Chinese people seem to never be satisfied with "eating". In recent years, with the rise of emerging consumer groups, the " lazy economy " has developed rapidly, which has also made catering and food the hottest track in recent years. Against this background, Guoquan, which originated in Zhengzhou, has developed rapidly in the five years since its establishment and has now grown to more than 9,000 stores.
How can Guoquan achieve growth against the trend in a cold economic environment? What is the future development plan? On July 13, at the China (Zhengzhou) New Consumer Brand Industry Summit, Yang Mingchao, founder of Guoquan gave a public speech.
Text/Top News • Henan Business Daily reporter Bai Liuyang intern Jia Xinyu
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Excerpts from the speech:
Why were both Guoquan and Mixue Ice City born in Zhengzhou
Yang Mingchao believes that in recent years, the consumption structure has undergone extraordinary changes. big change.
On the supply chain side, there have been many innovation opportunities in recent years. So we have seen that since 2015, an endless stream of new brands have emerged.
Let’s look at the changes in consumption. Japanese writer Miura Shun divides Japanese society into four stages since 1912. The first consumption era is the consumption enjoyed by a small number of middle classes; the second consumption era is riding the spring breeze of rapid economic development and family-centered consumption is overwhelming. ; In the third era, the trend of personalization of consumption is booming; in the fourth era of consumption, it is a society that values "sharing".
(for comparison), China is actually (quite) in the third consumption stage. At this stage, the demand for "cost-effectiveness" is amplified, and the innovation opportunities for "channels" are amplified, because reducing circulation costs is in line with changes in the purchasing power of the consumer population. At this stage, Japan saw the emergence of Muji and Uniqlo , including large-scale outbreaks of convenience stores and drug store chains.
This is why Guoquan and Mixue Ice City were born in Zhengzhou. Zhengzhou used to be a second-tier city, and people focused on cost-effectiveness. In 2003, we were in a factory workshop west of the Jinshui District Government. The workshop I rented was on the east side, and Mixue rented on the west side. We were two brands that appeared in the same factory building. Now, 20 years have passed. It's past.
Yesterday, when we were eating, someone was talking about the magical pot ring. Actually, there is nothing magical about pot circles. Guoquan just embraced the changes of the times based on the new situation, and then transformed from catering retail to community catering retail in 2017.
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Guoquan is not magical, Guoquan is just selling vegetables
Why has Zhengzhou become an international central consumer city? Because Zhengzhou is a consumption center, and the center of dual circulation is also in Zhengzhou. We have always said that those in the Central Plains will win the world. Let’s take a look. Within 300 kilometers of Zhengzhou, there are approximately 667 counties, more than 100 prefecture-level cities, and a population of 460 million. This is a huge consumer market and nowhere is the population density higher than this place. As the saying goes, it is not enough to build a region without planning a city, and it is not enough to build a country without planning a region. Guoquan started from Zhengzhou step by step and moved outward through the logic of cannibalization.
Some time ago, some people said that Guoquan was gone. In fact, Guoquan has always been in Zhengzhou. If Guoquan APP comes back, three-quarters of Guoquan’s business will be in Henan, all in Zhengzhou.
Everyone talks about the magical pot rings, but actually the pot rings are not magical, they are just for selling vegetables. Judging from the logic of Guoquan and Mixue Bingcheng, as well as the logic of explosive growth, we have actually caught a trend, one is cost-effectiveness, and the other is multi-channel. The price-performance ratio means "more and better", and the channel means "faster and cheaper". The reason why Guoquan’s slogan is “delicious but not expensive” is this logic.
How to make products that are both delicious and not too expensive? It’s just a few keywords, whether it can be scaled up, whether efficiency can be improved, and how to ensure the stability of the supply chain. The logic of delicious food but not expensive and cost-effective lies in user trust and repurchase rate, which will then extend to the upgrade of the supply side. Everyone thinks it’s quite magical that Guoquan has come to this day, but in fact it’s not magical at all. There’s nothing magical about selling vegetables.
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Guoquan’s new positioning: a solution for home meals
The logical core of the supply chain is efficiency. Traditional trade is a model that starts from the place of origin, food factory and central kitchen, and reaches the terminal through first batch, second batch and third batch logistics.
