The Birth of Shanghai's First Conglomerate

Tong Zhelan rushed from Shanghai to Beijing.

She spent almost half a month traveling abroad last month; Deer Antler Coffee is a major project she was working on.

She personally invested around one billion yuan, not counting other investments.

It holds a 30% stake.

She also brought good news this time.

"Old Chen, the IPO valuation of Deer Antler Coffee can reach at least 200 billion."

The domestic coffee market clearly has huge room for development, and one Starbucks is simply not enough to meet its needs.

Two hundred billion?

Chen Pingsheng wasn't particularly surprised, considering his total investment in Deer Antler Coffee was approximately 1.5 billion yuan.

Now they've opened up a nationwide franchise market, and half of the entertainment industry's resources are being poured into it.

Now the market reputation is very good.

In this case, 20 billion is not actually that high.

"According to overseas listing surveys, this month is quite crucial."

“That’s right, but I still believe that with the reputation and prestige that Deer Antler Coffee has built up over the past year, there’s absolutely no problem,” Tong Zhelan said.

Before long, Chu Qiuyan and Qin Xue arrived as well.

The news that Deer Antler Coffee has applied for a listing on Nasdaq has spread throughout the company.

That's really inspiring.

After all, this is about listing on the US stock market and making money from Americans.

The tech companies there are worth hundreds of billions of US dollars, which is incomparable to the real estate companies in China.

Chu Qiuyan never expected that her lecture at the university would cause the stock prices of the entire Tencent Holdings Group to plummet.

We still can't see the bottom of it.

Chen Pingsheng asked Tong Zhelan, "How long do you expect it will take before Deer Antler Coffee's IPO can officially begin?"

"About twenty days."

Tong Zhelan thought for a moment and said, "The foreign team will only be here for about a week. We can only officially start the IPO overseas after they have completed all their investigations."

"This period is still crucial. Not only their investigation report, but we can also make great efforts in this area. If we can further increase the valuation of Deer Antler Coffee, it is very possible to reach 30 billion."

Three hundred billion is actually about five billion US dollars.

You might say it's high-end, but it's truly unique in the domestic beverage industry.

You might say it's not high, but Starbucks has a market value of hundreds of billions of US dollars.

Compared to this, a valuation of five billion US dollars seems insignificant.

To increase Deer Antler Coffee's valuation during this period, the research team must be shown greater potential for growth.

Celebrity endorsements, influencer photoshoots, trainee competitions, Deer Antler Coffee concerts, etc.

We've already tried all the methods that can quickly increase brand awareness.

Chen Pingsheng believes that to truly increase the value of Deer Antler Coffee, one must start from its essence.

That is to improve its earning power.

Improving earning power mainly depends on two aspects.

One is revenue, and the other is cost.

In terms of revenue, Deer Antler Coffee's new milk coffee is already in high demand and short supply.

In terms of cost, the investment for a single Deer Antler Coffee store has now dropped to around 800,000 yuan.

To further reduce the cost of opening a store, it is essential to accurately target your store with the right customers.

Do this in a small but exquisite way, or by simply offering takeout.

After thinking for a few minutes, Chen Pingsheng said, "How about this? In the beginning, Deer Antler Coffee stores were mainly located in the bustling commercial districts of first-tier cities, on the very first floor of the most central location."

"Although business is good, the investment for a single store is as high as 200 million yuan or more, and the payback period is at least three years."

"Later, we reduced the cost per store to 1.5 million, 1.2 million, and now 800,000. The lower the investment cost per store, the faster we can recoup our investment and make a profit."

“If we were to open Deer Antler Coffee directly in an office building and focus on delivery or order-based production, the cost of opening the store would be around 200,000 yuan. Once this step is successful, Deer Antler Coffee’s future profit model will definitely follow the same path as Bobo Milk Tea, moving towards a business model that allows for rapid return on investment.”

Traditional stores take more than three years to break even.

Forget about a valuation of 200 billion, the very possibility of this business going public is highly questionable.

The risk is undoubtedly too high.

If we can reduce the investment cost per store for Deer Antler Coffee to 200,000 yuan, and if business is decent, recouping the cost within a year should definitely not be a problem.

The reputation of Deer Antler Coffee is already great enough; there's absolutely no need to open a flashy, large store just to enhance its reputation.

What defines a flashy but impractical shop? The Deer Antler Coffee on Nanjing Street in Shanghai is a perfect example.

The annual rent is as high as nine million, while the area is only a little over two hundred square meters.

The same goes for The Deer Antlers Cafe, located in the heart of Sanlitun in Beijing, which has an annual rent of around five million yuan.

Do you think this kind of store can make money?

It's basically working for the landlord for free.

Many traditional stores in China are like this.

In the early days, doing this to increase brand awareness was understandable.

Now that everyone in the country knows about it, there's absolutely no need for that.

How to reduce the cost of opening a store, quickly recoup the investment, and achieve a high-turnover business model is what they need to consider now.

Deer Antler Coffee's target customers are white-collar workers in office buildings.

Opening the store in an office building perfectly aligns with its development strategy.

Tong Zhelan thought the suggestion was excellent.

Once the cost of opening a store can be reduced to less than 200,000 yuan, Deer Antler Coffee will be able to open another 5,000 stores in China in less than a year.

Deer Antlers Coffee is not short of money now, but it doesn't have much money to quickly realize this idea.

Although there are 300 million in deposits from franchisees, this money is absolutely untouchable.

When I paid the money, I even had the bank notarize it.

Didn't Tong Zhelan invest in Ofo (the bike-sharing company)?

Why did Ofo fail so quickly in the market? It's because they shamelessly misappropriated customer deposits.

Which investor would dare to give money to a company like this?
Chen Pingsheng didn't need to touch the franchisees' money at all; he took out another 2.5 million yuan himself.

Tong Zhelan raised another 2.5 million yuan.

Together, they secured another 500 million yuan in funding for Deer Antler Coffee, and then launched a massive campaign to find those super-large office buildings.

Opening Deer Antler Coffee in an office building saves a fortune just on the storefront transfer fee.

In addition, its shop rent is at least half lower than those prime ground-floor shops.

Adding these two items together will show you a significant reduction in costs.

Without prior brand recognition, opening a store in an office building with low foot traffic is definitely not a good idea.

Now that its reputation has grown to this extent, there's absolutely no need to worry about a lack of buyers.

To reduce costs, opening stores directly in office buildings became inevitable.

If this step succeeds, Chen Pingsheng believes that putting aside the overseas market, surpassing Starbucks in the domestic market is definitely a strong possibility.

After all, a simple iced tea drink at Starbucks costs 35 yuan.

A cup of milk coffee at Deer Antler Coffee only costs a dozen yuan.

Don't assume that everyone who drinks coffee in China is rich; that's not true at all.

The largest customer group consists of urban white-collar workers with a monthly income between 6,000 and 20,000 yuan.

Of those, 70% were women, while men accounted for only about 30% of coffee drinkers.

At this income level, consumers still pay close attention to cost-effectiveness when making purchases.

Those who don't need to consider cost-effectiveness at all start with an annual salary of five million.

Chen Pingsheng was in a hurry to complete the IPO of Deer Antler Coffee.

His main goal is to get several billion yuan to fully buy back his own company's shares.

If it drops like this for another month, it will fall back to the initial offering price.

Even Boiling Sheep has fallen below its issue price.

If he takes the opportunity to buy back shares, it will not only boost market confidence.

They can make a fortune.

We must seize this opportunity.

(End of this chapter)