This article is from WeChat official account:Leopard change (ID: baobiannews)< span class="text-remarks">, author: Liu Xia, editor: Liu Yang, head picture from: Visual China

Xiabuxiabu, a small hot pot once loved by young people, is experiencing the “darkest moment”.

In more than a month, Xiabuxiabu experienced two high-level changes in succession. First, Zhang Zhenwei, the CEO of Coco, a subsidiary of the brand, resigned in mid-April, and then on May 21, CEO Zhao Yi was dismissed.

On April 19, the third day after Zhang Zhenwei’s resignation was announced, Xiabuxiabu’s stock price fell by more than 20%. Zhao Yi’s departure also caused shocks in the capital market. On May 21, the market value of Xiabuxiabu fell by HK$1.9 billion. Since February this year, Xiabuxiabu’s share price has been on the “slide”, and its market value has evaporated by HK$18.8 billion in three months.

Xiabuxiabu’s stock price trend since February

In addition to the stock price, its performance is not satisfactory. Affected by the epidemic, Xiabuxiabu’s revenue in 2020 was 5.455 billion, compared with 6.03 billion in the same period last year; net profit fell 96% year-on-year to only 11.485 million.

Although the epidemic is the black swan that catering companies will encounter in 2020, in fact, Xiabuxiabu’s weak growth has begun to take shape as early as 2016. According to the financial report, from 2016 to 2018, Xiabuxiabu’s net profit increased by 39.92%, 14.13% and 10%, respectively. In 2019, it was the first time that there was a negative growth, and net profit fell 37.7% year-on-year.

Executives have left one after another, performance has declined, and stock prices have fallen. The small hot pot once known for its cost-effectiveness can continue to boilTeng?

First, the more and more expensive small hot pot

“Two pot bottoms, one fresh vegetable platter, one portion of pork belly, three plates of meat, one portion of fried dough sticks, two cups of milk tea”, a total of 227 yuan. Zhang Lan told “Leopard Change” that this was the expense of eating with her friends at a Xiabuxiabu store in Tongzhou, Beijing.

In the past few years, the small fast-food hot pot with an average per capita of 40 or 50, which was popular in university towns, has now transformed into a “expensive” dinner hot pot. Many people are uncomfortable with this.

Time back to 1998, Xiabuxiabu, born in Beijing, relied on the new way of eating “small hot pot for one person” to meet the dining needs of many singles. During the “SARS” period in 2003, this sanitary eating method catered to people’s “green and safe” diet. As a result, Xiabuxiabu quickly opened up the northern market by virtue of its “cost-effective, convenient, and hygienic” characteristics.

As a loyal fan of Xiabu, Xiao Min told “Leopard Change” that he missed Xiabu Xiabu a few years ago: “One person eats a hot pot for 40 yuan and has a mouthful. For an invisible poor like me, eating Xiabu Xiabu is a small fortune in my life.”

However, today’s Xiabuxiabu not only increases the price of dishes, but also the hot pot dipping sauce from the past 2 yuan a piece of sesame sauce to a 7 yuan DIY dipping sauce. Xiao Sen sighed, Xiabuxiabu has abandoned their “loyal customers” with low spending power, and embraced those with stronger spending power instead.

This change occurred in 2016. The financial report shows that since 2016, the company’s performance has shown a weak trend. Although the turnover rate of small hot pots is high, after the substantial expansion, the cost increases, and the low customer unit price does not improve the performance of Xiabuxiabu very well.

So, Chairman He Guangqi proposed the “Xiabuxiabu Brand Upgrade Plan”, transforming from “fast food” to “light dinner”. The zhuantype is mainly reflected in three aspects. One is to expand Xiabuxiabu’s stores and upgrade the store to 2.0; the second is to create a mid-to-high-end hot pot brand Cocoa; and the third is to extend the industrial chain. , Enter the seasoning market.

In order to better cater to the consumption habits of “Generation Z”, Xiabuxiabu has put a lot of effort into store decoration, pursuing a sense of light luxury. At the same time, the number of U-shaped bar counters was reduced, and tables for two and four were added. Xiabuxiabu also uses milk tea as an incision, pickingTo attract young consumers in the form of “hot pot + tea rest”.

According to the financial report, as of September 2019, Xiabuxiabu has 955 restaurants in China, 700 of which have been upgraded to version 2.0.

But many people do not buy the upgraded Xiabuxiabu. Some netizens complained about the menu changes on social media. The Beef Beef set has slowly increased from 46 yuan to 56 yuan. Moreover, not long after the price increase, the Beef Beef set completely disappeared from the menu, replaced by the 65 RMB Australian Millet Beef Set.

The netizen wrote this sentence in a slightly sad tone: “Although the food is more refined, I don’t need it. I can eat ordinary beef.”

Second, the “growth engine” has become a “black swan”

In order to better upgrade to a “light meal”, Xiabuxiabu hatched Coucou hot pot in 2016, making up for its vacancy in the mid-to-high-end market.

The development of Coucou is also very rapid. By the end of 2020, there will be a total of 140 stores across the country. In just four years, an average of 11 days to open a new store.

In terms of store opening strategy, Coucou adopted a “hot pot + tea rest” compound catering form, introducing the milk tea consumption scene that young people love today. In 2018, Xu Yiwen, the marketing director of Coucou, said in an interview with the media that the tea portion has accounted for 20% of Coucou’s turnover.

