"Countdown to pick up money", this Spring Festival, the county town milk tea is making crazy money

First-tier brands are moving down to the lower-tier cities, and milk tea brands are also beginning to flourish in the vast county towns. The lower-tier market has huge potential, and the county market has become the frontline for major brands to accelerate their layout. The accompanying milk tea boom during the Spring Festival has once again shown the vigorous vitality of the lower-tier market and the booming economy of the county towns.

The boundary between the county town and Beijing, Shanghai and Guangzhou may not have really melted in a cup of latte art coffee, but it has been leveled by "Osmanthus Oolong Milk Tea".

When Mina, who works in Beijing, returned to the county town for the Spring Festival a few years ago, she would miss osmanthus jelly, bloody glutinous rice, taro paste and various freshly made fruit teas. There are no decent coffee shops or milk tea shops in her hometown, and the products of the few shops are full of flavors and are too sweet to be eaten.

But this year, when Mina returned to her hometown and opened the food delivery app, she found that Ba Wang Cha Ji and Shanghai Auntie were also available in the county town.

"My worry now is not that there is no milk tea and fruit tea in my hometown, but how can I try all the large chain brands, local small brands, and even independent coffee shops during the holidays," said Mina.

The speed of development of county towns makes many workers in big cities feel a sense of reverse folding.

In the past, the monotonous life in county towns bored young people. Now, first-tier brands such as Starbucks, Heytea, KFC, Watsons, etc. are expanding to lower-tier cities. Bawang Chaji, Guming, and regional special milk teas are also beginning to flourish in the vast county towns. The popularity of milk tea during the Spring Festival has once again shown the vigorous vitality of the lower-tier markets.

1. Every second counts, milk tea takeaway welcomes the hot "Spring Festival"

In the past, the Spring Festival period was a term exclusive to the film industry. However, this year, the tea industry also saw a surge in box office sales.

The sinking market represented by county towns is the absolute main battlefield. Mina, who returned home from Beijing for the Spring Festival, told Value Planet that there were not many delicious new tea brands in her hometown before. After staying at home for a long time during the Spring Festival, she would especially miss all kinds of cheese milk tea, hand-made lemon tea, brown sugar pearl milk tea and other products. But when she went home this year, she found on her mobile phone that "milk tea shops that can't be swiped on two or three screens" had opened in her hometown - whether it was a big brand that was popular all over the country or a local star's regional milk tea, almost no one closed during the Spring Festival.

"The speed of serving the cups is terrifying," Mina exclaimed. On the evening of the second day of the Chinese New Year, she walked into a new tea chain store in a shopping mall. Although the store was crowded, the estimated waiting time shown by the mini program was not long. "It takes less than a minute to serve a cup. There were more than a dozen cups ahead of me, but the actual waiting time was shorter than expected."

The milk tea business is so hot that your hands are smoking. The reason behind this is that various brands have realized the huge business opportunities hidden in the holidays early on, and they have prepared people and materials offline and stepped up marketing online, working at full capacity to prepare for this annual "money-making moment."

Meituan data shows that during the 2024 Spring Festival (February 2, the 23rd day of the lunar calendar, to February 17, the eighth day of the first lunar month), county markets across the country ushered in a peak in homecoming consumption. The volume of takeout orders from several leading chain milk tea brands, including Heytea, Nayuki, Guming, Mixue Bingcheng, and Chabaidao, increased by 65% ​​year-on-year (corresponding to the lunar calendar date), and the number of related merchants increased by 34% year-on-year.

Most consumers will choose to spend time with their families on New Year's Eve and the first day of the Lunar New Year, and arrange activities such as class reunions and shopping before New Year's Eve and after the first day of the Lunar New Year. Many new tea drink operators predict that there will be a large-scale explosion of orders in stores before New Year's Eve and after the first day of the Lunar New Year. Therefore, improving the speed of store orders, ensuring normal operations, and avoiding a decline in reputation due to long waiting times have become the focus of new tea drink preparations for the Spring Festival.

The rapidly expanding Bawang Cha Ji started to increase the speed of orders two months before the Spring Festival, and has been controlling every step of tea-making to the second. The production time of each cup of tea is controlled within 40 seconds, which is about one minute including the time for sealing the cup.

According to the Daily Economic News, from the cumulative sales data of the two major food delivery platforms, Mei and E, in a certain county town, Gu Ming and Cha Bai Dao received more than 3,000 orders in February, Ba Wang Cha Ji received more than 5,000 orders, Mixue Bingcheng’s five stores received more than 4,000 orders, Heytea received more than 2,000 orders, Xuncha and Shanghai Auntie received more than 1,500 orders, and COCO received more than 900 orders. This is the result of shutting down food delivery after the dine-in orders exploded.

