It’s just selling milk tea, is it necessary to be open 24 hours a day?

More than 20 tea brands and 450 stores are trying the 24-hour operation model to adapt to the rise of the night economy and consumers' demand for late-night tea drinks, while seeking to break through the fierce market competition.

Introduction: More than 450 stores of more than 20 brands are trying to operate 24 hours a day.

At three o'clock in the morning, Wang Yan was complaining about the evil Party A while drinking tea and revising the draft.

As an audit "laborer", working overtime is a normal thing for Wang Yan. In order to comfort her tired body, Wang Yan would prepare various sweets and drinks at her workstation and in her bag. But this time, Wang Yan searched through her backpack and drawers and couldn't find any inventory.

At this time, it was already two o'clock in the morning. With the mentality of giving it a try, Wang Yan opened the food delivery app and was surprised to find that Heytea and Bawang Chaji near the company were still open. Without any hesitation, she quickly placed an order. This cup of hot tea became the motivation for her to complete her work.

Since that night, Wang Yan found that more and more tea brands began to adjust their business hours, starting with Heytea and Bawang Chaji, and later Guming and Cha Baidao. These stores are not only open until the early morning, some have even switched to 24 hours a day.

These changes have gradually lightened Wang Yan's backpack. She smiled and said, "If I want to drink something, I can just open the takeaway and order it. I don't have to worry about not having food in the middle of the night."

Wang Yan's feelings also reflect the changes in the entire industry. According to incomplete statistics from Yilan Business, there are currently at least 20 tea and coffee brands involved in 24-hour operations, with a total of more than 450 stores. According to current statistics, the brand with the largest number of stores is Cha Baidao, the only brand with more than 100 stores, followed by Bawang Chaji and Heytea.

From the perspective of site selection, most brands have placed their 24-hour stores in Changsha, Guangzhou, Shenzhen and other southern cities with more developed nighttime economies, and the vast majority of stores are located near commercial districts.

It is worth mentioning that most of the 24-hour stores of coffee chain brands are located in special locations. For example, all of Starbucks and Luckin Coffee’s stores open all day are at airports. The M stand Hongqiao Railway Station store will also open soon, and its business hours will also be 24 hours.

Of course, in addition to chain brands, there are also a large number of self-operated brands that extend their business hours to 24 hours. The question is, why are more and more tea and coffee brands becoming keen on 24-hour operation?

1. 24-hour business logic

In the view of Yilan Business, the following three reasons have led tea and coffee brands to start "competing in time".

First of all, consumers have a demand for late-night tea and coffee. From the perspective of location, the common feature of these stores is that the night economy is well developed, and nearly half of the brands focus on Guangzhou and Shenzhen, the two "cities that never sleep".

According to statistics from China UnionPay, the total transaction volume of nighttime consumption such as shopping, dining, and entertainment in Guangzhou and Shenzhen accounts for about 60% of the city's total daily consumption transaction volume, ranking among the top in the country.

The night economy has also stimulated consumers' enthusiasm for late-night snacks. According to a survey by Nandu Big Data, 48.2% of young people in Guangzhou eat between 22:00 and 24:00, nearly half of them. Even between 0:00 and 2:00 in the morning, 22% of customers still eat late-night snacks.

Of course, the concentration of tea consumed at night is not only related to the concentration of local nightlife, but also to the concentration of overtime work. For hard-working workers, drinking tea at night is not for entertainment, but for "extending life".

Meituan Takeaway data shows that from 4 p.m. to 5 a.m. the next day, the proportion of tea orders placed by workers in workplaces such as office buildings or industrial parks exceeds 30%, of which the dinner period (16:00-21:59) accounts for 20.5% and the night period (22:00-04:59) accounts for 9.8%.

Secondly, the current tea and coffee market is definitely not easy.

According to incomplete statistics from Yilan Business, in May this year, the number of existing stores of 25 new tea beverage chain brands was 114,839. In August, this number changed to 109,515. That is to say, in three months, the new tea beverage industry has seen a net decrease of more than 8,000 stores, while the number of store closures in the coffee industry in the past year has reached 43,039. The performance of both industries has been extremely "tragic."

Faced with the current situation of severe product homogeneity and fierce price wars, tea beverage brands are seeking breakthroughs. Based on the logic of reducing costs and increasing efficiency, extending the operating hours has become a good choice.

This means that merchants have more opportunities to engage with consumers, influence the shaping of users' consumption habits, facilitate more transactions, and expand the possibility of profit.

Practice has proven that 24-hour operation has brought substantial performance growth to businesses. The sales of Tianlala’s test store in Bengbu, Anhui Province, increased by nearly 230%; a store of Gu Ming in Ningbo can bring in 1,000-2,000 yuan in revenue at night, which can increase monthly revenue by 30,000-60,000 yuan.

