What Does the Xixiaocha Closure Mean for Cafe Specifications?
HEYTEA's sub-brand Xixiaocha closed its last store in Guangzhou City Investment Building, ending a run that began in April 2020. The brand had opened 22 stores across six Pearl River Delta cities, selling drinks priced at 8 to 16 yuan. Most stores were still profitable before closing, and HEYTEA has not publicly explained the decision.
The closure tracks with HEYTEA's own repositioning: the main brand has cut prices since early this year, pledging no new products above 20 yuan and nothing over 29 yuan. That overlap in price and product erased the gap Xixiaocha was built to fill. Xixiaocha's WeChat account last posted in July 2022, and its mini-program is no longer searchable.
Heytea's sub-brand Xixiaocha recently closed its last store located in Guangzhou City Investment Building. From the opening of its first store in April 2020 to its complete withdrawal now, only two and a half years have passed. Xixiaocha once deeply cultivated six cities in the Pearl River Delta, opening 22 stores, focusing on affordable drinks priced at 8 to 16 yuan. Before closing, most stores remained profitable. At the same time, Heytea's main brand has been continuously reducing prices since the beginning of this year, announcing that it will no longer launch products priced above 29 yuan, with all new products priced no more than 20 yuan. The product positioning and price ranges of the two brands are increasingly overlapping. Xixiaocha's official WeChat account last updated on July 20, 2022, and its mini-program can no longer be searched. Heytea has not yet responded. This article reviews the rise and fall of Xixiaocha and analyzes its connection with the strategic adjustments of the main brand.
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According to media reports, the last store of Heytea's sub-brand Xixiaocha, located in Guangzhou City Investment Building, has ceased operations, lasting only two and a half years from opening to closure. Currently, Xixiaocha's mini-program can no longer be found, and its official WeChat account's most recent post was on July 20, 2022. As of press time, Heytea officials have not yet provided an explanation for this matter.
As a sub-brand under Heytea, Xixiaocha has long focused on the Pearl River Delta region, successively entering six cities: Shenzhen, Guangzhou, Dongguan, Zhongshan, Foshan, and Huizhou, with a total of 22 stores. Xixiaocha stores are generally small, with customer ordering and pickup areas only about 3 to 5 square meters. Site selection tends to favor densely populated but relatively affordable commercial districts like Huaqiangbei, emphasizing buy-and-go and delivery services, with online ordering, in-store pickup, or delivery as the main modes.
In April 2020, Xixiaocha opened its first store at Huaqiang Plaza, Huaqiang North Road, Futian District, Shenzhen, Guangdong Province, with a single cup priced between 8 yuan and 16 yuan, about half of Heytea's price at the time. Within months after the first store opened, Xixiaocha gradually expanded to other cities in Guangdong, with products covering five major categories: fresh milk tea, fruit tea, coffee, ice cream, and pure tea. Among them, the "Grand Slam" series includes four signature products such as soy milk and fruit.
According to the "Xixiaocha First Anniversary Mini Report" released in 2021, in the first year of operation, Xixiaocha sold more than 2.8 million cups of drinks, and the number of stores reached more than 20 at its peak. It is understood that until closure, the vast majority of Xixiaocha stores were still profitable.
At the beginning of this year, Heytea trended on Weibo with "Heytea says goodbye to 30 yuan," while announcing price reductions on some products: pure tea categories reduced by 3 to 5 yuan, 5 fruit teas reduced by 2 to 3 yuan, and cheese tea reduced by 1 yuan. On February 24, Heytea again stated that it would not launch drinks priced above 29 yuan within the year and promised not to increase prices on existing products. After that, it further announced that all new products would be priced no more than 20 yuan.
Heytea and Xixiaocha have never had an obvious gap in product standards. Heytea focuses on "real fruit, real tea, real milk," and Xixiaocha also insists on "real ingredients," making it difficult to further compress costs. Driven by the main brand's price reduction adjustments, Xixiaocha also followed suit in adjusting prices and promised that drinks launched within the year would not exceed 15 yuan. The two brands are becoming increasingly similar in both product positioning and pricing.
It is understood that behind Heytea's price reductions, similar to Xixiaocha, the intention is to allow more consumers to enjoy high-quality and affordable products, customize toppings and choose specifications according to personal preferences, with corresponding different prices. The development momentum of the new tea beverage industry is becoming stronger and stronger. Against this background, Heytea's lowering of prices may be to attract a broader consumer group and thereby achieve small profits but quick turnover.
Some reports show that the younger Xixiaocha is more favored by equally young consumer groups. Among Heytea's consumer group, those born after 1995 and after 2000 account for 49.2%, while the proportion of consumers in the same age group for Xixiaocha reaches 61%. Xixiaocha consumers born after 1990 account for about 22%, those born after 1995 about 39%, and those born after 2000 about 22%. Overall, its consumer group has great potential in society.
When the main brand and the sub-brand attack the same market in the same way, Xixiaocha may have already completed its mission and therefore retired after success. Another possibility is that Heytea's price reduction strategy directly conflicts with the price range in which Xixiaocha operates, and this has also become one of the reasons for Xixiaocha's store closures.
Image source: Internet
The above content is compiled by CoffeeHunters, a coffee news website.
