From financing tens of millions to leaving the market sadly, what enlightenment does this prefabricated dish brand bring?

By orchioo Mar1,2023

Cooking bag is a brand of prepared dishes established in June 2020. It is positioned as frozen instant food, and its products are mainly rice and noodles. Starting from the second half of 2021, cooking bags have completed multiple rounds of financing at the tens of millions level, and have entered more than 2,000 offline sales outlets including Family Mart, Pangdonglai, Shouhang Supermarket, and China Resources Vanguard. At the same time, the brand has maintained a high sales growth rate, with monthly sales exceeding one million yuan in a short period of time.


But after quickly emerging, cooking bags quietly disappeared from the public eye. It is understood that its normal operations had ceased as early as October last year, and it was only a year since its first financing.

The question left by the cooking bag is, with financial support and good sales data, why did the brand still fail in a short period of time? Does this mean that there are obstacles in the entire prefabricated vegetable track that companies cannot overcome? Have other businesses followed the same path?


To this end, “Retail with the Third Eye” interviewed Zhang Qi, who had participated in the cooking bag project. We hope to understand the development of cooking bags from his perspective. In the face of the above problems, Zhang Qi said that the failure of cooking bags is related to the difficulty in opening up the market for pre-made vegetables and achieving profitability. However, the brand itself also has mistakes in strategic choices, and the problem of excessive money burning in the early stage cannot negate the entire track.


The following is Zhang Qi’s self-narration, and the content is edited by “Retail with the Third Eye”.


Cooking bags were originally a brand of Zaihui Network, which was divested and reorganized in August 2021. Since I have been paying attention to the prefabricated vegetable track, I joined this project during the adjustment of the operation team after the reorganization.


Before the reorganization, the overall development of cooking bags was tepid. After the reorganization, the first round of financing was quickly completed, and then the brand entered a stage of rapid development in accordance with the requirements of holding high and fighting high and quickly starting volume. During that period, cooking bags maintained a growth rate of 100% month-on-month, and the monthly sales scale reached the million level after two or three months. While focusing on online channels such as Tmall and Douyin, we have also expanded our channels to offline channels and entered a number of chain retail companies.


But when everyone was about to do a big job, the company had a shortage of funds, and it even developed to the point of needing to cut employees’ salaries. What is even more unacceptable is that when the focus should be on channel expansion, the company maintains an expensive R&D team, wants to make breakthroughs in product standards, and at the same time spends huge sums of money on celebrity endorsements. It gives the impression that employees are bearing the consequences of the company’s misuse of money. After that, the sales team started to leave in large numbers, and I chose to leave the company as well.


1. The product itself is “no problem”
I always think that there is no big problem with the cooking bag product itself.


On the one hand, frozen instant food has market space. Cooking bags are mainly for one person, and consumers will choose this kind of product as a meal solution for supper or other emergency situations. The reason is that such products can be eaten after only a few minutes of heating in a microwave oven, which can meet consumers’ needs for convenience. At the same time, compared with normal-temperature instant food such as instant noodles and self-heating hot pot, products processed by freezing technology taste better, and the longer shelf life also facilitates consumers to “stock up”.


In terms of commodity categories, staple foods such as rice and noodles can be accepted by most consumers, and have the opportunity to be made into a large single product of quick-frozen dumplings. In fact, the sales volume of Japanese fried rice is very large. Therefore, although it was not certain that this matter could be done at the time, I still think this is a direction worth trying.


On the other hand, cooking bag products have their own advantages. They do not simply follow the low-price route, but take into account both price and taste, and consumers have a high acceptance of the product.


After the new team took over, the cooking bag chose to cooperate with Nichiren factory to improve the product. It can be said that the taste of other similar products on the market at that time was not as good as that of cooking bags. At the same time, the company has simplified the original product categories and reduced the unit price from 30 yuan to 15-18 yuan. This is a price most consumers can accept. We even considered that street fried rice was lower than this price, so we shifted our focus from fried rice to pasta.


Because of this, the cooking bag has good sales data in a short period of time. Starting from September 2021, the brand’s GMV has maintained a 100% month-on-month growth rate, and its monthly sales have reached millions of yuan in two or three months. We have accumulated a number of repeat customers, and I have seen consumers who have purchased products worth more than 10,000 yuan in half a year. There are also consumers who spend more than 100 yuan each time and buy 3 times a month.


Online, the unit price of cooking bags is 120 yuan, and the gross profit margin is about 54%, and the cost can be evened out by two points. Offline, we have entered the Family Mart convenience store, Pangdonglai Supermarket, Shouhang Supermarket, etc. Although no further marketing promotion has been done, as far as I know, sales at Family Mart convenience stores are not bad.


At the end of 2021, cooking bags will also cooperate with Internet cafes and script killing stores. The method is to place freezers in such stores and deliver goods regularly. Sometimes a store can sell thousands of dollars a week, which is better than selling in convenience stores. However, after the Spring Festival, the outbreak of the epidemic in Shanghai put the matter on hold. The company began to focus on group buying, but did not make money in the process.


Today, people still ask me where I can buy cooking bag products, which makes me think that if the brand continues to do so, there may be hope for opening up the situation. But at that time, we really lacked a more professional trading team.


2. The money is not spent in the right place
Looking back now, the biggest problem with the cooking bag project is that the money was burned too quickly in the early stage, and the money was not spent on the really critical places.