This Spring Festival, franchisees have not been idle and have started recruiting staff early to prepare for the "Spring Festival period".

Luo Yixiuan, a franchisee born after 1995, runs a milk tea shop in a county in central Hubei. He told Value Planet that he predicted that more people would go home for the Spring Festival this year than last year, so he did online promotion in advance and distributed three times the coupons to the platform fan group.

Although Luo Yixuan prepared enough materials in advance and recruited two more short-term workers, he still felt overwhelmed when the peak of the Spring Festival holiday came. Normally, the daily output of cups in winter is about 200 cups, but during this Spring Festival holiday, from the Little New Year to the eighth day of the first lunar month, the daily output of takeout and dine-in cups doubled to 400-500 cups.

2. 9,000 new milk tea shops opened in one year, and the "Internet-based" business of county-level milk tea shops

The development speed of milk tea shops in county towns has been far ahead of others.

According to brand data from third-party agency GeoQ Data, from January to early December last year, more than 9,000 chain tea shops were opened in counties across the country, with an overall store opening rate of about 36%. On average, each county has 17.27 chain milk tea shops, which has overturned many people's stereotypes about the county tea market.

Number of chain milk tea shops in counties and provinces in 2023

Data source: GeoQ Data brand data

A cup of tea costs only 10-20 yuan, but because it is widely loved by young people, it can generate at least thousands of yuan in daily sales; and because milk tea is simple to make and highly standardized, it is easier to cultivate franchisees and practitioners, and stores can achieve rapid expansion and impact thousands of stores. This business model is something that many categories want to do but cannot do. It can be said that milk tea has realized the "ultimate dream" of the catering industry.

However, in the process of the continuous development of the new tea beverage industry, there are also bottlenecks: the simple production process and high degree of standardization make new tea beverage products extremely easy to copy, and various brands tend to be homogenized. With the increase in stores and serious product homogeneity, various new tea beverage brands are caught in fierce internal competition.

In order to escape from internal competition, many new tea brands choose to enter the sinking market with huge potential. The county market has also become the frontline position for major brands to accelerate their layout.

There is a huge potential consumer group in the county. For young people, new tea drinks are a social symbol. Starting around 2018, young people in first- and second-tier cities began to post new tea drinks on social media. Although young people in small and medium-sized cities could not buy these tea drinks and had to find ways to buy them on behalf of others or make their own "substitutes", the popularity of new tea drinks on social media has attracted the attention of young people in small and medium-sized cities, laying the foundation for the subsequent brand expansion.

Affordable brands such as Mixue Bingcheng and Tianlala have been working in the lower-tier markets for many years, attracting a group of young people in small and medium-sized cities with a price of around RMB 10. Mid- to high-end brands and regional specialty brands also have a certain appeal to young people in the lower-tier markets with their strong brand potential and rich taste experience.

Brands such as Shanghai Auntie, Cha Baidao, and Guming, which sell teas priced at RMB 10-20, have focused on expanding their stores into lower-tier cities. Heytea, which has always established a high-end image, has also gradually expanded its presence to lower-tier cities through price cuts and franchise opening in recent years.

Although the overall consumption level in the sinking market is not as high as that in big cities, new tea drinks still have considerable profit margins due to low rent and labor costs. In addition, with the rapid development of food delivery platforms in county towns, new tea drink stores are further freed from their dependence on high-rent stores and can run freely.

In May 2021, Luo Yixiuan joined a Hubei local specialty milk tea brand. The franchise fee and brand management fee totaled 150,000 yuan, the rent was 40,000 yuan per year, the decoration was 30,000 yuan, and he also needed to pay 24,000 yuan in water and electricity bills per year and 108,000 yuan in annual wages for three permanent employees. Excluding raw materials, the gross profit margin of the small shop can reach about 60%.

In the off-season, the average daily sales volume of tea drinks is about 200 cups, which can increase by 30% to 50% in the peak season. Takeaway orders account for 40% of total sales. After deducting platform commissions, delivery fees, online discounts and other fees, the actual revenue of takeaway orders is about 80%, but the advantage is that one store can deliver to the whole city, greatly increasing the reach of the store.

In Luo Yixiuan's view, the comprehensive cost generated by takeout is equivalent to hiring an extra clerk, but the difference is that the cost of takeout is only incurred when the takeout order is received, and it is not a fixed cost. Therefore, after deducting this part of the cost, he still has a gross profit of more than 30%, which can dilute the rent and franchise fees.

