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produced by phoenix.com's eye of the storm

author: guangkun editor: wenhua

email for reporting: [email protected]

core tips:

1. many tea brands’ stores are closing down at an accelerated pace, bringing popularity to “corpse collectors” – second-hand equipment recyclers. among them, due to the large number of closed stores, the second-hand equipment of shuyi shaoxiancao was unsalable. a recycler sold more than a dozen sets of equipment that cost 60,000 to 70,000 yuan as scrap metal for 2,000 yuan.

2. according to third-party data statistics, another 10,000 tea shops disappeared in the two months from june to august. the survival cycle of branded stores has been significantly shortened. an equipment recycler revealed that a store of a leading brand could survive for two or three years before, but now the recycled stores "are often only open for two or three months, or eight or nine months."

3. some recyclers who entered the industry early said that in 2019, the survival rate of chain brands was very high, and very few chain brand equipment (including tea and beverage + catering) was recycled, accounting for only single digits. however, in 2021 and 2022, there was a sudden explosive growth, and the proportion of chain brand equipment recycled in one year was nearly 50%. this year, the proportion can reach 70%.

4. tea brands rise and fall, and many recyclers have expressed their determination not to open stores. even for the most popular bawang cha ji, a recycler said that it would take at least one or two years to recover the investment of more than 1 million yuan. according to the current competitive situation, "who can guarantee that bawang cha ji will still be popular in two years?"

01famous tea brands’ franchise stores closed down one after another, and their equipment was sold as scrap

"we no longer accept shuyi's herbal jelly equipment," said "octopus brother," who specializes in recycling tea brand equipment. the turning point came when he was clearing out inventory before may day - treating tea equipment that was difficult to resell as scrap. he found that the most scrapped equipment was shuyi's herbal jelly equipment, with more than ten sets.

"i spent 60,000 or 70,000 yuan to buy it, but now i can only sell it as scrap for 2,000 yuan." octopus brother said. later, when he received a call from a franchisee of shuyi shaoxiancao, he didn't want to buy it. if he met a franchisee who really wanted to sell, he tried to estimate the price of some equipment at the price of selling scrap, which made the other party "mentally exploded."

the circulation of second-hand equipment is directly affected by the relationship between supply and demand. when more franchisees close stores than open new stores, the excess equipment will be unsalable. experience tells him that shuyi shaoxiancao, which has been a "happy partner" for young people, seems to be "outdated".

second-hand equipment recyclers play the role of "scavengers" in the vast tea beverage market. they are often the first to sense the popularity of brands. from the perspective of brand franchisees, second-hand recyclers pick and choose and take the equipment back to the warehouse by truck. on the surface, they are taking away equipment, but in fact, they are the franchisees' savings and hard work over the years. therefore, second-hand dealers are regarded as "corpse collectors."

figure: octopus brother’s warehouse is full of second-hand equipment of tea brands source/provided by the interviewee

the combination of milk tea and grass jelly made shuyi grass jelly capture the hearts of young people in 2019, which was once a phenomenal hit in the tea industry. its slogan is "half a cup is full of ingredients", which once led the milk tea industry to roll up ingredients, making milk tea nicknamed "eight treasure porridge of the new era" by netizens. in 2021, its number of stores exceeded 7,000, ranking second in the industry, second only to mixue ice city. however, just over two years later, when the number of stores of other brands skyrocketed, its scale dropped by more than 1,000 compared with 2021, and currently has less than 6,000 stores.

in fact, as early as the first half of 2023, shuyi shaoxiancao began to "stalle". zhu luhao, the founder of youcanchu, who is involved in the recycling of tea equipment, recalled that at that time, he received 13 shuyi shaoxiancao franchisee calls to withdraw from the store in one day, which was a phenomenon he had never encountered in the two or three years since he started working in the industry. there are more and more shuyi shaoxiancao equipment circulating in the second-hand market. the same set of equipment cost 25,000 yuan to recycle last year, but this year it can be bought for 15,000 yuan.

