This is an English adaptation of a FoodBud historical article originally published on December 16, 2021.
FoodBud had previously analyzed Helen's business logic, future potential, and challenges in an article on the brand's promise of “never calculating against customers.” More recently, another craft-pub brand, Blue Ark, announced an angel round of several million RMB.
Blue Ark had opened its first store in Chengdu and was still marked as a new store on review platforms. Its PR materials already described three store formats, despite having only one operating location. FoodBud had not visited the Chengdu store, so its product strength could not be assessed directly. One Chengdu craft-beer industry source said its drinks leaned toward dessert-style flavors, a direction still uncommon enough to require more time in market.
For consumers, whether a beer is “pure craft” is less important than product capability: whether it tastes good and whether quality is stable over time.
Defining “good” is difficult. Beers highly rated by craft enthusiasts may not appeal to mass consumers. Drinkers accustomed to high-alcohol dark beers may find lower-ABV products thin. In the broader market, lower-alcohol, fruit-flavored, beverage-like beers are easier for mainstream consumers to accept.
Some Chinese craft-beer brands have pursued capital aggressively. Panda Brew, for example, had seen the founder's stake heavily diluted. FoodBud noted that a Panda Brew product bought that year tasted different from several years earlier, possibly because the product had become lighter or because the author's palate had changed.
The central issue for craft beer is that the category can become too self-referential in its definition of craft, instead of building from consumer cognition. Young pub customers usually do not care about malt concentration. They want fruit flavor, sweetness without heaviness, and a drink that can quickly create a light buzz. That is not necessarily tied to traditional beer quality. Some consumers born in the 1980s will sit down for higher-quality beer, but they represent a different segment.
Craft beer culture has three real traits: localization, diversity, and craftsmanship. Many brands have experimented with Chinese local ingredients, and many founders began from passion before committing years of effort to their breweries.
But diversity can work against commercial logic. In craft beer, tea drinks, and other categories, constant launches and increasingly complex SKUs tend to lower gross margin. For many founders, craftsmanship also becomes a small-circle pursuit: products fail to move mass market, and founders may not have an open attitude toward capital-led scaling.
From Helen's development, the pub category was still early. Consumers were still mostly drinking bottled and canned products. As consumers receive better beverage education, the category is expected to move toward freshness, from long shelf life to shorter shelf life. That is the implied product iteration path.
Helen's does not open 1,000-square-meter stores. The company has said large stores are less suitable for socializing, while Helen's focuses on building a social platform. Another operational reason is that stores above 400 square meters require a secondary fire-safety approval process, raising public-relations and expansion costs. Helen's has also said it has not seen a scalable model for large stores.
Helen's future strategy at the time was to move into lower-tier cities. Based on the financial data then available, first-tier-city pub economics were weaker than those in second- and third-tier cities. In external communication, Helen's said its future target was to open in third-tier and lower cities, while considering franchising for first-tier-city expansion.
The company pushed subtraction to an extreme in decoration, SKU setup, and staffing, somewhat like Tai Er in the restaurant sector. It used digital systems to manage music nationwide, monitor store traffic and atmosphere, and hired musicians to select songs. It kept beverage pricing very low, offered a small number of simple snacks, and made store management light and standardized. That reduced staff requirements and created an extreme single-store model. Helen's then focused its energy on operating the store as a social platform, running long-term activities and building a youth social-culture barrier.
Helen's core products included third-party OEM beverages: three fruit-flavored drinks and two craft-beer products. The three fruit-flavored drinks did not display detailed production information. The two craft products were produced by Huzhou Tesla. Stores also carried channel products such as 1664, Budweiser, and Heineken.
FoodBud's view was that products such as Budweiser served as price anchors because they were slightly more expensive than Helen's own products. If a cheaper Helen's product tasted similar enough, consumers had little reason not to choose the private-label option.
Helen's profit was not only at the store level. The supply-chain side also mattered. Its OEM cooperation models were complex: some were production based on company demand, some involved factory equity contribution, and some included rebates. In other words, the company could earn from both revenue and supply chain.
One pub-industry source said OEM beverage profit was far higher than commodity alcohol profit. For example, a 275 ml red-bottle Budweiser cost about RMB 90 per case of 12 bottles, or RMB 7.5 per bottle. Helen's sold red-bottle Budweiser for RMB 8-9, implying very low gross margin. A case of 1664 cost more than RMB 200; at Helen's RMB 9.8 selling price, the company would not make money. If consumers only drank 1664 at Helen's, the company might not last a month.
For OEM products of 230-260 ml, the ex-factory price could be under RMB 2, depending on beverage quality. At the time, Helen's was the only player that had built such a complete supply-chain product set, and supply-chain profit was considerable.
Helen's used an extreme single-store model to lay down sales outlets, developed core private-label products, kept store output consistent, and maintained high gross margin. Another key capability was operating public and private traffic outside the store.
An industry source described Perry's earlier operating discipline: each store manager had to know how many high schools, junior colleges, and universities were within a three-kilometer radius; how many male dormitories each university had; who the dormitory supervisors were; how many people lived in each dorm building; and who led each student club. Once that information was mastered, and servers were close in age to students and could easily become friends, the brand could invite students to drink through ground promotion and other methods, creating a “home-like” feeling.
Perry's became one of Guangzhou's strongest chain lounge-bar brands because it transmitted this culture across student cohorts. Seniors brought juniors, graduates returned for memories, and that repeated handoff created brand loyalty and dependence.
