Summary of the Core Content
This news article discusses the emergence of a group of “super franchisees” in the catering industry. These individuals are not ordinary small business owners; rather, they are powerful players who control prime locations in key shopping districts and operate dozens or even hundreds of stores. They make quick profits by betting on potential brands in advance (for example, investing in Ba Wang Cha Ji before it became popular) and exploiting information and time advantages. Their relationship with brand owners has also changed—they have shifted from being obedient executors to equal partners. However, as the industry enters a competitive red sea, with new brands failing rapidly and locations becoming highly contested, these super franchisees are now facing increased competition. Some are transitioning to community management, while others are exploring overseas expansion.
Detailed Analysis
1. What are Super Franchisees? – Not Just Small Family Businesses, but Powerful Players in the Catering Industry
In the past, most catering franchises were small family businesses that invested a few hundred thousand yuan to open a single store and relied on local demand for survival, following the brand’s instructions without question. Super franchisees, however, are different:
- Large Scale: They own dozens or even hundreds of stores; for instance, Lao He has opened over 300 stores in five years.
- Strong Resources: They monopolize prime locations in city centers (such as entrances to shopping malls and subway stations), making them essential partners for brands looking to expand quickly.
- High Professionalism: Unlike individual entrepreneurs, they have comprehensive research methods—Lao He, for example, will observe stores for several days to calculate customer traffic, costs, and profitability before making a move. They also have specialized teams for site selection, decoration, and inspections, which can reduce opening costs by up to 30%.
These super franchisees have emerged due to market forces: Brands need to quickly secure locations and outcompete competitors, and direct operations are too slow and costly. Therefore, they have become essential partners for brands looking to expand rapidly.
2. How Do They Make Money? – Betting on Trends to Profit Quickly
Super franchisees focus on making quick profits rather than long-term investment:
- Investing in Potential Brands: They enter the market before a brand becomes popular (e.g., investing in Ba Wang Cha Ji before its rise) and open multiple stores at low costs.
- Reaping the Biggest Profits: When a brand gains momentum, their stores can recoup their investment in as little as eight months and generate millions in profits. Once other investors follow suit, rent increases, competition intensifies, and profit margins shrink; they then move on to the next opportunity.
- Leveraging Information and Resources: The most valuable asset in this industry is internal knowledge (e.g., knowing which brands will succeed), but crucial factors are also location and a well-organized team. While other franchisees are still waiting for recruitment events, super franchisees have already secured the best locations. Their teams are highly efficient.
In short, they act like cheetahs—waiting patiently to strike when the right opportunity arises, then leaving before taking on additional risks.
3. The Change in Relationship with Brand Owners: From Obedient Executors to Equal Partners
Previously, brand owners had the final say; franchisees had no bargaining power. Now the situation has reversed:
- Brands Need Them: Brands need super franchisees to help them expand quickly and manage local operations.
- Super Franchisees Have More Power: They can influence site selection, pricing, decoration, and marketing strategies. Lao He argues, “The brand just needs to produce good products; we have the best locations and teams—why not listen to us?”
This new partnership is more balanced: Brands focus on product development and supply chains, while super franchisees handle operations. Both parties benefit, but the stronger their resources, the more influence they wield.
4. The Current Challenges in a Competitive Market
The industry is becoming increasingly competitive, posing challenges for super franchisees:
- Frequent New Brand Failures: In 2023, the number of chain brands increased from four to thirteen, with the franchising rate rising from 13% to 25%, especially in the tea and beverage sector. New brands often fail within 18 months (e.g., Pretty Rice and Jiangxi Xiao Chao).
- Intense Competition for Locations: High-quality locations are in high demand, with multiple franchisees competing for the same spots.
- Monopolization by Early Entrants: Early super franchisees are growing larger, squeezing out smaller competitors.
- Lower Investment Confidence: Super franchisees are hesitant to invest in new brands and prefer to maintain their profitable existing stores.
Some are adapting by transitioning to community management or expanding overseas (e.g., opening stores in the UK and Thailand). However, the future is uncertain, so they must remain active in the market to stay competitive.
Conclusion
Super franchisees are a result of the trend towards chain operations and capitalization in the catering industry. They have changed the industry’s rules by leveraging their resources and expertise for quick profits. However, with the current competitive landscape, they need to find new ways to thrive. If you want to invest in a catering franchise, you’ll need to determine whether you can access valuable internal information or possess the resources of a super franchisee—otherwise, you may end up as a victim of the competition.