it's not just the shuyi herbal jelly brand. in the warehouses of the "corpse collectors" of tea drinks, the number of cha baidao and guming has also begun to surge this year.

zhu luhao has not collected specific data on second-hand equipment, but because he runs a short video account, when employees go to the front line to recycle equipment, they will shoot videos and synchronize them to him, "you can see that many pictures are of cha baidao." on the short video platform, this is a brand that often appears when second-hand equipment dealers record their daily recycling.

caption: there is a second-hand tea equipment recycler account, and cha baidao frequently closes stores for recycling. content source/screenshot of short video platform

because shuyi’s grass jelly equipment is no longer accepted, the tea brand with the most closed stores that octopus brother has collected is cha baidao. “two out of every 10 stores are cha baidao, accounting for 20%.” the second one is gu ming. “10% are gu ming,” said octopus brother.

however, the situation of heshuyi herbal jelly is somewhat different. chabaidao and guming still have brand potential, and there are new franchisees willing to join the market, so second-hand recyclers are still willing to recycle. octopus brother revealed that guming's equipment is still hard currency like mixue ice city. other small brands' equipment can be recycled for 10,000 or 20,000 yuan, while guming's second-hand equipment can be recycled for 70,000 yuan.

in the first half of this year, a large number of tea shops closed. according to the data from zhaimen canyan in june, the number of newly opened stores in the past year was 165,000, and the net increase was 46,000, which means that 120,000 tea shops disappeared in a year. this is not the worst. according to the data from august, the number of newly opened stores in the past year was 167,000, with little change, but the net increase was reduced to 35,000. in two months, another 10,000 stores disappeared. among the fifteen cities monitored by canbaodian, the number of tea shops in 2024 will decrease by an average of 1,457.9 stores in each city compared to 2021.

the trend of store closures seems to be expanding. "heytea, nayuki's tea, shanghai auntie... almost every brand that can be named has closed many stores this year," concluded a second-hand recycler. currently listed nayuki's tea and chabaidao have submitted their 2024 semi-annual reports. nayuki's tea turned from profit to loss, from a profit of 72 million yuan in the same period last year to a net loss of more than 400 million yuan. chabaidao's revenue and profit both fell, with a net profit of 237 million yuan, a year-on-year decline of 60%.

02opening a store, closing it, and recruiting people to open another store, tea drinks are trapped in an internal cycle game

in 2024, the new tea beverage brands are competing fiercely for price and number of stores. franchisees are forced to join the battle, which also accelerates the turmoil in the tea beverage industry.

summer has not yet arrived, but the price war among tea brands has already been fierce. after using coupons, heytea's "pure green tea yan" is as low as 4 yuan a cup, shuyi shaoxiancao's main product "kumquat lemonade" is as low as 3.9 yuan a cup, and guming launched the "mini program for 9.9 yuan drinks every day"... huaan securities research report shows that from 2020 to 2023, the proportion of consumption of new tea brands below 10 yuan will increase from 7% to 30%, and the proportion of consumption above 20 yuan will drop from 33% to 4%.

but not every brand can become the "low-price king" of mixue bingcheng. price wars have damaged the brand itself, and shuyi shaoxiancao is one example.

in 2024, shuyi shaoxiancao entered the price war. the original product price was concentrated at around 15 yuan. in april this year, shuyi shaoxiancao stores gradually changed their menus, and products priced "under 10 yuan" dominated. this made franchisees miserable. the product price was lowered, but the purchase price remained unchanged, squeezing the already small profit margin. previously, its abandonment of the advantage and slogan of "half a cup is full of ingredients" had already affected its growth momentum, and the price war accelerated the withdrawal of franchisees.

source/shuyi shaoxiancao official website

however, in order to maintain the number of stores and tell capital stories, many tea brands have accelerated the bundling of more franchisees.

this year, major brands are lowering the threshold for opening stores: heytea will waive all cooperation fees for new contracts signed in the first quarter of 2024, shuyi herbal jelly has 0 brand fees, and shanghai auntie’s franchise fees can be paid in installments...

there are other ways to reduce store costs, such as buying second-hand equipment for store opening, which can save tens of thousands of dollars. an ongoing trend is that brands are also allowing new stores to use second-hand equipment.

