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as early as 2021, shanghai auntie launched coffee products in some stores.

the current average customer spending of “hu ka” is generally 10-15 yuan.

recently, nanduwan finance reporter learned that shanghai auntie's coffee brand "hu ka" will officially operate independently and open to franchise. after the early test of the store-in-store "hu ka" and the first independent coffee shop "hu ka oriental latte", the price of the independently operated "hu ka" drinks is set at 10-15 yuan, which is slightly lower than the main brand shanghai auntie.

in march this year, shanghai auntie upgraded its new brand "light enjoyment edition" to "tea waterfall", targeting mixue ice city and the sinking market. with the independent operation of huka, the number of beverage brands under shanghai auntie will increase to 3.

shanghai auntie submitted an application for listing on the hong kong stock market in february this year. its prospectus expired on august 14, and it has not yet resubmitted its prospectus. can tea in the left hand and coffee in the right hand help shanghai auntie go public smoothly?

huka sets up test stores and lowers dining prices

a reporter from nanduwan finance learned from the investment promotion department of shanghai auntie that "hu ka" has officially started independent operation recently, and has begun to test the waters for franchising on a small scale, and will officially open up franchising next year.

the manager of shanghai auntie's business department told nanduwan finance reporter that previously "hu ka" was mainly opened in shanghai auntie's store, which was a "one store, two stores" without independent decoration and storefront. now it is separated from shanghai auntie and becomes an independent coffee brand. "hu ka" will focus on coffee + snacks, with a customer unit price of 10-15 yuan, the minimum initial franchise fee is 150,000 yuan, and the minimum store area is 10-15 square meters.

in 2021 and 2022, shanghai auntie launched several coffee products such as thick milk latte, raw coconut latte, and fresh lemon americano in some stores. at the beginning of 2023, shanghai auntie stepped up its efforts to develop its coffee business. at that time, it connected the "shanghai coffee" brand and products on the basis of the "shanghai auntie" store. the store has two ordering systems. if consumers want to drink coffee, they have to enter through the "shanghai coffee" ordering system.

the "hu ka" store, which operates in the form of a store within a store, initially priced its drinks at 12-18 yuan, but after just a few months, it lowered the price to 6.6 yuan to 13.9 yuan. it also provides snacks such as bread and cakes. according to zhaimen canyan, as of august 2, there were 1,878 "hu ka" stores in the store within a store format.

at present, "hu ka" has only one independent test store in the country, which is a company-operated store and an independent brand of "hu ka". in january this year, this independent coffee shop "hu ka oriental latte" opened in shanghai. "hu ka oriental latte" offers shanghai special blends, tea coffee, classic coffee, soe series and other drinks. it also sells breakfast sets and baked snacks, and has more than ten seats.

however, after operating for a period of time, the price of "shanghai coffee oriental latte" has also dropped significantly. at the beginning, the price of its drinks was concentrated between 16-23 yuan, and more than half of them were priced above 18 yuan. at present, the overall price of its drinks has dropped to below 16.8 yuan, of which 14.8 yuan and below account for more than 91.67%. its shanghai-style latte, which originally sold for 23 yuan, is now priced at 16.8 yuan, and the jasmine longjing latte, which originally sold for 18 yuan, is now priced at 13.8 yuan.

it can be seen that after testing, shanghai auntie adjusted the price of "hu ka" products to between 10-15 yuan, which is slightly lower than the main brand shanghai auntie. the price of shanghai auntie's drinks ranges from 8-22 yuan, of which drinks priced at 15 yuan or less account for nearly 60%.

many tea beverages have established sub-brands

want to get a piece of the coffee market

compared with the store-in-store model, li yingtao, a partner of guest consulting, is more optimistic about the independent operation of "hu ka". he pointed out to the reporter of nanduwan finance that the store-in-store model may reduce costs and convert old customers in the short term, but in the long run, the fierce competition in the coffee market will require brands to be extreme. the store-in-store model needs to match the main brand shanghai auntie, so it is difficult to achieve the ultimate in the coffee field and lacks competitive advantages.

however, li yingtao also believes that "hu ka" also faces transformation challenges in its transition from a store-in-store to an independent store. the main risks come from brand awareness, customer flow challenges, increased operating costs, and systemic changes in operations. it would be best for "hu ka" to expand further after successfully building a template store.

as for the price reduction of "shanghai coffee", li yingtao pointed out that consumers have become more rational in recent years, and price wars have become the main theme of the market. coffee, tea and catering brands have all lowered their prices to adapt to the fiercely competitive market and the rationalization trend of consumers. in addition, the brand image of shanghai auntie is difficult to support the high-price positioning, so it can only reduce prices. from the perspective of the coffee market size, the main price range of "shanghai coffee" has the largest market size, and the competition is also extremely fierce.

lin yue, chief analyst of lingyan consulting management, told nanduwan finance that the domestic coffee market has entered the 20 yuan price range. aunties in shanghai have found that selling coffee for 18 yuan or more is not feasible, so they can only reduce the price. if coffee wants to be sold at a high price, it needs to have three elements: first, the store environment and atmosphere must be good, second, there must be elements such as joint names and brand marketing, and third, the product itself must be innovative and have enough ingredients.

