Summary of Key Points
Two food entrepreneurs, Hu Wenbin and Dong Xuan, have succeeded in the Japanese yakiniku (grilled chicken) industry by adopting a "buy-and-restyle" approach: they take over failing restaurants of the same genre, renovate them at a low cost (only one-third of what it would cost to open a new restaurant from scratch), and then revitalize them through precise market positioning (mid-to-high-end "Niao Yi" and more affordable "Da Ji"), cost control, and consistent product quality. The "Songjiang Niao Yi" store generates monthly revenues of 450,000-500,000 RMB with a net profit margin of 20%-25%, while the best-performing store earns a annual net profit of 2 million RMB. Their core strategy lies in operating with minimal capital and targeting specific market segments.
1. "Opening with a 70% Investment": Saving Big Money by Using Existing Stores
Why not start from scratch? Opening a new Japanese restaurant from scratch would cost over one million RMB, with a slow return on investment; however, renovating a failing store only costs around 300,000 RMB, and the investment can be recouped in as fast as three months. How do they achieve this?
- Only necessary renovations: They keep the existing Japanese restaurant equipment (such as the preparation counters) and add the grill and exhaust systems required for yakiniku; they simply change the storefront and pay the rent.
- Three principles for acquiring stores:
1. Only buy stores in the same genre: They focus on Japanese restaurants to avoid major renovations (for example, converting a Chinese restaurant into a Japanese one would be much more expensive).
2. Consider the surrounding environment: They only acquire stores where there is demand from nearby customers.
3. Evaluate past performance: If a store once had monthly sales of 1 million RMB but has since dropped to 100,000 RMB, it indicates a good location; they can still make a profit with sales of 500,000 RMB. If the peak sales were only 100,000 RMB, the location is likely not ideal.
- Pitfalls encountered: They once bought a store in a suburban area with low rent, but the business was sluggish due to a lack of customers during working hours (yakiniku is meant to be enjoyed with alcohol, so evening hours are crucial).
2. Choosing Yakiniku: The Right Niche Makes Half the Success
Why choose yakiniku?
- Long operating hours: It can be served from dinner to late-night snacks, offering flexibility and higher profits compared to regular meals.
- Stable costs: Chicken is cheaper than beef or seafood, resulting in smaller price fluctuations and more stable profit margins.
- Differentiated branding:
- Niao Yi: Prices range from 200-300 RMB per person, targeting business dinners; they locate in high-income areas of the suburbs (e.g., near companies like Giant Network and Feike) to avoid competition in urban areas.
- Da Ji: Prices range from 70-90 RMB per person, targeting young people and white-collar workers; the name is catchy and easy to remember, and they can choose locations with a large youth population.
3. Profit Comes from Efficiency, Not on Ingredients
How do they achieve a net profit margin of over 20%?
- Detailed cost management: With monthly revenues of 500,000 RMB, labor costs are controlled at 20%-25% (100,000-125,000 RMB), rent accounts for only 3% (15,000 RMB, a benefit of acquiring an existing store), and ingredients cost 30% (150,000 RMB). Other expenses such as marketing and staff accommodation account for 20%, leaving a net profit of around 100,000 RMB.
- Freshness is key: They use fresh chicken daily, preparing the skewers on-site, and sell out quickly. Although labor costs are higher, the good reputation and high repeat business justify this investment.
4. Adapting to Market Changes: Avoid Competing with Popular Brands
Recently, affordable Japanese restaurants like Sushi郎 have become popular. How does this affect them?
- Differentiated competition: Sushi郎 operates in shopping malls and closes at 10 PM; they are independent stores that can stay open until early morning, catering to customers who enjoy drinking and eating skewers.
- Following the trend with young people: They offer attractive and tasty dishes that are updated regularly, and promote their products through social media platforms like WeChat Moments and Douyin (where young people spend their time).
5. Key Advice for Others in the Industry
1. Operate with minimal capital: Avoid investing a large amount to open an expensive new restaurant; buying and renovating an existing store allows for lower risk and faster returns.
2. Involving employees as partners: Encourage outstanding managers and chefs to invest in the business, making it their own venture. The success of a restaurant depends on its staff.
The essence of their approach is to use minimal resources to meet the needs of specific customer groups and turn failing businesses into profitable operations. This strategy provides a practical reference for those considering entering the food industry.