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yet another new tea beverage brand has fallen behind in the race to open franchise stores.

recently, shuyi shaoxiancao, a new tea brand targeting the 15 yuan price range, was reported to have closed stores on a large scale, and even many franchisees' second-hand equipment was unsalable. according to data from the chain store monitoring platform jihai brand monitoring, the reporter of the daily economic news found that in the past 90 days, shuyi shaoxiancao opened 496 new stores and closed 1,605 stores.

data from tianyancha shows that on september 3, 2024, the registered capital and shareholders of sichuan shuyi catering management co., ltd., to which the shuyi shaoxiancao brand belongs, changed. after the change, the registered capital decreased by 5.67%, the number of investors decreased by 3, and the legal representative remained the founder wang bin.

shuyi shaoxiancao was founded in 2007 and focuses on the category of shaoxiancao. in 2018, shuyi shaoxiancao put forward the slogan "half a cup is full of ingredients", emphasizing cost-effectiveness, which was deeply rooted in the hearts of the people at that time. in september 2021, shuyi shaoxiancao announced that the number of stores exceeded 7,000. in the industry, the number of shuyi shaoxiancao stores is second only to mixue bingcheng.

some industry insiders believe that the closure of shuyi shaoxiancao stores is related to the change in brand positioning in 2022. in this regard, shuyi shaoxiancao responded to the reporter of "daily economic news" that the closure of stores is based on the new market situation. shuyi optimizes stores and business adjustments, shifts from opening more stores to opening good stores, focuses on sinking markets, focuses on product structure adjustment and single store model optimization, supports franchisees to make steady progress, and improves store revenue and profitability.

however, the industry is not optimistic about the situation of offline store opening in the new tea beverage industry. li chengdong, founder of dolphin club, told reporters: "this year, the new tea beverage industry may close 20% to 30% of its stores."

stores resell second-hand equipment at low prices

the reporter searched for "shuyi shaoxiancao equipment" on the xianyu platform and saw many resale posts. the resale posts with the 2023 equipment label had higher views, and the prices set by the posters were relatively higher. but even so, the resale prices were also greatly discounted. for example, the total price of a full set of equipment in 2023 was 80,000 to 90,000 yuan. one poster described the resale at a 30% discount in his post, but the current price is 11,000 yuan. some posters also listed resale prices of 17,000 to 19,000 yuan.

image source: screenshot of xianyu platform

a reporter from the daily economic news randomly clicked on a post and found that the transferor’s xianyu homepage had a total of 21 items for resale, all of which were related to shuyi shaoxiancao store equipment. in june of this year, he launched the shuyi shaoxiancao store and said it could be transferred. in august, the transferor still accepted the "spin-off treatment." on the xianyu homepage, he successively launched milkshake machines, refrigerators, ordering screens and other store equipment, but the first one to be sold was a money counting machine. other professional equipment is also listed on the homepage for sale.

according to data from zhaimen canyan, as of august 2, 2024, the number of shuyi grass jelly stores in operation has been reduced to 5,965.

abandoning "plant-based": new product launches have not kept up with the pace

the official website of shuyi shaoxiancao shows that in 2022, the brand received nearly 1 billion yuan in investment from investors including juewei foods, qia qia foods, tencent investment, and the well-known strategic positioning company trout.

in the same year, shuyi herbal jelly, which has always been known for its "half cup is full of ingredients", proposed the concept of "plant-based new tea drinks". its brand image also changed from the chinese character "book" to a red rabbit, and the original bookish main visual was also replaced with a grass green main visual. this series of changes was too fast, so consumers of shuyi herbal jelly could not get used to it.

image source: daily economic news data map

when a reporter from the china business network typed "shuyi shaoxiancao plant-based" into the search engine, the second half of the sentence that automatically came up was "what is it?" this also reveals the confusion of consumers: what is plant-based?

an industry insider told the reporter that, first of all, the word "plant-based" itself is a bit difficult to pronounce, and the three words "plant-based" look a bit like "non-dairy creamer", which is synonymous with unhealthy milk tea, which runs counter to the brand's emphasis on health. the industry insider analyzed to the reporter: "as a consumer brand, it should not educate consumers on what to choose, but discover what the current consumption trends are and then cater to consumer demand. shuyi shaoxiancao did not keep up with its competitors in terms of product innovation that year."

perhaps shuyi shaoxiancao has realized the problem. in the official public account, the three words "plant-based" have not appeared in the title of the promotional articles since december 2022. in the subsequent public account updates, shuyi shaoxiancao mainly promoted new fruit teas and provided discount coupons.

