Volume 3: Taking Roots 2016 Chapter 598 Starting Over
After the last long talk with Zhou Dongsheng, Nie Yunchen was completely determined to create a new brand. Faced with the widespread pirated imperial tea, it was better to suffer a short pain than a long one.
If you want to practice this skill, you must castrate yourself first!
Nie Yunchen opened his first milk tea shop in mid-2012 and has been running it for three and a half years.
The number of milk tea shops with the "RoyalTea" sign in Nie Yunchen's hand increased from one to fifty, from his hometown Jiangcheng all the way to Pengcheng.
All stores were opened one by one by Nie Yunchen steadily and steadily, and all of them are directly operated stores without exception. This is also why Nie Yunchen refused to adopt the franchise model in order to ensure quality.
It is also because of this that although the number of stores owned by Nie Yunchen has increased to 50 stores in three and a half years, the steady development pace has not slowed down at all.
But compared with the pirated Imperial Tea that has sprung up all over the country, it is just a drop in the bucket. According to conservative estimates, the number of pirated stores is at least ten times its size!
That is to say, among the Royal Tea brands that are everywhere in the market, not even one out of ten stores may be genuine. Although the direct sales model ensures quality, its slow expansion is also its obvious disadvantage.
After returning to Pengcheng from Shanghai, Nie Yunchen convened a meeting of his company's entrepreneurial team and set the tone for his plan to reshape the brand.
As a brand that is still a startup company, Nie Yunchen has the final say in the company and he has absolute control.
Meetings are for brainstorming, not for informing others.
Under Nie Yunchen's insistence, the purpose of the meeting was naturally focused on a series of issues regarding the brand name and subsequent name changes.
One of the great advantages of a one-man show is that the entire company has only one will, and it is easy for everyone to work together in the same direction, so the new brand name was naturally decided quickly.
Changed its name from "royaltea" to "HEEKCAA"!
At first glance, it seems that the substance remains the same in a new name, but judging from the highly consistent naming preference, it is obvious that this is entirely due to Nie Yunchen's personal preference, and he just likes it this way.
In addition to looking more tonal, Nie Yunchen also has a clever idea in pronunciation, that is, "HEEKCAA" sounds like the pronunciation of "Hey Tea" in Cantonese.
After establishing the route of restarting with a new brand, the next major task is naturally to carry out drastic brand replacement.
Just to give all 50 directly-operated stores a facelift is a huge project, but as long as the painful period is overcome, everything will naturally be renewed.
At the same time, Nie Yunchen finally waited for Lu Sifang.
Strictly speaking, this investment in Heytea is Dongsheng Investment's first investment in the real economy, and all of its previous investments were in the virtual economy.
The difference between the two is also very obvious. Compared with the high risk and high return of Internet companies, the risk of physical enterprises is undoubtedly much lower.
In fact, the solid business model is undoubtedly steady and has considerable output and revenue. The 50 stores in Nie Yunchen's hands alone are already a considerable asset.
Even though these 50 stores are merely rented, the cash flow generated by the operation of these 50 stores is real, which is undoubtedly a major feature of the catering industry.
That is, the cash flow is huge. The number of tea bags used in these 50 stores alone last year exceeded 50 million, not to mention the cash flow on the books.
The small goal of annual turnover exceeding 100 million yuan has naturally been achieved long ago. The next goal is naturally to achieve a net profit of over 100 million yuan after deducting various operating costs. This goal is still somewhat challenging at the moment.
Especially when choosing the path of reshaping the brand, the final market feedback is still an unknown.
However, since the long talk with Zhou Dongsheng, Nie Yunchen is now full of confidence in this path, and with capital support, Nie Yunchen is also full of enthusiasm for drastic reforms.
Therefore, at this critical time point, Nie Yunchen naturally attaches great importance to this financing from Dongsheng Investment.
For Nie Yunchen, who has a huge cash flow, financing can certainly obtain a large amount of funds for development, but what Nie Yunchen cares most about is still the huge value of Zhou Dongsheng.
