cautiously and reduce promotions in the second half of the year.

In addition, according to the Beijing News, Jiu Mao Jiu has transferred the two brands "Na Wei Uncle is a Chef" and "Lai Meili Sour Soup Grilled Fish" and concentrated its resources on Tai Er Pickled Cabbage Fish and Shuang Hot Pot Factory.This means that in the future, Jiu Mao Jiu may focus its bets on Tai Er and Shuang Hotpot, and adjust or even abandon those "unprofitable" sub-brands in a timely manner.

When consumers get used to the "9.9 yuan" and "poor man's set meal", the catering industry is likely to enter a normal low-price stage in the future, which will be a difficult and protracted battle for any brand. For the current Tai Er Pickled Cabbage Fish, the only way to avoid being squeezed off the table is to retain customers.