Considering the cost and benefit, Luo Yixuan did not choose the basement store of the shopping mall in the core section of the county town, but chose a corner of an alley 100 meters away from the shopping mall, which is facing the street on both sides. The rent is half of the basement store of the shopping mall. Although there are not as many offline people as in the shopping mall, many consumers who have ordered takeout will choose to repurchase when they pass by his store while shopping.

Luo Yixuan's business experience is not an isolated case. In county towns, the rent of shops in core business districts and ordinary community stores often differs by about 50%. Shops in core business districts can bring more offline consumers, but as online ordering becomes more and more popular, more than 40% of orders come from food delivery platforms. If you choose a community store, you can use the saved rent for online group purchase subsidies and operations, saving at least 20% of the cost.

According to GeoQ Data, 59% of chain milk tea shops in counties are located in communities, and another 18% are located in shopping malls. Hybrid stores and school stores account for 10% and 7% respectively.

According to industry analysts, the common characteristics of the rise of milk tea brands are that they attach importance to the simultaneous development of online and offline and become "heavy Internet users". This is also why many franchisees in the sinking market are mainly those born in the 1990s and 1995s, because they have a "stronger sense of the Internet" and are more sensitive to traffic and efficiency. Tea shops seem to be opened offline, but the main marketing battlefield is online. Internet marketing methods such as takeaways and local life live broadcasts play a key role in enabling brands to quickly gain a foothold in the market and usher in the consumption peak during the Spring Festival.

3. Behind a cup of milk tea, county consumption is "hot"

The craze for milk tea in county towns is a microcosm of the changes in county towns’ consumption power, consumption habits, and consumption formats.

In the past, county towns represented backward economy, low consumption capacity and boring life. Young people yearned to escape from county towns and settle down in prosperous cities. But now they find that life in county towns is more comfortable and beautiful.

Before returning to his hometown to open a milk tea shop, Luo Yixuan worked as a copywriter in a media company in Wuhan, earning about 6,000 yuan a month. However, the exhausting life in Wuhan also made him desperate. In this city with the largest number of college students in China, his company recruited many part-time college students who "can stay up late and work overtime." After the epidemic, work has become more and more "competitive", working overtime until 10 o'clock in the evening is commonplace, and the subway going home is also crowded with young people getting off work.

During the 2021 Spring Festival, Luo Yixuan discovered that a fried chicken shop opened by his elementary school classmate in the county town not only recovered its costs in more than a year, but also made a profit of 50,000 yuan. He was instantly inspired to see his classmates go fishing in the morning and open a shop in the afternoon, and still be able to take care of their parents and maintain their quality of life. After research, consultation, and investigation, Luo Yixuan finally decided to return to the county town to open a milk tea shop.

During this Spring Festival, more young people like Luo Yixiuan realized that life in their hometown county is "really great."

A video about "going home for the Chinese New Year and laughing at my own poverty" went viral online. The upvote "我就是星月" described his experience of returning from Beijing to a county town in Jiangxi for the Chinese New Year: after returning to his hometown, he found that his classmates and friends in the county town lived in houses that their families had fully paid for, drove luxury cars, and spent high prices to buy fresh baked goods and Boston lobsters from Sam's Club and Hema from the provincial capital, while he only dared to buy discounted products from Hema.

She sighed, "Before I moved to Beijing, I thought that people who went back to their hometowns in the county town for the Spring Festival were city dwellers returning to their villages. But after I came back, I found that they were country people going to the city, like Granny Liu returning to the Grand View Garden. I was the poorest and most unsophisticated one..."

This video resonated with a large number of netizens. Many urban workers who returned to third-tier and lower cities or even county towns found that the development of small cities completely overturned their cognition. The hot topic "county town economy" also caused a lot of discussion.

Most young people living in county towns have stable jobs, do not need to bear high rents or mortgage pressure, and have relatively low daily expenses. What they lack is the same rich entertainment life as young people in big cities, and they often feel that they have "money but nowhere to spend it."

But in recent years, more and more chain brands and consumer formats have filled the consumption needs of third-tier cities and counties, driving the continuous iteration of consumption trends and allowing young people in small cities to seamlessly enjoy the daily life of big cities.

Milk tea and coffee, which are booming in takeout, have become the common consumption denominator of young people in Beijing, Shanghai, Guangzhou and the sinking market outside the Fifth Ring Road. A small cup of milk tea takeout fills the consumption gap between young people in some big cities and young people in small towns, and has also become a true reflection of the consumption capacity and service level of county towns.

*This article is based on public information and is only for information exchange purposes and does not constitute any investment advice

Author: Danmu, Editor: Maji

Source: ValuePlanet (ID: ValuePlanet)