In particular, concepts such as "Internet celebrity economy" and "social currency" mentioned by Zhou Dongsheng gave Nie Yunchen a lot of inspiration and gave him a deeper understanding of the path of shaping brand value.
Therefore, under Nie Yunchen's strong desire for financing, the deal was naturally negotiated very smoothly. After a professional evaluation, Lu Sifang's team gave a "taking advantage of the fire" valuation.
"I personally think that a valuation of 200 million is more reasonable. The average valuation of a single store can reach more than 4 million, which is already outstanding among the new tea shops on the market."
"Of course, the biggest reason for this valuation is the brand value. If the Royal Tea brand belongs entirely to Mr. Nie personally, the valuation could even double!"
"At this critical moment of reshaping the brand value, Dongsheng Investment can not only provide Mr. Nie with a considerable amount of cash for development, but we can also contribute to brand building..."
"I believe that Mr. Nie should be aware of this."
Lu Sifang said with great planning.
It has to be said that this valuation is still somewhat lower than Nie Yunchen's psychological price. After all, considering the current scale of his company, this valuation is not high. Nie Yunchen even feels that it is greatly underestimated.
But the brand pain point that Lu Sifang grasped is indeed Nie Yunchen’s biggest shortcoming at present.
After all, compared to the flourishing Imperial Tea, the brand recognition value of consumers is undoubtedly higher, and Heytea, which has started from scratch, still has a long way to go.
At least these two words are still blank in the market. It remains to be seen whether consumers will accept them and whether the current good operation can continue.
After all, for any brand, changing its name and logo is undoubtedly a matter of life and death...
Nie Yunchen couldn't help but think of Zhou Dongsheng's brilliant smile, the series of deeds that made him admire him, and the unreserved teaching he gave to him...
For some unknown reason, Nie Yunchen took a deep breath and nodded.
"Although I think this valuation is greatly underestimated, I agree with it because of my trust in Mr. Zhou. I think it is a blessing for me to be able to cooperate with such an outstanding person as Mr. Zhou..."
Nie Yunchen said this very proudly, and Lu Sifang couldn't help but reveal a shrewd smile.
They are indeed young people, so young and naive that they actually play the emotional card in the capital market... How much is that worth?
If he doesn't even offer to pay the price, then isn't that taking advantage of the situation? Wouldn't that be unfair to yourself?
At the same time, Lu Sifang couldn't help but sigh. He didn't expect that his boss's personal charm has become so great.
After the two parties reached a consensus, signing the contract and other matters became a natural outcome.
Dongsheng Investment won the A round of financing for Pengcheng Meixixi Catering Management Company with 50 million yuan. The valuation after financing was 250 million yuan. Dongsheng Investment acquired 20% of the shares and will not announce it to the public for the time being.
Nie Yunchen felt that at least they should wait until Heytea’s brand was reshaped and on the right track before announcing the news to the public, so as to maximize benefits.
After all, given Zhou Dongsheng's current personal reputation, being able to get his investment is itself equivalent to an advertisement.
Maybe this is the so-called celebrity effect.
After completing the first round of financing, the now wealthy Dongsheng Investment naturally transferred 50 million yuan into the company's public account without delay.
With this abundant cash in hand, Nie Yunchen naturally had no worries anymore. He waved his hand and started the grand journey of brand reconstruction.
However, it is obviously unrealistic to replace the signs of all 50 stores in one go. After all, such a large project would require manpower and material resources...
Just closing down for renovations would be an unpredictable loss, which would undoubtedly be a fatal blow to a restaurant business that is highly dependent on cash flow.
The loss caused by one day of suspension of business often requires several days of profit to make up.
Therefore, the project of replacing the signboard cannot be rushed and needs to be carried out step by step.
Since it is a step-by-step process, which store should we start with?
If we want to minimize losses, shouldn’t we start upgrading and renovating the stores with the lowest sales?
This can ensure profits as much as possible and minimize losses on the books...
