Why is integrating production, branding and retail one of the best business models in the pre-prepared food industry?

Although integrating production, branding and retail is one of the best business models in the pre-prepared food industry, and even the best business model in the ToC pre-prepared food field, this business model is difficult and challenging to implement, and there is a large risk of investment uncertainty. Therefore, if a pre-prepared food company wants to choose this business model, it needs to be cautious and cautious, and it also needs to objectively evaluate whether the company's own resources and capabilities match this business model.

1. Why is the integration of production, branding, and retail one of the best business models in the pre-prepared food industry?

The core logic of pre-prepared food is to replace fresh food, whether in the ToB catering scenario or the ToC home cooking scenario. Because of this, the proportion of raw materials and cost structure of pre-prepared food, ingredients account for the vast majority, that is, various types of agricultural products. The ingredients of mainstream pre-prepared food in the market are mainly meat, which is one of the biggest characteristics of pre-prepared food products.
There is another crucial feature of pre-prepared food products, that is, the price of the product. The pricing of most pre-prepared food products is between fresh food and catering. There are very few pre-prepared food products that are priced lower than fresh food or higher than catering. At the same time, in the pricing range between fresh food and catering, the price of most pre-prepared food products will be closer to fresh food, and the price of a few products can be close to catering pricing.
From the cost side, the cost of pre-prepared food products will be greatly limited by the purchase price of agricultural products, while from the sales side, the pricing of pre-prepared food products will not be a product with a high premium, which means that the price increase space for pre-prepared food from food procurement, product production to final sales is limited.
In this case, if you want to build a good pre-prepared food business model, you must work hard on the transaction link, that is, reduce the transaction link through some resource integration, capacity building and other methods. After reducing the transaction link, you can ensure that the company has enough profit space, and you can also ensure that other partners have enough profit space. While reducing the transaction link, you also need to ensure the company's operational capabilities and comprehensive competitiveness. Only in this way can you have the opportunity to build a good pre-prepared food business model.

2. Risks, difficulties and challenges of the pre-prepared food business model integrating production, branding and retail

First of all, we must make it clear that although the integration of production, branding and retail is one of the best business models in the pre-prepared food industry, the difficulty and challenges of building such a complete business model are also top-level in the industry. If the difficulty coefficient of building a pre-prepared food factory is 1, then the difficulty of building this business model may be 10 or even dozens.
Moreover, the risks and uncertainties are very high, because it is necessary to have strong capabilities in the three sectors of production, branding and retail at the same time and establish good competitive barriers, so that the advantages and value of this business model can be effectively tapped, otherwise there may be risks of huge capital investment, long investment cycle and no way to achieve a closed business loop.
The pre-prepared food business model that integrates production, branding and retail has huge value and huge business potential, but at the same time, there are corresponding difficulties and challenges after the trinity. From the perspective of making up for shortcomings, it is relatively easy to make up for a certain short board, but if there are short boards and they all need to be made up at the same time, the difficulty will increase geometrically. At the same time, from the perspective of long boards, if a certain board needs to be made longer, it is relatively easy to have other boards as support, but if all long boards need to be made at the same time, the difficulty will increase exponentially.
Only by deeply recognizing the shortcomings of the pre-prepared food business model that integrates production, branding, and retail, and objectively evaluating whether one has the resources, funds, and capabilities to overcome these shortcomings, can one have the opportunity to realize the value of this business model.
The biggest risk of the pre-prepared food business model that integrates production, branding, and retail is that it cannot achieve a closed business loop, because in order to achieve a good closed business loop, it is necessary to make capital investment, resource construction, and capacity construction in production, branding, and retail at the same time, and it requires a certain investment cycle. During the investment cycle, not only must it bear continuous losses, but it is also necessary to continue to expand investment after having a certain foundation in production, branding, and retail, and the length of the investment cycle is difficult to control.
For example, the production end needs to invest in building a factory by itself. Because it is its own retail system, it needs to have a rich product supply to support it to meet the needs of different customers. At this time, more equipment and factory area need to be introduced in the investment of the production line. On the one hand, the investment is increasing and huge, which requires a lot of capital investment. On the other hand, the number of stores and sales scale at the retail end is a continuous expansion process. Starting from one store, it takes not a few months or even a year to have the number of stores required to meet the normal production capacity of the factory. It may take 2-3 years or even longer.