Branding self-operated products into sweet pastries?

By orchioo Mar2,2023

“When the catering chain brand develops to a certain scale, the branding of its own products will gradually become a new ‘way of making money’ for catering companies…”

 

Not long ago, I just reported to Wusu Beer to open a barbecue restaurant. I only sold my own beer in the store, and found that the back-end of the restaurant began to compete with the front-end business.

 

And when we look back at the front end of catering, we find that many chain catering companies have begun to knock on the door of new growth by relying on their “own” products, and even become their own “killer”.

 

For example, the first Chinese-style tavern, Hailunsi’s self-operated brand beer and alcoholic beverages accounted for 78% of the total revenue; Haidilao’s self-operated beer sales reached 432 million last year…

 

When chain catering companies develop to a certain scale, the branding of their own products will gradually become a trend, and in the future it will even become an independent new sub-brand of catering incubation, bringing new profits to catering companies.

 

1. A group of catering companies such as Hailunsi and Haidilao make a lot of money by relying on their own products
1. Helens’ own alcoholic drinks accounted for up to 78% of revenue, and drinks contributed 75% of revenue
Helen Si fought his way out of the 10-yuan tavern and became the first in the tavern.

 

Then why its tavern can achieve ultra-low prices and cost-effectiveness. The main reason for supporting the low prices is that the branding rate of Helens Liquor Drinks’ own products is extremely high.

 

This is fundamentally different from most individual or small and micro chain taverns that can only sell wine by price difference.

 

According to the prospectus, Hailunsi’s own alcoholic beverage products include Hailunsi draft beer, Hailunsi craft beer, Hailunsi fruit beer, Hailunsi milk beer, etc., and third-party products include Budweiser, Corona, 1664, Jager, etc.

 

From the perspective of income, in 2018, 2019, 2020, and 2021, the sales revenue of self-owned alcoholic beverages accounted for 68.4%, 64.2%, 69.8%, and 78% respectively.

 

In terms of gross profit margins, the gross profit margins of Helens’s own liquor brands in 2018, 2019 and 2020 were 71.4%, 75.3% and 78.4% respectively, significantly higher than the gross profit margins of third-party products of 39.2% and 78.4% respectively in the same period. 52.8%, 51.5%.

 

In addition to regular offline taverns, Helens’ online business is also booming: in Helens Liquor Tmall flagship store, the monthly sales volume of the most popular Helens milk beer reached 8,000 pieces, with grape, strawberry, white peach and other fruit flavors Beer is a close second.

 

And when the restaurant mainly focuses on “own products”, Helens’ beer is also updated very quickly.

 

Founder Xu Bingzhong once said, “We will give back to customers every dollar and every cent of the cost reduction brought about by the scale.”

 

From this point of view, it is not the third-party alcoholic beverages that really help Helens attract money, but its own brand alcoholic beverages.

 

2. The annual sales of Haidilao Beer reached 432 million yuan, which is expected to increase with the expansion of the number of stores
In addition to Helen’s becoming the first Chinese tavern with its “self-owned liquor”, the big brother in the hot pot industry is also a very typical case.

 

In 2017, Haidilao decided to enter the beer field. After half a year of research and development, it launched its own craft beer.

 

Since then, beer seems to be one of Haidilao’s most important sources of income.

 

In 2019, the Haidilao research report released by China Securities Investment Securities stated that the annual beer sales of more than 700 Haidilao stores may reach 432 million yuan.

 

In 2021, although affected by the epidemic, Haidilao’s overall revenue will be affected, but Haidilao’s own brand wines will account for 66.8% of the overall wine and beverage revenue, and Haidilao’s beer sales will exceed 250 million yuan.

 

In a media interview last year, Zhao Wei, head of the Haidilao beer project, introduced that with the continuous launch of its own brand beer products, the order rate of its own brand beer in Haidilao stores has surpassed that of other brands. “Since the beginning of summer, Haidilao’s beer sales have been booming. For three consecutive months from May to July, the average monthly sales of Haidilao’s over 1,000 stores across the country exceeded one million.”