This profit-making mentality is obviously reasonable, but it is a bit putting the cart before the horse. After all, if the purpose is to ensure profits, then if you don't do such thankless tasks, wouldn't it be a sure win?
From the perspective of reshaping brand value, what is a good way to make a new brand quickly remembered by consumers and become famous overnight?
In bustling commercial districts, busy pedestrian streets and other core commercial areas with huge traffic flow, it is a good idea to directly airdrop. This way of acquiring customers is simple and crude, but effective.
Of course, this kind of customer acquisition cost is very high, but it is a real truth that you get what you pay for, and the effect is absolutely immediate.
Therefore, Nie Yunchen decisively chose to start with the Coast City Shopping Center store, which ranked high among all the stores in Pengcheng. This move was made at no cost.
Since the most expensive option was chosen, Nie Yunchen tried his best to make the adjustments to the decoration plan as perfect as possible.
On this point, Nie Yunchen also fully absorbed Zhou Dongsheng's suggestions and put a lot of effort into aesthetics.
In Nie Yunchen's understanding, the so-called "Internet celebrity economy" and "social currency" are just to make consumers excited, and then can't wait to take photos and share them, so that they can be spread online?
Aesthetics is undoubtedly one of Nie Yunchen's strengths. After all, the original design of "Royal Tea" was done by him personally. Whether it is the iconic "crown" or the store style dominated by black, they are all from his hand.
In this busy commercial area, this store already had quite a few customers, so its sudden closure for renovation naturally attracted a lot of attention.
Many loyal consumers' first reaction was, "Did this store go bankrupt?" That shouldn't be the case. Business was so good every day, how could it suddenly go bankrupt?
Before consumers could feel regret, the "brand upgrade" notice posted in the store interrupted their regret.
"For better development of the brand, we will carry out a comprehensive upgrade and transformation of the brand. From now on, the original Royaltea will be officially renamed HE EKCAA Xicha. Please stay tuned..."
"Why change the name for no reason? Will the milk tea taste better if the name is changed?"
"Well, it seems that there will be no milk tea to drink these days. I can only go to other places to drink."
"But I still think his is the best, even though it's a bit expensive..."
Such remarks were spread by this group of consumers and soon spread throughout the area, attracting the attention and curiosity of a considerable number of people.
They would like to see what earth-shaking changes will take place in HEYTEA after the upgrade and transformation?
After all, isn't it just a cup of milk tea? Why is there a brand upgrade? It sounds fresh...
But a mere cup of milk tea, even if it's a little more expensive, is affordable. I can go and join in the fun when the store reopens.
As the first HEYTEA store, it is of great significance to Nie Yunchen, just as he opened the first HEYTEA store in his hometown Jiangcheng in mid-2012.
At that time, the young and frivolous him once boasted to his employees as if jokingly saying, "This will be the place where a brand will be born."
What he got was, of course, some disapproving snickers from the employees.
Unexpectedly, he expanded from one store to 50 stores step by step. In a sense, the "Royal Tea" brand is already quite successful.
It’s just a pity that, just like “Gong Cha”, this success has little to do with the founder.
Now, in order to avoid repeating the same mistake, all trademark registration and other matters of the Heytea brand have been resolved at great expense.
Looking at the newly renovated first HEYTEA store, Nie Yunchen once again pointed at the store with great pride and made a solemn announcement to his subordinates.
“This will be the place where a brand will be born. HEYTEA is our future. Let’s start over together!”
This time, Nie Yunchen did not receive ridicule, but applause from his subordinates. "Good! Well said, President Nie!"
As for how much truth there is in it, that is naturally unknown.
"We will officially open tomorrow!" Nie Yunchen said with a smile.
Tomorrow, HEYTEA will officially set sail from this first store.
As for such an important matter, Nie Yunchen naturally informed Zhou Dongsheng as soon as possible. What he didn't expect was that Zhou Dongsheng immediately replied with a message.
"Got it, I'll definitely be there! By the way, I'll give you a small gift and wish you a prosperous opening!"
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