A few days ago, foreign media reported that Ting Hsin International Group is considering splitting and packaging its catering business in the mainland and going to Hong Kong for an IPO, raising approximately US$800 million.

Ting Hsin International Group owns well-known brands such as Dicos, Master Kong Beef Noodle, Weiquan, FamilyMart and so on. Based on various considerations such as store size and brand volume, Ting Hsin International Group's most popular brand for this IPO is Dicos.

Regarding the IPO, the relevant person in charge of Dicos also confirmed: "With this plan, there is no specific progress."

ONE

Suffering from the enemy, with many difficulties

Turning around?

In the impression of many people, Dicos is a brand that started from "cottage" foreign fast food. In fact, Dicos is also an authentic "imported product". It originated in Texas, USA, entered the Chinese market in 1994, and was acquired by Ting Hsin International Group in 1996.

The other two Western-style fast food giants, KFC and McDonald's, entered China in 1987 and 1990 respectively. Whether it is KFC, McDonald's, or Dicos, they all entered the Chinese market when Western food was "deified". The first KFC store in the Mainland was opened in Qianmen, Beijing, and the first McDonald's store in the Mainland was opened in Guanghua Building, Shenzhen. The opening was an unprecedented grand occasion, and the queues circled a few times. In 1994, it was still in the period of China's western food market dividend, but Dicos did not form a tripartite situation with KFC and McDonald's in one go.

In the early days, Dicos closely followed McCann and expanded rapidly with first- and second-tier cities as the main battlefield. However, Dicos soon ushered in "veteran veterans" McDonald's, KFC "exclusion", and "market newcomers" such as Burger King and Subway. Dicos, who has repeatedly hit the wall, chose to change its strategic direction and set its sights on the sinking market for Western-style fast food consumption that has yet to be developed. Since then, Dicos has officially moved towards the "small town youth".

Dicos adopted the franchise model and penetrated into prefecture-level cities and counties at a high speed. With its high brand influence, Dicos quickly became the "top-tier" in the county. The first foreign fast food eaten by many "small town youths" came from Dicos.

As of the end of 2020, the number of Dicos stores nationwide has exceeded 2,600, of which 400-500 stores will be added in 2020. However, even if the "second order" is the main attack on the sinking market, Dicos' life is not easy.

1. The main battlefield is attacked back and forth

Dicos probably did not expect to meet KFC again in a small county one day. In August 2020, KFC opened its first "small town model" store in Fengqiu County, Xinxiang City, Henan Province, and announced that it would increase its efforts to open a small town model store in Henan. Prior to this, KFC had increased its investment in sinking the market. Also in a small county in Henan, when a new local mall opened at the end of 2019, local residents were surprised to find that a KFC opened at the entrance of the mall. Since then, KFC has been overcrowded. In contrast, Dicos, which had been open for several years in the local area, began to receive cold reception.

While KFC went to sink the market for Nuggets, McDonald's was not idle either. In September 2020, McDonald’s China CEO Zhang Jiayin said that McDonald’s vision of reaching 4,500 stores by 2022 has not changed, and revealed that in terms of restaurant portfolio, more than 50% of the new stores opened in 2020 will be in the third-tier and low-end stores. City, accelerate the speed and layout of sinking.

The sinking of KFC and McDonald's means that Dicos, who originally wanted to "avoid its edge", will soon usher in the "frontal toughness" with McCann again. In addition to McCann, Dicos' competition in the sinking market also comes from a variety of fake foreign fast food, such as Wallace. Starting with a copycat KFC and relying on its low-price strategy, Wallace exceeded 10,000 stores as early as the end of 2018, which is more than the number of stores combined by McDonald's and KFC.

There were McDonald's and KFC in the front, and Wallace in the back. Especially in the context of McDonald's and KFC continue to promote the sinking strategy, whether Dicos can maintain its "top-tier" image in the sinking market remains to be verified.

2. Difficulties in the new battlefield

Dicos is going to return to the first-tier cities!

In recent years, the voice of Dicos returning to the front line has been there. This brand that has paid a lot of tuition in first-tier cities has never given up on first-tier cities.

