On March 4, Haidilao International Holdings Co., Ltd. (hereinafter referred to as "Haidilao") announced that the company will officially introduce the franchise model, relying on a diversified business model to further promote the pace of expansion of the restaurant network.。

According to the HKEx document, open franchise will introduce more quality resources on the basis of ensuring management standards and customer experience, improve operational capacity and efficiency, promote regional expansion of the brand and expand customer scale.。

In order to support the implementation of the new business model, the company has set up a franchise division to develop franchise details and business cooperation processes.。

Haidilao returns to the game, new model stimulates new growth

Since its establishment in 1994, Haidilao has always adhered to the direct business model for 30 years.。The company's previous positive earnings forecast showed that as of December 31, 2023, Haidilao's revenue for the year is expected to be no less than 414.0 billion yuan (RMB, the same below), an increase of not less than 33%, and net profit (excluding Tehai International Business) of not less than 44.0 billion, up 71% from 2019.8%, a record high。

This first release of the franchise may be proof that Haidilao has finally come out of the external shocks of the past few years and is back on the growth track.。

At present, the official website of Haidilao has launched the "Join Cooperation" page, publicizing the joining process and the support provided, but the specific joining application conditions are relatively simple, did not disclose the specific joining form and financial requirements.。However, according to its application form for joining the cooperation, in the "funds that can be invested in the submarine fishing business" options, the lowest level is "less than 10 million yuan," or it can be speculated that the capital threshold to join the submarine fishing is 10 million yuan level.。

According to the official introduction, Haidilao will adopt a number of selection criteria for franchisees in terms of brand and value recognition, vision planning, financial base and industry experience.。As for the support provided, Haidilao will implement unified operation and quality standards in all its own restaurants and franchised restaurants, specifically, the Group will provide unified personnel training, supply chain system, management experience, food safety control, brand marketing services, performance appraisal and other middle and back-office services to achieve true branding and standardized operation.。

It is said that Haidilao will promote the landing of the new model in a rigorous and systematic manner based on factors such as market size, competitive landscape, property conditions and geographical location; at the same time, the Group will continue to conduct market assessments and continue to explore new growth opportunities in order to achieve further moderate expansion.。

Domestic food and beverage market back to warm the brand is no longer alone

With the domestic economy stabilized and rebounded after the epidemic, the catering industry has finally ushered in its "spring."。Statistics show that in 2023, the national food and beverage revenue reached 5,289 billion yuan, an increase of 20.4%, a record high; catering revenue per unit above the limit was RMB1,335.6 billion, up 20% YoY..9%。

In this context, many direct brands in the domestic catering market "collective embrace" to join the chain, eager to get rid of the curse of "single tree without forest" through the "direct + join" model, seeking new growth space.。According to incomplete statistics, since 2022, dozens of food and beverage brands, such as Xi tea, Naixue's tea, hometown chicken, and Hefu Lo noodles, have been put into the arms of the franchise model, involving tea, coffee, snacks and other tracks.。

According to the "2023 China Food and Beverage Affiliate Industry White Paper" data, China's food and beverage chaining rate continues to rise, from 12% in 2018 to 19% in 2022, China's food and beverage market chaining process is accelerating; and compared to the United States 54% of the food and beverage chaining rate, China still has a lot of room for improvement.。

On February 1 this year, Jiumaojiu Group also announced the opening of some of its catering brands to join and cooperate with the business, saying that it has a mature product system, operating model and supply chain support, Taier pickled fish and mountain outside the sour soup hot pot thus became Jiumaojiu diversified business "test water" works。

Looking at the global market, the head catering brands (such as McDonald's, KFC, Starbucks, etc.) that have implemented the franchise model have achieved leapfrog growth without exception.。In the management system, supply chain are mature and complete on the basis of the promotion of standardized products and services, there is no doubt that in obtaining the advantages of card position and resources have priority。

China food industry analyst Zhu Danpeng said: "Haidilao open to join is expected."。Under the trend of other enterprises speeding up and increasingly fierce market competition, if Haidilao does not adopt the joining strategy, its industry status may not be guaranteed.。Open franchise will not only help stabilize the market position, but also fully release the dividends of brand effect and scale effect, which will have a positive impact on revenue, profit and stock price.。

As early as last year, founder Zhang Yong has revealed its tendency to open up the bottom of the sea to join, he said frankly: "standardized direct business also has its own inherent shortcomings, large-scale expansion has brought a lot of unsolvable problems.。"

Expansion trend mutation giants have "downward" competition.

With its mature supply chain, food safety and product management system, Haidilao has been strong for 30 years.。

According to Haidilao's 2023 semi-annual report, it currently has 1,382 stores in Greater China, of which 1,360 are located in mainland China and 22 are located in Hong Kong, Macao and Taiwan, ranking first in the domestic hotpot circuit.。

After joining the liberalization, it will not be difficult to see the rapid expansion of the brand on a global scale, and with reference to industry trends, the growth may be launched in the second and third tier markets.。In the previous 2023 semi-annual results conference, Haidilao has said that "second-tier cities show the potential to continue encryption, third-tier and below the potential market is broad," therefore, the joining of the official announcement may be helping the brand's low-cost expansion.。

By working with a franchise team with rich local property resources, you can gain more rent bargaining power in the sinking market, and "local property resources, with business management experience" is one of the conditions for joining the Haidilao.。

Industry insiders said that open joining can rapidly expand the scale, optimize cash flow, occupy more market share。Industry data show that the proportion of chain brand stores in the sinking market is gradually increasing - from 2018 to 2022, the overall distribution of the number of food and beverage stores in first-tier, new first-tier and second-tier cities is shrinking, while third-, fourth- and fifth-tier cities are "reverse growth," improving significantly。

In addition, the joining mode can also enhance the sinking speed of the brand。In November 2022, when the franchise business was opened in November 2022, there were only more than 800 stores, and after a year, by the end of 2023, the number of global stores exceeded 3,200, of which more than 2,300 business partnership stores, store size increased by 280% year-on-year.。

Combining the above advantages, the sinking market has become the "sweet pastry" of major brands.。

Ruiyu Coffee Chairman and CEO Guo Jinyi said that in 2024, Ruiyu will continue to focus on store profit performance while continuing to expand its stores at a high speed; Yum China CEO Qu Cuirong hopes to expand the number of stores in the Chinese market to 20,000 by 2026; McDonald's CEO Chris Kempczinski also intends to open 1,000 new stores this year to expand its business to lower-tier cities.。

For any catering brand, strict joining standards, transparent joining process and strong supervision and management are the top priorities to ensure the long-term steady development of the joining business; in addition, the necessary training and support, expansion speed and quality balance is also indispensable.。

In today's "new ten thousand store era," the sea fishing to open up to join is its expansion of the regional market, and then expand the growth potential of the new road, for the industry leader, its growth prospects are still broad。