 

Of course, Haidilao has not let go of delivery and e-commerce channels. As early as 2020, the German-style wheat and dark lager in Haidilao’s fine brewing store have entered e-commerce platforms such as Tmall and JD.com, and the sales volume is also very high. good.

 

2. The branding of “self-owned products” may become a “new opportunity” for chain catering enterprises
From the cases of chain catering companies such as Hailunsi and Haidilao, it is not difficult to see that perhaps “branding their own products” will become a new opportunity for catering companies in the future.

 

In fact, looking at the entire business world, there are not a few who succeed through their own brands.

 

Even in some large supermarkets in Europe, America and other countries, the proportion of private label products generally exceeds 30%, and even exceeds half in some countries.

 

For example, Sam’s Supermarket and Costco, which have already entered China, also have many large supermarkets in China, such as Hema.

 

Why do chain restaurant companies start to do “own product” branding business?

 

What are the benefits of the “mature and formed” self-owned product branding for catering companies?

1. A group of chain catering companies are exploring new growth channels – branding of “own products”
Staff Catering found that when chain catering companies reach a certain scale, it seems to be an “inevitable product” to make their own products into their own brands.

 

Why both Hailunsi and Haidilao have to develop their own beer, and the income and profits brought by their own beer are not low. Even small taverns like Helensi mainly earn and make profits from their own products. .

 

Because of self-owned products, you can not only control pricing and profits, but also decide your own pricing strategy and strategy to optimize production costs.

 

It is also possible to control product quality and even “new” speed, and can guide third-party manufacturers in terms of materials and composition, quality and production rate.

 

Because the number of stores reaches a certain scale, not only has the bargaining power of food materials and product procurement, but also directly removes the “middleman earning the price difference” after self-production. It is both a seller and a buyer, controlling profits, having new value, and room for growth. It will follow.

 

2. Improve profitability and barriers, incubate new brands in the future, or become the “killer” of catering companies
In addition to the reduction of its own costs, and the increase in the profit margin of its own catering companies.

 

Because of the branding of its own products, it also brings more growth to catering companies.

 

For example, the development of online retail, as well as the sale of its own products to other small catering companies, such as Haidilao’s snack crispy rice, there are many Sichuan noodle shops that purchase and use them in their waiting areas.

 

In addition to profitability, the branding of self-owned products has also become the “killer” of catering companies, increasing their competitive weight and raising barriers.

 

For example, only Haidilao can taste Haidilao’s various innovative flavors of beer, and only Helens can let you have such low-priced and delicious craft beer, resulting in a state of “no one else has what I have”.

 

If a chain catering brand does well enough after branding its own products, it may even develop into an independent retail brand in the future.

 

For example, when we interviewed Guo Dong, the general manager of Huda during the study tour, he gave us a piece of data, saying that Huda gave customers 100 tons of melon seeds for free during the queuing period. If Huda wants to create a melon seed brand “Huda Melon seeds, for personal use or sale to third parties, is also understandable.

Branding self-operated products into sweet pastries?

3. Summary of professional catering network:
Catering chains have developed to a certain scale and seem to be slowly copying the model of European and American supermarkets such as “Sam’s and Costco”.

 

They all use “branding of their own products” as a “stepping stone” to explore new ways to increase profitability.

 

Whether it is sauces, bases, desserts, snacks, alcoholic drinks, etc., on the one hand, it is to transform the well-made restaurant into its own brand; Haidilao sells Haidilao’s beer and snacks, develops and transforms them into its own brand and sells them to more channels.

 

When the passenger flow and scale are large enough, and the demand for products is large enough, you may wish to think about this new incremental road.

 

What do you think of the road of chain restaurant companies to “brand their own products”?

By orchioo

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