since then, shuyi shaoxiancao's main product is light milk tea, which is easier to make and has a relatively higher gross profit than fruit tea and grain tea. starting from june 2023, shuyi shaoxiancao will successively launch new products such as "youlan oolong", "zhixia" and "hei oolong". when new light milk tea products are launched, 10,000 new product discount coupons will be given out simultaneously to attract consumers to buy.

in october 2023, shuyi shaoxiancao emphasized "0 creamer" when launching a new taro paste product. then in november of that year, when shuyi shaoxiancao celebrated its 16th anniversary, the brand announced "0 creamer in the entire series". at the end of 2023, shuyi shaoxiancao's storefront returned to its earliest chinese style image.

after the restoration of its brand image, shuyi shaoxiancao launched the policy of "free store opening fees, 0 franchise fees, 0 service fees, and 0 cooperation fees" this year, but not many franchisees responded.

the 10 yuan price tag is “very dangerous”. has shuyi herbal jelly lost its “brand potential”?

mr. chen, the owner of two new tea drink franchise stores, started to investigate the franchise business in 2023. this time, he told the reporter of "daily economic news" that even if the store opening fee was free, he would not consider shuyi shaoxiancao. because "to join a franchise, you must join the top franchise", in his eyes, shuyi shaoxiancao no longer has "brand potential".

in april this year, shuyi shaoxiancao began to take the affordable route and launched single products such as "kumquat lemon" and "mint milk green" in the 10 yuan price range. the products originally positioned at around 15 yuan were also reduced in disguise through group purchase prices on e-commerce platforms, and the overall price range has come to less than 10 yuan.

zhuang shuai, founder of bailian consulting, believes that shuyi shaoxiancao's price cut is a move to reposition the brand, with the aim of finding a new position between guming, chabaidao and mixue bingcheng, and also hoping to attract consumers with a low-price strategy. however, zhuang shuai believes that the 10 yuan price is "very dangerous" for the brand.

generally speaking, compared with light milk tea, fruit tea has a higher cost of raw materials, and freshly made drinks that need to be added with small ingredients also require more manpower. if the price range of 10 yuan cannot be reduced at the cost level, it will inevitably squeeze the profit margin of franchisees.

shuyi herbal jelly franchisees reported that the material prices were high. some franchisees commented on a related post on xiaohongshu: "product prices are getting lower and lower, while materials are getting more expensive. the suggestions raised are falling on deaf ears." the aforementioned industry insider told the china business news reporter that shuyi herbal jelly's material costs are difficult to reduce. the reason is that its supply chain is more of a collaboration with third parties rather than self-built, which means it does not have an advantage in price control over brands that build their own supply chain.

after the price of the product dropped, the news of shuyi shaoxiancao closing stores began to increase. according to the brand monitoring data of jihai, the number of shuyi shaoxiancao stores dropped sharply in june, but rebounded in august. according to the data of zhaimen canyan, the number of shuyi shaoxiancao stores in operation is currently 5,965.

image source of the jiuhai brand monitoring data: webpage screenshot

zhuang shuai believes that the closure of franchised brands' offline stores is a normal business phenomenon. the closure of a single store due to factors such as location selection and rent costs does not generally mean that there is a problem with the franchised brand's operations. "but a large number of store closures are generally related to the general direction of the brand," zhuang shuai said.

in 2024, the competition in the new tea beverage market has entered the "hand-to-hand combat" stage. heytea and nayuki are open to franchisees and have entered the sinking market to grab land. guming and chabaidao are also actively expanding stores in other regions. in the franchisee communication group, bawang chaji has emerged as a dark horse and has become a hot commodity that franchisees are competing for.

the "blue book on the development trend of chain catering brand stores in the first half of 2024" released by geoq data shows that new tea drink brands will open about 17,174 stores and close about 8,608 stores in the first half of 2024. the overall scale of new tea drinks is growing, but the growth rate has slowed down compared with the same period last year.

li chengdong, founder of dolphin club, told the daily economic news that the milk tea industry is very competitive this year. in addition to competition within the industry, there is also pressure from luckin coffee's attempt to cross the industry. this year, the order volume and unit price of offline tea and coffee (stores) have dropped, and the industry is not doing well. "the unit price may have dropped by 10%, the order volume has also dropped by 10%, and (store sales) have dropped by an average of 20%." "with the competition at this point, "large-scale store closures are inevitable."

daily economic news