What can you eat for a 3 yuan breakfast?

Some say a baozi, others a fried dough stick, and some say a large pancake.

In Beijing's "Nancheng Xiang," you can not only enjoy a hearty breakfast but also eat to your fill.

Soy milk, orange juice, milk, sour and spicy soup, pumpkin porridge, lotus leaf porridge, and preserved egg and lean meat porridge - these 7 flavors are available for free refills."Nancheng Xiang" offers not only a 3 yuan self-service breakfast, but also a 19.9 yuan unlimited vegetarian hot pot in the evening and a 37.8 yuan individual hot pot set with beef and mutton.

It can be said that spending a day at Nancheng Xiang, one can satisfy the three meals a day for most people for less than 50 yuan, which everyone refers to as the "poor man's package."

It is such a chain fast-food restaurant that has an annual revenue of 1.5 billion, which is enviable.

With such low prices, and without franchising, financing, or going public, how does Nancheng Xiang make money?

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The Birth of the "Nancheng Xiang" BrandNancheng Xiang was established in 2004, and its founder, Wang Guoyu, was simply an honest person who was dedicated to the catering industry.

In 1993, Wang Guoyu came from a rural area in Anhui to the metropolis of Beijing. Not willing to work for others, he started a fried chicken business on the streets of the southern part of the city, naming it "Wang Xiansheng."

At that time, Wang Guoyu recognized the importance of quality, insisting on using the best raw materials and the freshest ingredients no matter what. As a result, his fried chicken shop became well-known far and wide, with customers lining up daily to make a purchase.

This also laid the foundation for the "Nancheng Xiang" philosophy of product quality and craftsmanship.

However, Wang Guoyu did not become complacent with the success of his fried chicken business; instead, he sought ways to innovate and create new categories.In 1998, Wang Guoyu started selling lamb skewers on the barbecue street at Yongding Gate, developing his own smokeless electric roasting equipment and creating his own recipes.

Every day before dawn, Wang Guoyu would ride a tricycle to buy lamb from the market, cutting and selling it fresh on the spot. Not only was his lamb fresh, but he also sold it at a lower price; while others sold a skewer for 1.6 yuan, he sold his for just 1 yuan.

He said, "I would rather work harder and earn less, but I want to make the business thrive."

Although the business was booming, problems arose, such as disturbing the residents and operating informally, which caught the attention of the urban management officials. They would chase people away daily, which also made him determined to open chain stores and close his stall.

With a strong will, Wang Guoyu persevered and worked his way up from a street vendor to running chain stores.In 2001, the first restaurant of Nancheng Xiang opened at the intersection of South Third Ring and Fourth Road.

Wang Guoyu added rice dishes and wontons to the lamb skewers, marking the transition from a "stall" business to a "sit-in" operation.

In 2004, the brand name "Nancheng Xiang" was officially adopted, with the Zhaogongkou store, Shazikou store, and Jiaomen store opening successively, embarking on the path of brand development.

However, in the following 10 years, Nancheng Xiang did not achieve much, always hovering around twenty to thirty stores, with a daily turnover of only three to four thousand yuan.Until 2014, Nancheng Xiang was positioned as a "full-time community dining" establishment, using a powerful combination of three major single-item dishes: bento boxes, lamb skewers, and wonton soup, to quickly enhance the efficiency of its stores.

In the following decade, Nancheng Xiang blossomed like mushrooms after rain, spreading throughout Beijing.

The profitability of a 3-yuan breakfast is all thanks to Wang Guoyu's efficient management.

Masters in the business world all possess the ability to be meticulous with their finances, and Wang Guoyu is an expert at controlling costs and preventing risks.

In 2014, Nancheng Xiang's ability to break through the market was inseparable from Wang Guoyu's bold reforms.At that time, Nancheng Xiang had a bloated organizational structure with redundant personnel. With less than 30 stores in total, the headquarters already had 40 people, including a complete set of departments such as finance, human resources, general manager, deputy general manager, district manager, and operations director, with all positions filled.

These individuals would visit the stores daily for inspections. Although they were able to make a profit in a year, the efficiency was very low.

