The largest Chinese fast food enterprise in China has more than 1,100 directly operated stores on the Hong Kong Stock Exchange

Financial Associated Press (Shanghai, Editor Zhou Xinyang) - China's largest Chinese fast food company, The Village-based Fast Food Chain Holdings Co., Ltd. submitted a table to the Hong Kong Stock Exchange on the evening of January 25, with Goldman Sachs and CMB International as its lead underwriters.

Country Ki, which specializes in Chinese fast food, now has two brands – Country Ki and Mr. Rice. Among them, Rural Was Founded in 1996 and focuses on Sichuan cuisine, while Mr. Rice was founded in 2011 to provide dishes from different regions such as Hunan, Jiangsu, Zhejiang and Guangdong.

Mr. Rice's layout in Shanghai is growing rapidly

As of September 30, 2021, there were a total of 1,145 directly operated restaurants under the two brands. Among them, there are 602 village-based restaurants and 543 Mr. Rice restaurants.

According to Frost & Sullivan's report, in terms of the number of chain restaurants and revenue generated in 2020, Rural Base is the largest direct-operated Chinese fast food group in China, while according to the growth of the number of chain stores from January 2019 to September 2021, Rural Base is the fastest growing fast food group among the top five direct-operated Chinese fast food groups in China, with a growth rate of 79.5%.

According to the prospectus, Mr. Rice's layout of the Shanghai market has become a key step for the rural company - since entering the Shanghai market in June 2020, it has been rated as the most popular restaurant in many districts of Shanghai by Dianping, and as of September 30, 2021, the number of restaurants in Shanghai was 70, with a total order volume of more than 5 million people, and the revenue of restaurants in Shanghai in the first three quarters of 2021 was 179 million yuan.

The prospectus discloses that from January 2019 to September 2021, Mr. Rice is the fastest growing brand among the top five directly operated Chinese fast food groups in China, with a growth rate of 102.6% in terms of the growth of the number of chain restaurants.

According to the village-based plan, about 90 to 110 village-based restaurants and about 160 to 180 mr. rice restaurants will be opened in 2022, and about 140 to 160 country-based restaurants and about 200 to 240 mr. rice restaurants will be opened in 2023. At present, the village base has more than 7 million registered members.

In the prospectus, The net proceeds from the IPO will be used primarily to expand the restaurant network, deepen market penetration and renovate existing restaurants as needed; strengthen supply chain capabilities, and lease additional regional warehouses equipped with frozen and refrigerated storage space for temperature-sensitive ingredients; strengthen technical capabilities to further improve operational efficiency; and for general corporate use.

Turn a profit in 2021

In terms of financial data, the rural base revenue in 2019 and 2020 was 3.257 billion yuan and 3.161 billion yuan respectively, which was inevitably greatly affected by the epidemic in 2020.

In the first three quarters of 2021, the village-based revenue increased by 56.4% from 2.189 billion yuan in the same period of 2020 to 3.424 billion yuan, and has exceeded the annual revenue scale of 2019 and 2020, with a net increase of 176 restaurants.

In 2019 and 2020, the proportion of the total revenue from the operation of the entire Group's restaurants was 63.7% and 62.9%, respectively, while the proportion of the Mr. Rice brand was 36.3% and 37.1%, respectively, while in the first three quarters of 2021, the proportion of the Village-based and Mr. Rice was relatively close, at 54.1% and 45.9% respectively.

In 2019, 2020 and the first three quarters of 2021, the operating margins of the village-based restaurants were 10.7%, 9.2% and 12.6%, respectively, and the operating margins of Mr. Rice restaurants were 6.5%, 3.3% and 10.4%, respectively.

In the first three quarters of 2021, the net profit of the rural base company was 163 million yuan, compared with a net loss of 13.81 million yuan in the same period of 2020.

The founder team is still the largest shareholder of The Village Foundation, holding 53.15% of the shares. According to the prospectus, before the IPO, SIG Haina Asia held 14.36% of the shares, the largest institutional investor, and Sequoia China held 7.88% of the shares of Rural Foundation.

Sun Qian, a partner at Sequoia China, serves as a non-executive director of Rural Foundation, and Du Zhongbing, founder of Banu Hotpot, also serves as an independent non-executive director of Village Foundation.