Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 55 Franchising Frenzy (Second Update of 10,000 words per day)

After speaking, Ling Peiyi took out a pre-prepared trial sales data report and pushed it in front of Zhang Zhiqiang: "Our bottled sugar water has a very high repurchase rate at sales points near office buildings and factory areas, and is especially popular among young white-collar workers and laborers."

This is precisely an important part of Wellcome's core customer base.

Zhang Zhiqiang picked up the report and quickly flipped through it.

He had to admit that Ling Peiyi's report was quite professional.

The data is detailed and the analysis is clear, directly addressing Wellcome's target customer base and the pain points for improving sales.

In particular, the points of "filling a market gap" and "attracting specific customers" struck a chord with him.

"So, Director Ling, what are your desired supply and retail prices? And what are your cooperation methods?"

Zhang Zhiqiang's tone softened somewhat, and he began to inquire about the substantive content.

Ling Peiyi felt certain that the other party had become interested.

She announced the pricing structure she had already calculated: "Our supply prices to Wellcome are HK$0.7 per bottle for Tangerine Peel Red Bean Paste, HK$2 per bottle for Coconut Milk Sago, and HK$2.8 per bottle for Mango Pomelo Sago."

The suggested retail price is the same as that of Chen Ji's standard stores.

This pricing system was the result of several discussions between her and Chen Bingwen.

This ensures that Wellcome has a reasonable profit margin, while also ensuring that Chen Kee can make a small profit after covering costs.

Ling Peiyi originally thought that the retail price of bottled sugar water should be higher than that of dine-in.

At least the cost of the bottles and labor should be reflected in the price.

But her idea was rejected by Chen Bingwen as soon as she put it out.

Chen Bingwen's reason for rejecting the proposal was clear: Chen Ji's current task is to seize channels and expand market share!

“Director Ling, now is not the time to haggle over petty gains,” Chen Bingwen said, pointing to the production capacity planning diagram. “Wellcome is the largest supermarket chain in Hong Kong Island, and its channel value is immeasurable!”
The fact that bottled sugar water is available at Wellcome is itself the best advertisement!

What we want is market share and brand exposure!
Offer discounts to our distribution channels to incentivize them to promote our products!

Once production capacity increases and the brand establishes a firm foothold, profits will naturally rise.

Moreover, and more importantly, by using a low-price strategy to capture the market, even if competitors want to enter the bottled sugar water sector in the future, they will first have to face the price barrier we have built!

"We have low costs, large scale, and a well-known brand. What can they use to compete with us?"

This strategic vision won Ling Peiyi's heart.

At a critical juncture when production capacity has not yet been fully released and brands urgently need channel endorsement, sacrificing short-term profits in exchange for market share and channel support is a wiser choice.

This meager profit is the key to entering Wellcome and the stepping stone to becoming a future market leader!
However, since it's a negotiation, you certainly can't just tell the other party your bottom line.

Therefore, the wholesale price that Ling Peiyi quoted to Zhang Zhiqiang was 20% of the retail price as the supermarket's profit.

This not only conforms to industry practice, making Wellcome feel it's reasonable and profitable, but also cleverly conceals the truth that Chen Ji is supplying goods at near cost, leaving room for possible price reductions later.

At that time, the way goods entered supermarkets on Hong Kong Island was very different from that in later years. It implemented a "zero-cost shelf placement + consignment inventory + monthly settlement payment" model.

To sum it up in one sentence:

Suppliers ship first, supermarkets pay later, and payment is made based on sales volume, with no entry fees, barcode fees, discounts, sponsorships, or other charges.

Supermarkets make their profits from the wholesale-retail price difference of goods.

Upon hearing Ling Peiyi's quoted supply price and suggested retail price, Zhang Zhiqiang quickly calculated in his mind.

“A 20% profit margin…” Zhang Zhiqiang tapped his fingers lightly on the table, a thoughtful look on his face. “Director Ling, this profit margin is only considered entry-level in Wellcome’s beverage category.”

As he spoke, he looked at Ling Peiyi and said, "You know, the value of Wellcome's distribution channels is undeniable."

The daily customer traffic of one of our core stores is probably equivalent to the weekly customer traffic of one of your standard stores.

Moreover, we provide valuable shelf space and invest manpower in inventory management and sales. More importantly, the endorsement of our Wellcome brand plays an immeasurable role in helping your Chenji bottled sweet soup quickly penetrate the market and enhance your brand image.

"Therefore, Director Ling, I think there is still room for discussion regarding this supply price."

We at Wellcome hope to secure more competitive prices.

For example, we can lower the price by 10% based on the price you quoted.

This way, our profit margin can be closer to 30%, which is more in line with our profit standards as a core channel partner.

A 10% reduction! This will almost break through Chen Ji's cost line, resulting in negligible profits or even losses!

Ling Peiyi felt a slight chill in her heart, but she maintained a calm smile on her face.

“Director Zhang,” Ling Peiyi said calmly, “I fully understand the value of Wellcome’s channels and brand influence, which is why Chenji attaches such importance to this cooperation.”

The price we quoted is based on our utmost sincerity and takes into full consideration Wellcome's operating costs and reasonable profits.

You just mentioned that Wellcome's brand endorsement is very important to us.

Conversely, the uniqueness and market popularity of Chen Ji bottled sweet soup also have irreplaceable value in enriching Wellcome's product line, attracting specific customer groups, and improving the sales performance of individual stores.

Our product is currently unique in the market, filling the gap in ready-to-drink, high-quality sweet soup.

I believe that the customer acquisition and brand premium resulting from this differentiated competitive advantage justify Wellcome offering more competitive cooperation terms.