in the 10-15 yuan price range targeted by huka, its main competitors include luckin coffee, kudi, and nova coffee. in addition to snatching users from these brands, huka also has to compete for franchisees from them.

luckin's number of stores exceeded 20,000 in july this year, and according to zhaimen canyan, as of august 2, kudi had 7,038 stores and nova coffee had 1,134. in order to expand its scale, kudi also lowered the entry threshold and launched a convenience store model, which only requires a counter of less than 2 square meters and only 60,000 yuan in initial start-up capital. kudi revealed at the end of july that it would open 50,000 convenience stores within three years, "with a kudi within 100 meters."

tea brands that want to get a piece of the coffee pie include not only shanghai auntie, but also mixue bingcheng, chabaidao, chayan yuese, and heytea, all of which already have coffee sub-brands.

mixue ice city, which was the first to enter the coffee market, has the largest number of stores under its coffee sub-brand lucky coffee, but its development has not been smooth in recent years. nanduwan finance reported earlier that lucky coffee has been closing a large number of stores. as of august 2, it has opened 576 new stores and closed 491 stores this year, with a total of about 2,890 stores.

yuanyang coffee, a coffee sub-brand of cha yan yue se, was launched in august 2022, continuing its usual direct-operated model. as of august 2, yuanyang coffee had 102 stores. at the end of last year, cha baidao launched its first coffee sub-brand "ka hui", and heytea launched a tea and coffee brand "xi que ka" in shenzhen. however, xi que ka closed at the end of july this year, and ka hui has only one store and is not open for franchising.

behind shanghai auntie's multi-brand operation:

performance lags behind chabaidao ancient tea

as "huka" is about to operate as an independent brand, the beverage brands under shanghai auntie will officially increase to 3 - shanghai auntie, tea waterfall, and huka.

in march this year, shanghai auntie officially launched the affordable tea brand tea waterfall. many of tea waterfall's drinks are priced below 10 yuan, targeting the sinking market and student groups, and are accused of trying to copy mixue ice city. not only are the two similar in positioning, but the milk ice cream sold in tea waterfall is 2 yuan a stick and lemonade is 4 yuan a cup, which are all the trump products of mixue ice city.

at the beginning of last year, shanghai auntie had shouted the slogan of opening 10,000 stores, but judging from its actions this year, its market expansion strategy seems to have shifted to multi-brand operation.

at the beginning of last year, at the national partner conference, shanghai auntie revealed that it plans to add 3,000 stores in 2023, and the number of operating stores is expected to exceed 8,000 by the end of the year, with more than 10,000 signed stores. however, half of this year has passed, and the number of shanghai auntie's stores has not exceeded 10,000. according to zhaimen canyan, as of august 2, shanghai auntie has 8,449 stores nationwide.

at the new tea drinks seminar held by nanduwan finance in july, the relevant person in charge of shanghai auntie revealed that "although many brands in the industry have previously called for the slogan of 10,000 stores, the trend of the industry has actually changed from pursuing quantity to pursuing quality."

as the fourth new tea beverage company to submit an application for listing and mainly based on the franchise model, shanghai auntie's performance lags behind other brands. in the first three quarters of 2023, the revenues of shanghai auntie, mixue ice city, and gu ming were 2.535 billion yuan, 15.393 billion yuan, and 5.571 billion yuan, respectively; during the same period, the net profits of shanghai auntie and mixue ice city were 324 million yuan and 2.401 billion yuan, respectively, and gu ming's adjusted net profit was 1.045 billion yuan. in 2023, cha baidao's revenue was 5.704 billion yuan and its net profit was 1.151 billion yuan.

although the price of shanghai auntie's drinks is similar to that of gu ming and cha baidao, and the store scale is similar to cha baidao, data shows that consumers clearly prefer gu ming and cha baidao. according to the prospectus previously submitted by mixue ice city, in the first three quarters of 2023, gu ming, cha baidao, and shanghai auntie had approximately 8,600, 7,500, and 7,300 stores, respectively. in 9 months, gu ming and cha baidao sold 900 million and 700 million cups of drinks, respectively, while shanghai auntie sold 500 million cups.

industry analysis

multi-brand operation strategy is a double-edged sword

lin yue told the nanduwan finance reporter that shanghai auntie no longer emphasizes the scale of 10,000 stores, which is related to the bottleneck in the development of its main brand. if the stores cannot show much benefit after large-scale expansion, it will make management more difficult. shanghai auntie's multi-brand development is mainly to solve the problems of brand aging and product homogeneity, but if the new brand is not sufficiently differentiated, it will be difficult to run a new curve. the multi-brand operation strategy of tea beverage companies is a double-edged sword. the advantage is to find new growth curves and models through trial and error. the disadvantage is that these attempts may not work, which will cause resource dispersion and waste.

written by: nandu wancai reporter zhan danqing feng jiaju intern chen menger

photo: nandu wancai reporter zhan danqing