At the same time, Coucuo’s store environment is in line with the “value economy” sought after by “Gen Z”. The free duck blood tofu and small gifts offered by the company have also increased consumer satisfaction. As many young people go to the store to punch in, Coucou gradually has the characteristics of “net celebrity”.

Wenwen told “Leopard Change” that she and her university roommates saw that Coucou was very hot on Douyin, so they went to experience it and felt very surprised, “The Dahongpao milk tea in Coucou is delicious, and the gift of brine Tofu and braised duck blood are also super delicious.”

The financial report shows that since its inception, Coucou’s revenue share in the group has continued to rise, from 3.19% in 2017 to 30.96% in 2020. Especially during the 2020 epidemic period, the revenue of Cobble together increased by more than 40% year-on-year, almost relying on its own efforts to rescue the group’s revenue.

Coucou’s good performance has won the favor of the capital market. Based on changes in Xiabuxiabu’s share price, weIt can be seen that since 2018, it has been relatively sluggish, and the overall trend is downward. However, since March 2020, there has been a reversal, and the overall trend has been rising rapidly. By February 2021, the increase will be close to 300%. According to analysis by industry insiders, the rise in stock prices is because the capital market is optimistic about making up for future growth.

For this reason, the resignation of Coucou CEO Zhang Zhenwei more than a month ago caused the capital market to worry about Coucou’s prospects, and Xiabuxiabu’s stock price continued to fall. Goldman Sachs stated in a report that Zhang Zhenwei has strong execution and investors need to pay attention to the risks associated with the CEO’s departure.

Zhang Zhenwei’s resignation directly affected the capital market’s view of Xiabuxiabu. Before Zhang Zhenwei left his post, Xiabuxiabu’s shareholders Hillhouse Capital and Morgan Tutanley staged a capital flight. The two institutions began to reduce Xiabuxiabu’s holdings on March 15.

Xiabuxiabu’s stock price plummeted, which may mean that capital is no longer optimistic about the “loss of Zhang Zhenwei”. As the growth engine of Xiabuxiabu, whether Couco can continue to bring dividends to it in the future still needs to draw a question mark.

3. The South Market that cannot be accessed

Capital is pursuing scale expansion.

Since its listing, Xiabuxiabu has mentioned accelerating the expansion of stores and actively expanding the market in the business outlook section of the annual report every year. In fact, this is not difficult to understand. The advantages of the hot pot track are no cooking, easy standards, wide range of ingredients, addictiveness, and strong social interaction. This business model can be simply summarized as store operation and store scale expansion.

The advantages of hot pot, such as easy standardization, high turnover rate, and wide layout scenarios, make it the easiest track to build a brand. However, the low barriers to entry have also led to crowded and fierce competition on the track.

Under such market conditions, to establish industry barriers, we must pay attention to the supply chain.

At the beginning of its expansion, Xiabuxiabu quickly occupied the northern market, which has a lot to do with its supply chain layout. Xiabuxiabu has a central kitchen in Beijing, with two RDC(Warehouse Regional Distribution Center) in Beijing and Shanghai, and 13 DCs at the same time Warehouse(Distribution Center). In terms of distribution, almost all are concentrated in the northern region.

However, in order to increase the brand’s market share and balance the layout, Xiabuxiabu mentioned in its 2020 financial report that in the next three years, East China and South China will be key areas for Xiabuxiabu’s expansion.

The existing northerly supply chain and plans to enter the southern market may cause trouble for future expansion.

Furthermore, the process of Xiabuxiabu’s “south” is not smooth. According to the financial report, Xiabuxiabu had 55 stores in Shanghai in 2013. By 2018, this number has become 52, a decrease of 3 stores. In terms of profitability, the 2018 financial report shows that Beijing’s profit rate is 26%, while in Shanghai it is only 9.8%.

Analyzed by industry insiders, Xiabuxiabu cannot open the southern market for two reasons. The first is that Xiabuxiabu’s main sesame sauce and Ximeng mutton are more northern, and the second is Xiabuxiabu. The bar table dining environment is not suitable for the eating habits of southerners.

If Xiabuxiabu wants to open the hot pot market in the south, you will definitely experience customer acceptance and integration. And if you want to solve the taste problem caused by the expansion in different places, it is obviously not enough to rely on better decoration and price increases.

The fierce competition in the hot pot industry has also cast a shadow over Xiabuxiabu’s expansion. As of the end of 2020, Tianyan Check data shows that there are more than 120,000 companies operating, surviving, and moving out in my country that include “hot pot” in their business scope. The outgoing Xiabuxiabu former CEO Zhao Yi mentioned in an interview: “This year this is an Internet celebrity, and it may close the shop next year.”

There is another situation that we have to pay attention to. Due to the epidemic, “eating hot pot at home” has become a new trend, and large supermarkets and fresh food e-commerce companies have also expanded their business to the hot pot field. Xiao Min said: “Now there is nothing for hot pot ingredients in supermarkets. It is more cost-effective to eat hot pot at home than to eat in the store.”

From the perspective of capital, it is understandable that Xiabuxiabu wants to upgrade its brand, but in the process of transformation, it is necessary to consider the psychological acceptance of consumers and its own business situation. Continuously providing consumers with good products and dining experience should be the original intention that all catering brands cannot forget.

(At the request of the interviewee, Zhang Lan, Xiao Min, and Wen Wen are aliases in the text)This article is from WeChat official account:Leopard change (ID: baobiannews), author: Liu Xia