"recycling second-hand equipment from chain tea brands and reselling it to franchisees was something we never dared to think of before," said "dog brother", the person in charge of jingqi catering equipment. after the epidemic, "many mainstream brands also asked them to close their stores. many brands that can be seen on the market have found them."

gou ge entered the industry early and started the second-hand equipment recycling business in 2018. he recalled that the survival rate of chain brands was very high at that time, and it was rare to receive chain brand equipment (including tea drinks + catering), "the proportion was only in the single digits." in 2020, the proportion was still less than 15%. in 2021 and 2022, there was a sudden explosive growth. the proportion of chain brand equipment recycled in one year was nearly 50%, and this year it accounted for nearly 70%.

it is difficult for second-hand recyclers to tell which brands have completely opened up new stores to use second-hand equipment, and it is not clear whether new franchisees who come to buy second-hand equipment use second-hand equipment with permission or secretly, but the recycling and circulation of second-hand equipment is becoming more and more prosperous. lao yang revealed that even if some brands do not allow it, many regional managers turn a blind eye in order to achieve expansion performance.

lao yang felt this very clearly. in october 2023, he had just entered the recycling industry and rented a 300-square-meter warehouse to store recycled equipment. soon the warehouse was not enough. in july this year, the site was expanded to 2,000 square meters. in the first month of use, the new warehouse was already more than half full. this is not lao yang's experience alone. a second-hand equipment recycler just opened a second warehouse in april. the more than 1,000 square meters of space was filled in a week or two.

the industry seems to be caught in a strange internal cycle. franchise stores are not profitable, so brand owners attract more people to join by reducing costs to maintain the scale of expansion. the more stores there are, the more intense the brand competition is, the less money they make, the higher the store turnover rate, and then more ways to attract people to join.

however, the franchisees who poured in, used their savings to open stores with the fantasy of accumulating wealth, suddenly found that they were just the material for the brand owners to tell capital stories, and what awaited them were overly dense stores and ever-shortening store survival cycles.

according to mr. octopus, before, leading brands such as gu ming, cha baidao, and shanghai auntie could generally survive for two to three years per store. but now, many recycling stores have only been open for two to three months, or eight to nine months. the equipment recycled is getting newer and newer, and they have been selective in recycling. they do not want equipment or brands that are not cost-effective.

in the cycle of expansion, opening stores, closing stores, and then expanding again, inexperienced franchisees increasingly seem to be draining their savings just to keep up with the pace.

03 the era of "working hard to make money" in opening a store is gone: i lost 20 million in ten years

in the new tea beverage market, the wind of the times has changed direction countless times.

in 2015, the taiwanese milk tea brand coco dominated the milk tea market. later, 1diandian, which was good at marketing, also became popular. the scene of long queues to buy a cup of yidian in 2017 is still vivid in our memory. at the end of last year, there were sudden rumors of "withdrawal from the milk tea industry", but the official weibo account later came out to refute the rumor, "who said diandian was going to go bankrupt!"

after that, the trend of the times blew from creamer to "freshly made". since 2019, high-end tea brands such as nayuki's tea and heytea have become popular. milk tea has even become a password for social show-off. on social platforms, there are scenes of people asking scalpers to buy a cup of milk tea for 100 yuan. however, after 2021, high-end tea drinks have collectively dropped in price. the original price of more than 30 yuan per cup has gradually returned to the price range of 20 yuan and 10 yuan, and the high-end concept has also gone with the wind.