Ling Peiyi cleverly avoided direct price negotiations, instead emphasizing the product's unique value and the potential benefits it would bring to Wellcome.

At the same time, she also hinted at it in her words.

Chen Ji doesn't necessarily need Wellcome; the popularity of its products is enough to support its success in other channels or its own operating system.

Zhang Zhiqiang's eyes flickered. Ling Peiyi's counterattack was reasonable and well-founded, hitting the nail on the head.

Chen's bottled sweet soup is unique and has received solid market feedback, which can indeed bring new customers and generate buzz for Wellcome.

Moreover, the other party's attitude was neither humble nor arrogant, clearly indicating that they came prepared.

He paused for a moment, then softened his tone: "Director Ling has a point."

Chen's bottled sugar water does indeed have its unique features.

Well then, lowering it by 10% might indeed be a bit too aggressive.

But I think 5% space is still acceptable.

So, our gross profit margin is 25%, which is a balance that both sides can accept?

Ling Peiyi quickly made a mental calculation.

Chen Bingwen's bottom line is 30%.

While the 5% price reduction squeezed some profit margins, it was still within an acceptable range, especially considering the long-term value of the distribution channels.

Ling Peiyi paused deliberately, as if making a difficult decision, before continuing, "Well then, Director Zhang, we agree to implement the price reduction of 25% as you proposed."

At the same time, we hope that Wellcome can provide Chen Ji bottled sweet soup with at least one month of prime display space in its core stores, and cooperate with some in-store promotions. What do you think?

"Prime location display and in-store promotion"

Zhang Zhiqiang did not answer immediately.

However, considering that Chen Ji's products have selling points and good market feedback, providing some promotional support is in line with Wellcome's interests and can also demonstrate Wellcome's channel value to suppliers.

With that thought in mind, Zhang Zhiqiang laughed heartily and made the final decision, "Okay, it's settled then! Chen's bottled sweet soup will get at least a month of prime display space in our 50 core stores!"
We will also produce some promotional materials to complement this!"

"Thank you so much, Director Zhang, for your support and trust!" Ling Peiyi felt a huge weight lifted off her shoulders. "We will definitely ensure that the first batch of goods is delivered on time and in good quality! It's a pleasure to cooperate with you!"

"It's a pleasure to cooperate with you!" Zhang Zhiqiang smiled and extended his hand to shake hands firmly with Ling Peiyi.

Just as Ling Pei-yi was achieving great success at Wellcome's headquarters, Chan Kee Foods' eye-catching recruitment advertisements published in mainstream business newspapers such as Sing Tao Daily and Oriental Daily News were like a boulder thrown into a calm lake, instantly creating ripples.

"Chen's Dessert cordially invites you to join us in this grand endeavor!"

The advertisement layout is simple and elegant, with the "Chen Ji" logo standing out prominently.

The advertisement clearly lists the advantages of joining the franchise:

Standardized decoration, technical training, raw material distribution, operational guidance, and brand promotion!
Low investment, high returns, share in the rapid development of Chenji!
On the morning the advertisement was published, the usually quiet phone at the Kwun Tong Food Factory was suddenly ringing off the hook!
"Ding-a-ling-ding-a-ling--"

The phone rang almost nonstop.

Gao Zhenhai temporarily assigned two clerks to answer the phone, and he also picked up the receiver himself from time to time.

"Hello, this is a franchise inquiry for Chenji Foods."

"Yes, we are recruiting franchisees."

"Franchise fee? The initial franchise fee is HKD 2, and the brand usage deposit is HKD 1. We have a detailed franchise manual for the specific services and benefits included."

"Shop requirements? Good location, high foot traffic, area recommended between 110-220 square feet."

Bottled sugar water? Of course we supply it! And we prioritize supplying franchise stores!

"Would you like to know more details?"
Okay, please leave your name, phone number, and a convenient time. Our marketing specialist will schedule a meeting with you as soon as possible.

In one morning, the two telephone lines recorded more than fifty valid inquiries.

The callers came from various backgrounds.

Some individual business owners who run snack shops and tea restaurants are looking to transform their businesses because they value Chen Ji's brand effect.

Some shop owners with spaces near office buildings or factory areas are looking for a reliable brand to partner with.

There are even some ordinary citizens who have some spare money and are optimistic about the catering industry.

In the afternoon, franchise applicants who had scheduled interviews began to arrive at the Kwun Tong factory one after another.

Ling Peiyi had made preparations in advance and temporarily set up a franchise negotiation room on the second floor.

Xiao Chen, a newly recruited marketing specialist in the marketing department, is specifically responsible for receiving and initially screening customers.

The first visitor was a middle-aged man in his forties surnamed Huang, who ran a small dessert shop in Wan Chai, but business was so-so.

Holding the newspaper, his eyes were eager: "Director Ling, I have a shop in Wan Chai, in a very good location!"

The business just just hasn't taken off.

When I saw Chen Ji was recruiting franchisees, I called them right away! The 2 yuan franchise fee was no problem!
I just want to hang up the Chen's brand!

The door to the meeting room was almost never closed.

Visitors came in droves.

Some brought cash deposits and wanted to sign the contract on the spot;

Some repeatedly inquired about the details of the profits;

Some are particularly interested in the supply of bottled sugar water;
There are also those who want to open several stores at the same time...

Market enthusiasm far exceeded expectations!
The Chen Ji brand and the appeal of the new bottled product have created a powerful siphon effect!

　I'll be sending out 6000 tonight, and another 4000 tomorrow noon or afternoon. Thank you all for your support!
　　
　
(End of this chapter)