Starting from the second half of 2021, consumption and investment have cooled down. When financing becomes difficult, it is no longer feasible to quickly open up the market by burning a lot of money.


Under such circumstances, it is more reasonable for new brands to expand the market with the goal of making profits, and to focus on catering and offline channels first. Online channels, do a small amount of investment and rely more on the natural growth of sales. But cooking bags are still burning a lot of money, and the money spent on Douyin may have exceeded one million yuan per month. It is also because of this that the cooking bag has raised three rounds of financing, and it has only supported the brand for one year.


At that time, everyone was not aware of the problem, and expanded the market with the mentality of raising hundreds of millions. However, this situation did not last long, and the company’s financing money was quickly spent. After a few months, it will be much more difficult to approve various expenses. After the Spring Festival, the company proposed to reduce the salary of employees, and some people began to leave.


More importantly, when cash is tight, the company’s money is not being spent wisely.


For prepared dishes, the three key elements that consumers value are delicious, convenient and cheap. The cooking bag had already achieved these points at that time. When the product has advantages, the company’s energy should be spent on how to find channels to sell the product quickly. But at that time, cooking bags began to fall into the ultimate pursuit of product quality. The company has established a professional R&D team, and cooperates with the research institute to formulate industry standards.


It is undeniable that there is nothing wrong with making better products. But for entrepreneurial teams, survival is more important. In fact, after the product quality and taste are guaranteed, it is difficult for consumers to perceive the more refined production process. But at that time, the expenses of the research and development team of cooking bags had exceeded those of the two sales teams of Douyin and Tmall.

what enlightenment does this prefabricated dish brand bring?

During this process, the R&D team is constantly putting forward requirements for R&D, quality control and other aspects of the factory. Therefore, the cost of cooking bags at the factory side has also increased. Therefore, in the later period, when the product weight was reduced, the cost per serving increased from 6 yuan to 7 yuan.


Cooking bags also ignore that market verification should be done first, and then product polishing. In the past, we struggled for a long time on how to make fried rice delicious, but the final result is that everyone found that fried rice is a “false proposition” in the domestic market, and consumers are unwilling to pay for it.


In addition, the company also spends money on celebrity endorsements and spends millions on redesigning the LOGO. But in the absence of channels, marketing promotion has no substantial effect. It may be better to use this part of the money to go to Douyin to find a talent to bring the goods.


When the funds are sufficient, these things are not too big a problem, and they will not affect the normal operation of the company. But once funds are tight and employees are required to pay for the company’s indiscriminate burning of money, the problem will become very serious. The sales team of cooking bags was all sold out at one time, and this is also doomed to make it difficult for the brand to go far.


3. Whose business is prefabricated food in the end?
Although the failure of cooking bags is directly related to the company’s operating capabilities, the predicament faced by the entire prefabricated vegetable track is also a reason that cannot be ignored. Even if you change a team, it is quite difficult to build this brand. The reason is that the development of prefabricated dishes is currently limited by channels, factories and consumption habits.


From the perspective of channels, online, cold chain logistics costs and promotion costs have greatly increased transaction costs, and it is difficult to achieve profitability without a 60% gross profit on products. But compared with takeaway and catering products, the price of pre-made dishes should not be too high. It is precisely because of this account that Cooking Bag has long decided to focus on offline operations.


But there are also problems with offline sales of prepared dishes. At present, consumers’ acceptance of pre-made dishes is very low. If you want consumers to buy such products, you need a lot of time to educate users. The sales of pre-made dishes are not high, and it is difficult for distributors and retailers to make money from the cold chain plus promotional expenses. Enterprises are unwilling to try to sell such products, and cannot complete the cultivation of consumption habits, which leads to the development of prefabricated dishes into an “infinite loop”.


On the factory side, the brand side does not have much say. The factory has added a lot of price to us, basically it is to talk about a cooperation to increase the price once. Many consumers complain that the serving size of cooking bags is too small, but this is also an unsolvable problem. Considering the cost of the factory, if the product volume increases, the price will need to increase.


As far as products are concerned, pre-made dishes are more of a supplement to three meals, and the frequency of consumption is low. At the same time, the need to use refrigerators and microwave ovens for frozen goods also limits some consumption scenarios.


Comprehensive consideration, I think there are currently two types of enterprises that are suitable for making prefabricated dishes.


One is an enterprise with a factory. The factory side generally gets 20% – 30% of the profit, plus this part of the profit is basically not a big problem in making a profit on the prefabricated dishes. At the same time, it is also more flexible in product R&D and production, and has advantages that other companies do not have. At present, many factories have begun to change their concepts and build their own brands.


Second, it is a brand owner with a certain scale in frozen commodity sales. This type of merchant has a complete product sales channel and distribution system, which can save the cost of channel expansion and logistics distribution of new products. Brands such as Sanquan and Yasui have already begun to set foot in prepared dishes. Sanquan’s small crispy meat has annual sales of tens of millions.


For more enterprises, the entry of prefabricated dishes still needs careful consideration. After all, at present, there are only two or three products of Zhengda that sell well fried rice, and the only pre-made dishes that can be accepted by most consumers are pickled fish. (At the request of the interviewee, the names used in this article are pseudonyms.)

By orchioo

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