Finally, food delivery platforms are also pushing merchants to extend their business hours and provide more traffic to merchants with longer business hours. After all, for the platform, every order completed will earn a certain commission income, and the riders will also get more delivery opportunities and income due to the increase in orders.

Therefore, food delivery platforms have also taken the initiative to become a catalyst for this trend. By optimizing algorithms, improving service efficiency and other means, they ensure that consumers can enjoy convenient tea service at any time, further stimulating consumption vitality in the night market.

It is worth noting that the increase in 24-hour stores is not a phenomenon that has only appeared this year. In the past few years, due to the soaring rent and the involution of the catering industry, many domestic brands have tried to launch a 24-hour business strategy under the pressure of survival, such as Haidilao, Yu Jian Xiaomian, Furongxiang, etc. However, due to unsatisfactory revenue results, most brands no longer insist on it.

Based on past experience, many catering peers are unable to maintain 24-hour operation, so is this a thankless business?

2. Is this a thankless business?

Yilan Business collected the operating conditions of many stores and used this as a basis to calculate the cost of extending business hours, as follows.

First, the biggest expense of a store is rent. The rent of a restaurant is fixed, and there is no difference in rent whether the brand operates 12 hours or 24 hours.

Because of this, 24-hour operation is equivalent to reducing rent in disguise, maximizing store benefits. Especially in high-rent areas, 24-hour operation is undoubtedly a good choice compared to the increase in manpower.

At present, 24-hour stores are mostly located in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, as well as new first-tier cities such as Chengdu and Changsha, where shop rents in these cities remain high.

The "Commercial Real Estate Rental Index in the First Half of 2024" report shows that in the first half of 2024, the average rental of shops in the top 100 commercial streets (100 streets) in key cities across the country was 24.37 yuan/square meter/day, and the average rental of shops in the top 100 shopping malls (100 malls) was 27.17 yuan/square meter/day.

Based on an area of ​​30 square meters, the monthly rent is about 20,000 yuan. If calculated based on 12 hours of business per day, the average hourly rent is 55.56 yuan. After extending to 24 hours, the hourly rent is only 27.78 yuan, which is a decrease of half.

Secondly, there is the equipment cost. The loss of equipment should be spread over the period of use. At present, the equipment costs of several leading tea brands such as Heytea, Chabaidao, Guming, and Bawangchaji range from 100,000 yuan to 160,000 yuan, with a median of 130,000 yuan. Depending on the degree of use and maintenance, the relevant machines can generally be used for 3-5 years.

If the maintenance is good, calculated based on 5 years, the average monthly cost is 2,166.67 yuan; calculated based on 3 years, the average monthly cost is 3,611.11 yuan, and the monthly depreciation cost increases by 1,444.44 yuan, with an average additional daily expenditure of 48.15 yuan.

Then, there are the water and electricity charges. A franchisee of Cha Baidao told Yilan Business that the business hours of his store are from 10 am to 12 pm, the water bill is 1,000-2,000 yuan per month, and the electricity consumption is 6,000-7,000 kWh.

The electricity fee in the area is one yuan per kilowatt-hour, so the electricity fee is 6,000-7,000 yuan. The daily material loss is 70-120 yuan. In summary, the monthly water and electricity expenses are 9,100-12,600 yuan.

The franchisee extended the store's business hours from March to May last year, switching to full-day operation, and the water and electricity bills increased by about 30%, about 2,100-2,700 yuan. As for material loss, the other party admitted that since brand inspections were more relaxed at night, material loss did not increase much.

The second factor is labor costs. Currently, most stores only have one employee on duty at night, and there are two main ways to determine where this employee comes from.

One is to reduce one employee during the day and implement a three-shift policy. A Gu Ming store clerk in Ningbo revealed that he has worked in the store for more than a year. The store officially opened all day this year, but the boss did not recruit additional workers, but arranged shifts according to the personal wishes of employees.

The shift schedule for its stores is 03:00-08:30 for the overnight shift; 8:30-18:30 for the day shift; and 18:30-03:00 for the night shift. The night shift is subsidized 400 yuan per month, while the overnight shift is subsidized 600 yuan per month. On average, employees can get less than 5 yuan extra per hour in wages.

It is normal for subsidies to be in the single digits, and in some stores, no matter which shift you work, you get the same salary and no subsidies. Yilan Business collected data from many stores such as Heytea, Bawang Chaji, and Chabaidao. The hourly subsidy amount ranges from 0 to 20 yuan, and most of the subsidies are around 5 yuan. Calculated based on eight hours, the monthly salary is 1,200 yuan higher than that of day shift employees.