Guoquan was also a B2B enterprise at the beginning, and will become a B2C enterprise in the future, facing consumers directly. We remove the middleman from the C-side and B-side logic and go directly to the factory and the production area. Therefore, Guoquan is a reverse supply chain, and how to remove intermediation requires a large amount of digital access. So we are digitally reconstructing the traditional food supply chain, which is no longer the same as the traditional one.
Guoquan has been making these explorations in this direction in the past few years. What is the new positioning of Guoquan? Guoquan is a B2C enterprise. Guoquan is to use an efficient digital supply chain and provide fast, cost-effective services to provide people with three meals a day, becoming an alternative to catering takeout and grocery shopping at the market. , the third solution for eating at home.
Another magical thing about Guoquan is its extremely low store closing rate. It’s not that Guoquan’s marketing team is great, but that Guoquan’s delicious and inexpensive value is its core competitiveness.
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Why Guoquan can not increase its price for four years
Since the first store was established in 2017, the development of Guoquan has only been five years. We shifted from B2B to B2C, and moved to Shanghai in 2019. We now have dual headquarters.
This year, Guoquan will have more than 10,000 stores and its revenue will exceed 10 billion. Currently, Guoquan has more than 9,000 offline stores in 28 provinces and more than 1,500 counties across the country. By the end of the year, our number of employees will reach 1,600, and the APP will also be launched in Zhengzhou.
On the other hand, Guoquan has also done a lot of exploration in digital construction. Digital construction is actually building a model of C2F, from consumer to factory. Since 2018, we have invested approximately 400 million yuan to build new digital facilities. At present, the front and back ends can basically achieve complete digitization.
In terms of infrastructure, Guoquan has incubated Huading Cold Chain, which has now achieved next-day delivery to towns and villages. Logistics costs have dropped by about 1/3, which is why Guoquan has not increased prices for four consecutive years.
Starting from this year, Guoquan will play the role of supply chain infrastructure and move from rapid growth in performance to rapid growth in profits. So this year is a watershed for Guoquan. In the past five years, we have been doing some infrastructure construction and laying the foundation.
Before, many people thought that the epidemic had boosted the development of Guoquan. In fact, Guoquan had been developing rapidly in Zhengzhou for three years before the epidemic. The founding team of Guoquan has always been thinking calmly. The result of thinking is to return to the value itself, to the essence, to common sense, and to how fast, easy and economical it is.
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One innovation is enough
It is difficult to endure loneliness and persist in one thing
In the future of the pot circle, what should be done and what should not be done? We believe that we must persist in the sinking market and focus on the problem of eating for the common people. , the value of making a pot circle.
The logic of Guoquan is to satisfy more customers. On the one hand, we must make good products and on the other hand, we must make good channels. Good products come from our respect for the industry and improvement of efficiency. A good channel is to allow franchisees to make more money.
Many of our 10,000 store franchisees are multi-store franchisees. On average, one person opens 2.9 stores. In terms of growth rate, the growth rate has reached around 2,700 stores in the past two years.
Consumption is an industry that is constantly doing new things. This was true 20 years ago and it is still true now. We look at Moutai, Golden Arowana , Nongfu Spring . In fact, there is no distinction between old and new in consumption. I think they are all on the same track.
The so-called old and new actually refer to whether it can achieve "more speed, less cost". Some of today's new brands actually do not lack innovation, but lack endurance.
The competitiveness lies not in how many innovations we have. One innovation is enough. It is often difficult to endure loneliness and persist in one thing. Consumption is a long-term welfare track. It doesn’t matter whether it is undervalued today or overvalued a few years ago. What is important? After reaching a certain scale, how to deeply intervene in the supply chain to ensure the scale and efficiency of production.
What I am most worried about is that Guoquan employees have lost their patience and cannot bear loneliness. Good consumer companies can hedge against the replacement of cycles. The demand for food, clothing, housing and transportation is still there no matter how the economy is in recession. Accompanying the growth of a good consumer goods company, the welfare space is unimaginably large.