when cha yan yue se became popular in recent years, tea brands once again became popular with the "national trend culture". however, it mainly lived in changsha, and now its imitator ba wang cha ji has taken the limelight.

before engaging in the recycling of second-hand tea equipment, octopus brother had run a tea brand chain store for 10 years since 2012, with about 200 stores nationwide at its peak. that was the period when taiwanese milk tea brands coco and 1diandian dominated the market. unlike today, when a brand can easily have 8,000 or 9,000 stores, in 2018, the two brands had only more than 4,000 stores combined. he recalled that at that time, big brands had little impact on their small brands, and stores "could make money if they worked hard."

but as more and more capital entered the market, they lost their living space in rounds of brand wars. he once owned seven or eight cloth shops in jinshan district, shanghai. before brands like heytea and lelecha came, the daily turnover of a store was easily 5,000 to 6,000 yuan. when big brands came, the store turnover dropped sharply to one-third.

favored by capital, tea beverage brands have pressed the accelerator for development in recent years. brands have sprung up like mushrooms after a rain, stores are highly concentrated, products are highly homogenized, and the market is becoming saturated.

after the epidemic, he closed stores one after another, and all store operations were closed in 2023. looking back on the stage of opening stores, squidward lamented that it took 10 years to incur a loss of 20 million.

in the eyes of octopus brother, the tea beverage market is a bit distorted now. so whenever he encounters a novice coming to buy equipment, he can't help but discourage them. the tea beverage market is no longer a field that novices can enter.

due to the low investment threshold, high degree of standardization and strong replicability, the chain rate of new tea drinks continues to rise. according to the "2023-2024 china tea drink industry annual development report", in 2023, the chain rate of china's tea drink industry will reach 49.1%, and it is expected to reach 51.6% by 2024. the china chain store association once jointly released a report with meituan, which showed that in a sample of core business districts in multiple cities, the chain rate of tea drinks exceeded 80%.

brands are scrambling to grab market share. in front of stores with strong brand potential, small brands are powerless to fight back. under various marketing and joint competitions, big brands that represent trends have gone through rounds of replacement.

the time it takes to build a king brand has also been greatly accelerated. in 2019, it took 22 years for coco to have more than 4,000 stores worldwide, while it took only 6 years for bawang chaji. in 2021, bawang chaji had only more than 400 stores, and three years later, the number increased to 4,500, an increase of nearly 10 times.

competition among new tea brands is too fierce, and it is difficult to maintain a hot momentum for a long time. the most popular tea brand now is bawang chaji, which has taken advantage of the traffic of the national trend, but still faces the dilemma of competition in an oversaturated market. compared with its predecessors, it has a hot marketing momentum, but it only makes milk + tea, and does not have its own raw material supply chain, so the moat built by its products is not high.

source/bawangchaji official website

in order to attract traffic to his short video account, octopus brother bought second-hand equipment from several ba wang cha ji stores, but he firmly told phoenix.com's "eye of the storm" that if he opened his own store, he would not join ba wang cha ji.

"the fact that many bawang cha ji stores are open does not mean that the stores are very profitable," said octopus brother. it takes more than 1 million yuan to open a bawang cha ji store. excluding marketing and traffic costs, he learned that some stores earn 10,000 yuan a month, and it takes more than 100 months to pay back the investment. this may not represent the situation of most stores, but he said that even if the common one or two years of payback period is taken as the cycle, it is too slow in the tea industry. given the current competitive situation, "who can guarantee that bawang cha ji will still be popular in two years?"

second-hand tea equipment dealers, stepping through the ruins of tea shops, observe the growth cycle of a brand more closely. perhaps because they have witnessed too many tragic store closures, a second-hand recycler told phoenix.com's "eye of the storm" that he would never open a store, "i will not join any brand", "unless tea drinks return to their essence - not looking at the brand, but only looking at whether it tastes good. only if you make it delicious will people buy it."