Helen's was also working on loyalty, including city-level store beverage-ambassador activities. Such activities and competitions target psychology and create dependence on the brand. Without those cultural and human elements, young consumers have little inherent brand dependence. If the same drink is sold at the same price in different pubs, and Helen's only has a fixed music-box format while another venue has DJs, MCs, and stronger interaction, young consumers will choose the more exciting venue.
A common view in the bar industry is that when a block is full of bars, the busiest one does the best business. The same applies to pubs. In a crowded industry, retaining young consumers across generations requires price, atmosphere, and cultural output.
Helen's and Perry's both focused on core commercial districts, then selected weaker sites nearby to control rent.
Perry's used payback period as a key evaluation standard. Its benchmark was payback within six months. Monthly revenue of around RMB 900,000 was roughly enough, and net margin could commonly reach 17%-20%. Operating costs for servers, supervisors, store managers, kitchen staff, and commissions were more than RMB 50,000. Rent varied widely: RMB 10,000-20,000 in third-tier cities, and more than RMB 100,000 in Shanghai.
Perry's site selection depended on its special ground-promotion and traffic-generation methods. Young consumers did not care much whether a store was street-facing. The brand chose first-tier commercial districts but fourth- or fifth-tier shop locations, such as the fifth or sixth floor behind a well-known commercial area, and sometimes even the ninth floor.
Chinese nightclubs such as SPACE were very popular. Stronger venues were often high-ceiling aerial-party spaces of 20-30 meters, with large footprints and strong sound, lighting, and visual effects. But the investment model was heavy: some boutique stores required tens of millions of RMB, and monthly revenue of at least RMB 5-6 million was needed just to break even.
Nightclub labor costs were also high. They included atmosphere teams, marketing teams, and stage DJs. Nightclub DJs differ fundamentally from pub DJs: they must meet standards for emotional intelligence, set-building ability, business capability, and track record. Monthly salaries could reach RMB 16,000-18,000, with some above RMB 20,000. A stage director could earn RMB 30,000. Each DJ worked only one hour, while a full night required six to eight DJ hours, so DJ plus MC costs could exceed RMB 300,000.
Nightclubs also needed dance-leading teams and atmosphere A-teams. A-team average salary was about RMB 15,000, and a venue needed at least 15-20 people. There were also B-teams that accompanied consumers and helped create atmosphere. One booth might require one dedicated server, washrooms needed dedicated PA staff, and service costs were high.
Consumers often felt nightclub spending was expensive and full of sales tactics. Spending RMB 3,000-5,000 might not bring real happiness, while true respect might require spending tens of thousands.
Helen's addressed this pain point by removing consumption hierarchy. Guests were treated equally, drank products at similar price levels and per-capita spend, and felt closer to friends. In nightclubs, consumers often face unsolicited approaches and post-booking WeChat follow-ups. Such aggressive sales methods are especially disliked by people born after 1995 and 2000 because they feel full of consumption traps.
Helen's chose a Southeast Asian interior style. Consumer psychology suggests that more reflective surfaces increase psychological barriers to spending. Helen's used matte, non-reflective wood materials to lower consumer vigilance. Its very low beverage prices were possible because operating costs had already been compressed: aside from servers and kitchen workers, there were few other staff roles. Monthly labor cost for an entire store was only RMB 40,000-50,000, allowing more gross margin to be passed to consumers.
By contrast, a 500-600-square-meter nightclub could spend more than RMB 1 million per month, forcing high alcohol pricing and marketing tactics. That was one reason lounge bars and bars struggled to scale.
Another reason was human dependence. Circle bars and lounge bars often relied on an owner with stories and personal charisma. If that owner was absent, a store manager alone found it hard to operate well. The owner had to keep solving customers' needs and turn one friend into another person's friend. Customers came to drink with the owner, hear stories from the owner's youth, or discuss shared interests. Human culture is the hardest part to replicate, which is why many such bars cannot go public or go far.
Small pubs recovered better than restaurant stores during COVID disruption. Helen's and Haidilao both opened stores aggressively that year, but Haidilao closed 300 stores while Helen's did not. The core reason was user profile.
Conventional restaurants often serve family meals, colleague meals, or, in some banquet-style restaurants, business hosting for consumers born in the 1960s and 1970s. Small pubs mainly serve people born after 1995 and 2000.
FoodBud argued that China's strongest consumption group had become the post-1995 and post-2000 cohort. Consumers born in the 1980s were carrying mortgage pressure, while those born in the 1970s were increasingly focused on health. The people still going out to consume were post-1995 and post-2000 consumers. This group had normalized and habituated to COVID, and still had social and drinking needs regardless of the pandemic. Compared with people born in the 1980s, who might go home after work if the pandemic reduced income, younger consumers often had stronger family financial foundations, lower savings needs, and spent what they earned each month. They were willing to spend and less afraid of the pandemic.
Pub licenses in China were generally restaurant-type business licenses. Guangzhou experienced two COVID waves that year. During outbreaks, many entertainment venues such as bars, nightclubs, and KTVs were not allowed to open, while some restaurant-licensed dining bars and lounge bars could continue operating. During that period, pub revenue did not fall; in some cases it multiplied and reached queueing levels.
Reference cited in the source: expert meeting notes from the pub industry.
Note: financing, store-expansion targets, payback expectations, COVID-era performance, and any public-market references are historical figures and views from the original December 16, 2021 article.