How relevant and consistent is your brand?

photo credit: yahlen

It's amazing what information you pick up if you keep your ears open while about town, especially in a jam packed Shanghai metro during rush hour. A young ambitious couple were talking about franchises. They were fed up of being small cogs in the wheel of a large organisation and were considering spending their life savings on buying a food franchise business to run (which to me would only mean they are only slightly bigger cogs in an even bigger organisation).

The discussion was between KFC and Tea Storm (茶风暴). Hmmm I hear you say, what on earth is Tea Storm. Well if you think coffee and sandwiches for Starbucks then think cold milk tea and sweet rice balls for Tea Storm! And of course they require minimal real estate since they are just kind of hole-in-the-wall set ups. The difference in franchise cost was also huge, 5millionRMB (ca.730,000USD) versus 100,000RMB (ca.15,000USD).

But the interesting point I think is not that KFC costs so much more, that is kind of obvious, but that Tea Storm, a seemingly naff brand in my eyes can actually command even 100,000RMB for their business model. Putting personal taste aside, the lesson really is, that building any brand is about being relevant to your customers and being consistent, in everything from the images and colours you use to the quality of your products and the tonality of your communication; consistency to the point that you can package it all up into a structure that you can franchise off and leverage x-fold. KFC has proved it's relevancy in the China market by outperforming McDonalds 2 to 1 in number of outlets. Not only is fried chicken more appealing to Chinese tastebuds than hamburgers but they also have a product localisation program and offer even chicken congee! Tea Storm has based it's brand on being the best cold pearl milk tea (珍珠奶茶) around, which appears to be rather relevant to the Chinese consumer. Not only that, it has chosen a market so specific that it can be the best at what it does.

And here is an interesting link, if you are wondering how KFC can command such franchise fees. Quick summary: each restaurant in China brings in an average revenue of 1million USD and 20% profit.