In order to reduce costs, Wang Guoyu created a flying saucer-like organizational structure, streamlining the middle layer and eliminating departments such as marketing.

Currently, Nancheng Xiang has more than 3,700 people, and the headquarters is left with only about thirty people. The actual management cadres are just over a dozen, and the real core decision-makers are only four or five.

By assigning some management personnel to the front-line stores, Wang Guoyu faced a lot of complaints, but it was precisely because of his determination that, after a period of pain, everyone gradually accepted the arrangement and brainstormed to come up with many good ideas, such as attracting customers by giving away free fruits and pickles, which improved the benefits.Wang Guoyu said that these complimentary snacks can cost 20 million a year, and these expenses are saved by not advertising and not engaging in marketing.

He hopes that the reputation of Nancheng Xiang is spread through word of mouth among customers, rather than through marketing methods such as stored-value cards and advertisements.

Wang Guoyu's strategic planning is not only reflected in the scientific and rational integration of the organizational structure but also in his highly efficient time management.

Currently, most restaurants only serve breakfast or lunch and dinner, but Wang Guoyu has proposed "full-time operation," which includes morning and afternoon tea in addition to the three main meals, making the most of the rent.Operating around the clock, one store is equivalent to five stores, so the income is at least five times that of others.

For a 3-yuan self-service breakfast, allowing customers to serve themselves, eat as much as they want, and take as much as they want, not only increases the sense of experience but also saves on service costs.

Wang Guoyu has calculated an account: if there are 1,000 customers coming to have breakfast in a day, the income from the 3-yuan self-service would be 3,000 yuan, and the cost would be sufficient with just 1,000 yuan.

After a series of operations, the turnover in that year doubled, increasing from three to four thousand per day to nearly 10,000, and in the second year it rose to 20,000, and in the third year it reached 30,000.

Wang Guoyu is clear about where to save and where to spend; he is not ambiguous about the money spent on investing in equipment and employee benefits.Nancheng Xiang does not have a year-end bonus; instead, every bonus is distributed monthly, allowing employees to receive the fruits of their hard work in advance, which enhances their enthusiasm and sense of identification with the company.

The income of Nancheng Xiang's employees is 20-30% higher than the industry average, and in 2023, at least four store managers earned over a million.

It is the boss's generosity that, during the major outbreak of the pandemic, more than 100 cadres of Nancheng Xiang fought the epidemic on the spot. In just three days, they managed to raise 18 million through voluntary employee fundraising, overcoming the difficult period together.

Wang Guoyu is not only like this to his employees but also treats delivery personnel as if they were his own family.

The fact that delivery guys enjoy a 40% discount on their meals, just like the in-store employees, is indeed a puzzling move.In Wang Guoyu's view, even if there is no profit, the delivery guys should be treated like family members. They eat during off-peak hours and wait for orders, which significantly increases their order acceptance speed.

The philosophy of treating others with sincerity has made the delivery guys feel the warmth of home, and many of their family members have also come to work at Nancheng Xiang.

Despite being a big boss, Wang Guoyu is extremely frugal with himself. To save on communication costs, he has no assistant, no driver, buys his own plane and train tickets, and makes videos and writes articles.

Wang Guoyu said: "To make money in the catering business, you have to calculate bit by bit. We are calculating every day, how much electricity we use today, how many people we use, how much we exceed today. From the bone, we have to be meticulous and economical."Nancheng Xiang, through continuous innovation and optimization of operations, has increased profits and reduced costs.

Currently, Nancheng Xiang's gross margin is steadily at 69%, yet the selling price is 20% lower than its peers, which is the positive outcome of cost control.

Affordability is important, but quality is paramount.

In today's era, consumer downgrading has become a new trend among young people. However, even with limited spending power, the pursuit of quality by young people, such as those who have moved north for opportunities, does not waver.

Before 2014, Nancheng Xiang did not have a specific business model; it engaged in whatever was profitable, such as open-air food stalls, hot pot, and stir-frying dishes.Without positioning, without goals, while other brand chain stores kept expanding, Nancheng Xiang was struggling and treading water.

