Chief executive of bubble tea maker Guming (1364) Wang Yunan said the fierce subsidy wars on food delivery platforms are not beneficial for the operations of franchised stores in the long term, with net revenue per order at about 4 yuan (HK$4.36) to 5 yuan amid zero-yuan purchase campaigns.
He said once the subsidies recede, brands have to return to a normal operational rhythm, adding that the intensity of promotional subsidies from delivery platforms has already decreased in August.
Lower-priced brands would benefit more from subsidies, while Guming didn't adopt an aggressive approach during the subsidy war to protect its dine-in business, Wang explained.
As the zero-yuan purchase campaigns launched in July, Guming’s daily order volume reached 2 to 3 million, with same-store gross merchandise volume growing by over 20 percent.
The company said that the rising GMV included delivery fees, which have been covered by platform subsidies, leading the whole industry’s transaction volume to look deceptively strong in the second quarter.
He also noted that the market share of leading brands will undoubtedly continue to grow, while new brands will still emerge in diverse segments.
Wang expected that the company's store expansion pace would remain, aiming to achieve 20,000 stores in China by 2027.
HELEN ZHONG