The second is to maintain the number of daytime employees, recruit a night shift staff, and provide a certain night shift subsidy. In these cities with developed night economy, the monthly salary of tea shop staff is at least 6,000 yuan. Including the subsidy, the additional expenses are about 7,000-10,000 yuan.

Finally, there is the cost of food delivery. Yilan Business learned that at present, Meituan’s minimum commission for each food delivery order is 1.28 yuan, and the commission rate is about 6%. If the amount of the product after the discount is 20 yuan, then the platform will charge a commission of 1.28 yuan;

At the same time, merchants also need to pay the riders. Depending on the distance, the price per order is at least 3.7 yuan, and night delivery will charge an additional 1 yuan or more depending on the time.

In addition, if merchants participate in activities such as the Inflated Coupon Program, they must also bear at least half of the subsidy amount. For example, if a consumer uses an 8-yuan coupon, the merchant bears 4 yuan and the platform bears 4 yuan.

Almost all orders at night are fulfilled on food delivery platforms, and even many stores open 24 hours a day are essentially food delivery stores. If the price of an order is 20 yuan, and the consumer uses a 2 yuan coupon, for a 2 a.m. food delivery, the merchant needs to pay at least 6.98 yuan to the platform and the rider, with an actual collection rate of 65.1%, and nearly half of the money goes into the platform's pocket.

The reality is often even more severe. Many merchants told Yilan Business that due to the increase in night delivery fees and the platform's increased efforts to issue coupons, the actual collection rate at night is around 50%-60%, and sometimes even loses money.

From the above, we can see that opening a 24-hour tea and coffee shop will increase the monthly operating costs by at least 4,744.44 yuan, and the average daily cost is at least 158 ​​yuan.

So how much sales can be increased by opening the store for one night?

A franchisee of Cha Baidao in Guangzhou told Yilan Business that during the peak season, there are about 20 dine-in orders a night, with an average consumption of about 14 yuan per person and an income of 280 yuan;

We can receive about 30 takeout orders. Based on the starting delivery price of 20 yuan, the turnover for one night is 600 yuan. Multiplying by the actual collection rate of 60%, the income is about 360 yuan. Overall, the revenue for one night is about 640 yuan, which increases the revenue by nearly 20,000 yuan a month, and can earn nearly 15,000 yuan more in profit.

This performance can be considered "okay". An employee of Yichabaidao store in Pudong, Shanghai told Yilan Business that the store is located in a residential area and is only open for takeout at night, not for self-service. On average, there are 20 orders per day, and the actual revenue per night is 240 yuan, with a profit of less than 100 yuan.

Prince Chali in Nanning once opened the first 24-hour tea shop in the local area, but because there were too few customers at night, the store cancelled its 24-hour operation in the first half of 2023. Its current business hours are 9:20-01:00; some stores, after opening 24 hours a day, had a monthly revenue of nearly 490,000 yuan, but only made a profit of 29,000 yuan, and eventually closed down.

3. The right time, right place and right people are all essential

"A 24-hour store may seem like a great idea, but you'll realize how difficult it is to run it." During the interview, many front-line merchants remained on the sidelines regarding opening 24-hour stores.

First of all, not all stores are suitable for 24-hour operation.

A franchisee of Lemon Season revealed that only in urban areas with a thriving night economy and a high concentration of business districts can stores support nighttime customer traffic and order volume and achieve 24-hour value and benefits. If this standard is not met, extending business hours means losing money. It is understood that the profit of its store at Fisherman's Wharf in Changsha, Hunan Province increased by 20% year-on-year.

Secondly, nighttime sales are extremely unstable. Holidays, parties and large-scale events can drive the growth of nighttime business, but in daily operations, sales are still limited.

The most important thing is how to arrange the employees. In the current competitive environment, almost all stores will not choose to recruit additional people, but use existing employees to arrange shifts. The "cattle and horse fee" for one night can be as high as one or two hundred yuan, or as low as a few dozen yuan. Who will do it? Who is willing to work for a long time? On Xiaohongshu, many netizens have expressed their dissatisfaction with the exploitation of employees.

In Yilan Commercial’s view, 24-hour operation is not a simple extension of time, but an all-round test of various aspects such as products, site selection, customer base, and labor.

For brands, using all-day operations as a strategy to enhance brand image and customer stickiness, and selecting a small number of stores in a city for pilot testing, is a direction worth exploring.

But for first-line franchisees, they need to be more cautious. After all, whether or not you can get business in the middle of the night depends not on how hard you work, but more on "the right time, the right place, and the right people". Otherwise, you will work yourself to death, and the turnover may not even be as much as the labor cost. Why bother?

Meng Jiayi | Author Mu Yu | Editor Yilan Business | Produced by This article is written by the operator [Yilan Business], WeChat public account: [Yilan Business], original/authorized to be published in Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.