Later, Wang Guoyu cut several products and focused all his efforts on the most basic rice bowls, grilled skewers, and wonton soup.

It turned out that the more basic the product, the more enduring it could be as long as it was done well.

While many people were pursuing scale and expanding financing, Wang Guoyu adhered to the corporate development principles of "no franchising, no financing, no going public," and devoted himself to improving the quality of the main products.

While others used powdered milk to make milk, he used fresh milk; while others used pre-cooked dishes, he resolutely opposed pre-cooked dishes.In fact, Nancheng Xiang started using seasoning packs in the early 2000s. At that time, in pursuit of convenience, the factory produced seasoning packs that could be heated in the store and then sold to customers.

Initially, it was an innovation, and everyone was learning how to simplify and standardize the process. Eventually, the process became standardized, but it soon became apparent that the taste of the food had deteriorated to the point where even they themselves did not enjoy eating it.

When everyone else was using pre-cooked dishes and seasoning packs, Nancheng Xiang resolutely used fresh ingredients, returning to the original taste of the products.

Wang Guoyu has issued a firm directive to completely eliminate the use of seasoning packs by 2024.

To ensure the freshness of the ingredients, Nancheng Xiang has its own vegetable fields in Hebei, and the recently launched pure vegetable hot pot uses vegetables grown in their vegetable base.Back in 2004, in order to standardize processes and reduce the burden on stores, Nancheng Xiang established its first central kitchen in Jiujing Village, covering an area of 500 square meters. Adjacent to the kitchen was a vegetable processing plant, where the produce was processed and directly sent to the central kitchen. From there, dozens of trucks would deliver the goods to the stores, ensuring that fresh ingredients reached the dining tables within 24 hours.

Today, the central kitchen, spanning over 6,000 square meters, has an annual production capacity of approximately 500 to 600 million, which can no longer meet the demand for supply. Wang Guoyu is currently constructing an even larger central kitchen of over 10,000 square meters to provide a safeguard for the chain operation.

How popular are Nancheng Xiang's dishes?

During the pandemic, when Nancheng Xiang started selling marinated meats, as soon as the stall was set up, customers gathered around. The store manager asked a customer entering the store, "Is Nancheng Xiang's marinated meat delicious?"The customer said: "I'm not sure, I've never tried it, but I've been eating here for so many years, the food from Nancheng Xiang must be reliable."

The ability to purchase with confidence is inseparable from the trust that the common people have in Nancheng Xiang.

In addition to pre-prepared dishes, Wang Guoyu also wants to reduce the number of refrigerators, ensuring that ingredients are delivered to the customers' mouths before they even enter the refrigerator.

At the barbecue window, you can see the mutton being skewered, sliced, and grilled on the spot, along with a prominent promise: "Selected lamb meat, skewers are not kept overnight, fresh without freezing, limited sale within 8 hours."

With this trust endorsement, customers can eat with greater peace of mind.In late November, Wang Guoyu said in an interview with "Chinese Entrepreneur": "What Nancheng Xiang does is more like Pinduoduo's business, which is about human nature. Affordability is a universal need for everyone, regardless of whether you are rich or poor."

By taking product quality to the extreme and controlling costs to the extreme, there is no need to fear price wars, and one can be far ahead in the industry.

In conclusion, according to the data statistics from Qichacha, as of December 21, 2023, the number of domestic catering enterprises that have been deregistered exceeded 1.265 million, which is more than double that of 2022.

Those who once rose on the winds of opportunity and dividends have now disappeared, while Nancheng Xiang stands out with its unique business philosophy and distinctive business model.Now, Nancheng Xiang has opened over 180 chain stores in Beijing, with the daily turnover of a single store being five times the average daily turnover of fast-food chain stores nationwide.

However, Wang Guoyu also frankly stated: "The next one to go bankrupt is very likely to be Nancheng Xiang."

The biggest risk for a company lies in its innovation capability. While being involved in price competition, whether it can continue to innovate to provide consumers with more emotional value is the next challenge that Nancheng Xiang has to face.