Summary of Key Points
Li Qi, a super franchisee born in 1997 who owns over 60 Luckin stores across 14 provinces (covering nearly a hundred outlets in total), has recently shifted his investment focus from standardized large brands like Luckin to smaller, essential food categories such as rice and noodles. At the same time, he is expanding into local cuisines from northern regions (Jiangxi and Yunnan). He shared practical criteria for selecting brands, the logic behind investing in lower-tier markets, effective store management strategies, and valuable advice for other franchisees in the food industry. His core principles are: "low cost, quick return on investment, targeting essential consumer needs, and delegating authority with trust."
1. From Luckin to Small Food Businesses: Why the Change in Investment Strategy?
Li Qi used to invest in standardized brands like Luckin, which allowed for rapid expansion. However, he has now changed his approach due to the high initial investment requirements and slow return on investment. For example, opening a Luckin store requires an investment of 800,000 yuan, which is too risky given the current market conditions. He prefers smaller, lower-cost businesses with simpler operations—such as those dealing in essential commodities like rice, noodles, and flour, which people consume daily and have a higher tolerance for failure. In his words: "The key is to recover costs quickly; if a small brand can't make a profit within 1-1.5 years, it might disappear by the third year."
2. Four Criteria for Selecting Brands (Easy to Follow for Everyone)
When choosing a brand, Li Qi doesn't rely on advertising but focuses on four key factors:
- Verify Real Data: Don't just believe what the brand claims; talk to people who have actually opened stores and asked about their profits and operational challenges. Only those who have invested real money will give you honest information.
- Evaluate Standardization: Does the brand have the potential for widespread success (e.g., a standardized operating procedure like Luckin's that can be easily replicated)? If a brand doesn't even have a standard process for making a cup of tea, it's unlikely to succeed on a large scale.
- Calculate the Return Period: Large brands like Luckin and Mianchuangyoupin may take 2-3 years to turn a profit, but small brands need to do so within 1-1.5 years; otherwise, they could face sudden failure (e.g., many popular drink shops last year have closed this year).
- Assess Public Relations Capabilities: Negative media coverage can damage a brand's reputation. For example, Mo Yoghurt failed to respond promptly to negative reviews, while Ba Wang Cha Ji clarified the situation within 24 hours, minimizing the impact.
3. Opportunities in Northern Counties
Li Qi has started expanding his business into northern Chinese counties (such as Baoding and Xiongan) with his own Jiangxi and Yunnan cuisine restaurants. There are three main reasons for this:
- Business Concentration: Northern counties typically have only one mall and a few pedestrian streets, so all locals gather there, leading to higher customer loyalty. His Jiangxi restaurant is the first of its kind in Baoding, so no one else is competing with him.
- Lower Costs: Rent and labor are cheaper than in big cities, allowing for more sustainable operations even with smaller profits.
- Cuisine Adaptation: Traditional Jiangxi cuisine is too spicy for northern consumers, so Li Qi has adjusted the recipes by adding local ingredients (sweet or sweet-and-savory flavors) and offering different levels of spiciness. He also offers children's meals to encourage repeat business.
He says, "People in counties use social media; if you don't open a store first, others will copy your concept. By occupying the market early, you'll have a competitive advantage."
4. Managing People Requires Empathy
How does Li Qi manage nearly a hundred stores? His approach is practical and human-centered:
- Fair Compensation: Provide good salaries, but create a positive team atmosphere. Retaining employees depends on their sense of fulfillment and support (e.g., helping them prepare for civil service exams).
- Supervision and Delegation: Conduct unannounced inspections across regions to prevent regional managers from covering up mistakes by store owners. Give store owners significant autonomy in recruitment, operations, and financial management. Gen Z dislikes strict rules; delegating authority helps retain talent.
- Be a Leader, Not an Autocrat: Treat employees like friends and listen to their concerns. Trust is mutual; if you show concern for them, they will work harder.
5. Five Practical Tips for Franchisees
Here are Li Qi's final recommendations based on his experience:
1. Protect Your Money: Avoid investing in high-cost, new brands. Focus on low-cost options with quick returns.
2. Quality Over Quantity: It's better to open one successful store than ten that each make a small profit.
3. Consult Experienced Operators: Talk to people who have opened stores before making decisions and don't trust brand promises.
4. Trust Your Partners: If you invest in someone else's business, don't try to manage it directly; trust them and judge their reliability based on daily interactions.
5. Embrace Failure: Be bold in your ventures. Learn from mistakes and move forward without dwelling on the past.
This guide highlights the practical wisdom of a successful franchisee in an uncertain economic environment: stability is more important than expansion, essential consumer needs are more reliable than fleeting trends, and genuine care for employees leads to better results. For those considering entering the food franchise industry, following these principles can help avoid common pitfalls.