Cui Kaijun, chief operating officer of Dicos, once revealed that in 2020, Dicos will open more than 200 new stores in Beijing, Shanghai, Guangzhou and Shenzhen, which is the largest increase in the past three years and will continue to accelerate in the future.

In 2017, Dicos opened the first "Dexco Future Store" in Shanghai. With the theme of "Unmanned Intelligence", it upgraded and extended the original characteristic "Shu Shi" store. Dicos launched "Smart, Fresh, Fresh" for this store. "Exclusive" slogan to attract consumers.

Dicos' strategy of "returning to the front line" has been put on the agenda, but obviously, facing the upside market of KFC, McDonald's, and Burger King, under the red sea, "returning to the front line" may be more difficult than "entering the front line" back then. Because of this, Dicos needs to show more sincerity and creativity in order to make breakthroughs. The launch of Dicos Future Store is a manifestation of Dicos's other ways of seeking breakthroughs.

The sinking market is ushering in rivals, and it is difficult to return to the front line. Under such a background, whether it can usher in a turnaround by listing may be exactly what Dicos expects.

TWO

The mountains and rivers are strong, but the disease is still there

The challenge comes first?

If the parent company’s listing is successful, it may bring a turning point for Dicos’ status as the “Millennium Third”, but it also means that Dicos may face greater challenges under the all-round scrutiny of investors and transparency of brand operations.

1. Service

Dicos' service has always been criticized. The children’s play area is messy, the staff is bad, and so on. On the Internet, you can see all kinds of complaints about Dicos services. This has a lot to do with Dicos' cooperation model.

The initial fee for McDonald's is 3 million yuan. 3 million yuan is only an entry threshold, and applicants also need to meet various requirements in terms of management and communication skills. At the same time, applicants are required to undergo 12-month training. The franchisee McDonald's is looking for is a "businessman who knows how to wear an apron." Moreover, McDonald's does not allow diversified investments. Investors must devote all or most of their energy to the operation of McDonald's stores. KFC has an entry threshold of 8 million, and at the same time it needs to receive relevant training and is willing to establish a cooperative relationship of up to 10 years, and KFC only chooses mature franchisees. In contrast, Dicos has a lower threshold and more flexible requirements for investors. In the 2 million yuan franchise fee of Dicos, it basically includes most of the store opening expenses such as store rent and decoration costs.

Compared with McDonald's and KFC, Dicos has more relaxed management and control of stores, which results in uneven business levels of various stores. This is the main reason why Dicos has not formed a service label relative to McDonald's and KFC. So, once the listing is successful, the service has not been improved accordingly. Under the scrutiny of more eyes and stricter requirements, the service of Dicos may usher in more violent complaints, which may eventually affect its brand image.

2. Food safety

Using smelly chicken wings to make food, the operator’s health certificate is not standardized... Dicos food safety incidents are not uncommon in recent years, and the reason why they did not cause uproar like the food safety incidents of McDonald’s and KFC has a huge reputation for its brand. Relationship. The higher the brand's voice and the higher the attention, the greater the impact of food safety incidents on the brand.

Then, after the successful listing, the impact of the food safety incident on Dicos will surely escalate. Strict management of food safety issues is the foundation of every restaurant's operation, and it is also the foundation for a well-known brand to maintain its “long red”.

3. The brand goes up

With the opening of more than 200 stores in Beijing, Shanghai, Guangzhou and Shenzhen in 2020 alone, Dicos' upward strategy has reached a drastic stage. But whether it can go up successfully remains to be verified. If it fails again, the unlisted Dicos will continue to stick to the plot of sinking the market, but after the listing, it will inevitably affect the stock price. By then, the blow to Dicos will be twofold.

For Dicos, the temptation to go public is the same as the challenge. But from the series of actions taken by Dicos (and its parent company), it is not difficult to see that Dicos is seeking a breakthrough, showing a positive image of a brand seeking progress. As for the success of the listing, what changes will Dicos bring after the listing? Dicos is looking forward to it, and the catering market is also looking forward to it!