2024-04-06 06:04:44
(Picture/reproduced from Yuan Zhenzhen’s official website)
“How did I lose 10 million yuan (approximately NT$44.41 million) in 2 years with my strength?” Xie Yao, the former founder of the Internet celebrity milk tea brand “Yuan Zhenzhen”, recently shared his ups and downs on social platforms. Her entrepreneurial journey explains how “Yuan Zhenzhen” has grown from nearly 300 chain stores across the country to just over 20 franchise stores. “2 million in debt at the age of 42” and “from CEO to street vendor” are all her labels. But Xie Yao said without reservation that she failed because she was “shameless, brainless, and careless.”
comprehensive”Shanxi Evening News、《Acorn Business Review》According to reports, in the fiercely competitive new tea beverage industry, “Yuan Zhen Zhen” has already become a famous failure case. At its peak, “Yuanzhenzhen” had nearly 300 chain stores across the country, but now, there are only more than 20 franchise stores left. Among the former competitors, “Cha Momo Dao” and “Shu Yishao Xiancao”, one is going to be listed in Hong Kong, and the other has exceeded 7,000 stores.
How did Yuan Zhenzhen decline? In this regard, Red Star Capital Bureau conducted an exclusive interview with Xie Yao, the founder of “Yuan Zhenzhen” on March 21. From starting a business riding on the wave of new tea drinks, the company has an annual income of tens of millions, to closing all directly operated stores and setting up street stalls directly. In just five years, Xie Yao has really experienced ups and downs in her entrepreneurial career. She also bluntly said that she failed because she was “shameless, brainless, and drifting.”
Xie Yao, founder of the internet celebrity milk tea brand “Yuanzhenzhen”.
In 2018, under the leadership of the well-known brands “HiTea” and “Nayuki’s Tea”, the new tea beverage industry ushered in rapid growth. Internet celebrity brands emerged and capital rushed to enter the market. At that time, when Xie Yao was inspecting the market somewhere, she found that a 100-meter street opposite the hotel was full of milk tea shops, so she thought “there are still opportunities in this industry.” Xie Yao decided to ride on the wave and in early 2019, with 50 With a capital of 10,000 yuan, the first “Yuan Zhen Zhen” opened in Chengdu, which happened to be next to “Cha Baidao”. At that time, bubble milk tea was gaining popularity, and she created her own “handmade pearls” as a selling point. However, sales and response were not good in the first few months.
In May 2019, Xie Yao began to place advertisements on self-media platforms. With the traffic of visiting the store through Douyin short videos, it became an Internet celebrity’s favorite store overnight. Xie Yao clearly remembers that the store’s single-day sales quadrupled in one day and finally achieved profitability. One month later, Xie Yao received a financing from a friend and opened a second branch. She began to carefully manage the brand, and placed the work area where the clerks were hand-rolling pearls directly in a prominent location in the store, conveying the concept of “freshly prepared” milk tea, and successfully attracted the attention of consumers.
Although the competition in the milk tea industry in 2019 is fierce, “Yuan Zhen Zhen” has found a way out by relying on differentiation. That year, more than 23,000 newly registered milk tea companies were registered across the country, setting a record high. By December 2019, “Yuanzhenzhen” had grown to more than 10 stores. It was at this time that venture capital came to the door one after another. Xie Yao also said that she has contacted more than 10 professional investment institutions, many of which are well-known capital, but the equity issue has become a big obstacle.
At that time, there were 9 natural person shareholders in the affiliated companies of “Yuan Zhenzhen”. “Many investors asked me to sort out the equity, but I can’t let the friends who trusted me in the beginning get out of the car after I have developed well, and I can’t count them.” “Xie Yao said that in the end, she rejected venture capital funding because of her indecisive personality and various reasons.
However, “Yuanzhenzhen” is still expanding rapidly. In 2020, it will launch a franchise model and recruit franchisees across the country. It can be seen from the franchise advertisements that year that the official estimated franchise fee was between 100,000 yuan and 200,000 yuan, and the franchise threshold was relatively low. Coupled with the craze for new tea drinks, many entrepreneurs were attracted to join. Xie Yao said that at that time, a franchisee from Hangzhou opened 6 stores in one go.
In the first half of 2021, “Yuan Zhenzhen” has opened nearly 300 stores across the country. At its peak, the annual turnover of stores nationwide was nearly 40 million yuan (approximately NT$177 million).
However, the second half of 2021 has become a key turning point. At that time, Xie Yao confidently planned to upgrade the brand, find a new way among the milk tea categories, and create her own concept of “chewy tea”, and invested a huge amount of advertising expenses for this purpose. According to his account, the bus stop advertisement alone cost 300,000 yuan. However, the new concept of “chewy tea” has not been recognized by consumers, and the huge amount of marketing has not boosted performance growth. Xie Yao found that starting from June 2021, the performance of “Yuan Zhenzhen” directly-operated stores has been on a downward trend.
On the other hand, with the rapid expansion of stores and sales, the management capabilities of Xie Yao and his team have not kept up with the rapid development of “Yuan Zhenzhen”. One of the prominent issues is franchisee management. Xie Yao said that when she visited stores in other places, she discovered many problems such as dining standards and hygiene. After returning, she made up her mind not to open franchises outside Sichuan. “There are too many foreign franchisees, which makes management more difficult for me. If management is not good, I am not responsible for the brand.”
“It’s so stupid.” In an interview with Red Star Capital Bureau, Xie Yao felt very regretful about what she did at that time, that is, in order to upgrade the brand, she coined a word – “chewing feeling” and lost the original “handmade pearls” Brand concept. Not opening up franchises outside of Sichuan also deprived them of their best opportunity to expand.
Just when Yuan Zhenzhen and Xie Yao were in trouble and stagnant, other players in the new tea beverage industry had gradually widened the huge gap with “Yuan Zhenzhen”. In 2022, after “Cha Yan Yuese” and “Bawang Cha Ji” became popular, they promoted the transformation of the new tea drinking industry into “light milk tea”. On the other side, the well-known brand “Hitea” suddenly announced a price cut, and “Nayuki’s Tea” followed suit, making the price-cutting competition become more intense.
Since then, Yuan Zhenzhen’s franchise stores and directly-operated stores began to close one after another. In 2023, Xie Yao closed the last direct-operated store, and the company suffered a cumulative loss of 10 million yuan. So Xie Yao tried to start over by setting up a street stall. In the second half of 2022, the direct-operated stores of “Yuan Zhenzhen” were closed one after another, and Xie Yao and the only remaining employee began to try to make street milk tea. From being the founder of a company with an annual income of tens of millions to running a street stall, the gap is self-evident. Xie Yao lamented, “My previous office was only a few dozen square meters, but now I am embarrassed to push a stall cart from the warehouse to the night market. It would be a lie to say that I am not sad.”
“You lost 10 million, and I lost 200,000, just because I joined you.” Under the video of Xie Yao sharing her failure experience, a franchisee left a comment like this. On the day of the interview with Red Star Capital Bureau, Xie Yao also posted a video apologizing to franchisees, saying, “Because of my own lack of ability, cognitive problems, and mistakes I made in the past, I want all (franchisees) to come forward.” Bear it with me.” On the other side, a franchise owner privately messaged Xie Yao, comforting her that she would be able to get through the difficulties. Nowadays, Xie Yao has also started a community restaurant and created a new brand. She is not afraid of failure and starts over.
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