Image source @ Visual China
Text | Kaiboluocaijing, author | Jiaoying Wu, Editor | Golden Dragon
Once the "first strand of Chinese fast food" village base, "kill" back.
On January 25, the Chinese fast food brand Village-based Fast Food Chain Holdings Limited (hereinafter referred to as "Village-based") officially submitted a prospectus to the Hong Kong Stock Exchange. This is the second sprint IPO of the village base. As early as 2010, The Village Foundation was listed on the New York Stock Exchange, but was delisted in 2016 due to poor management and continuous losses.
Born in Chongqing, The Village Base has two affordable fast food brands, Village Base and Mr. Rice, the former focusing on Sichuan cuisine, the latter including Hunan, Jiangsu and Zhejiang, Guangdong flavors, and using innovative models such as weighing dishes and small bowl dishes. At present, there are 1145 directly operated stores in The Village Foundation, which is the largest directly operated Chinese fast food group in China.
According to the prospectus, in 2019, 2020 and the nine months ending September 30, 2021, the revenue of the village base remained above 3 billion yuan, and the restaurant and takeaway businesses have increased to varying degrees. Among them, the growth rate of "Mr. Rice", which was established in 2011, is obvious, and by the first three quarters of 2021, the revenue will account for 45.9%, and the turnover rate will be 4.2, higher than the 2.8 of the "village base".
However, the asset-heavy business model coupled with the not very high unit price, the profitability of the rural base is not good, in 2019 the net profit of 80 million yuan, in 2020 to turn a loss, by the first three quarters of 2021 to increase to 160 million yuan, but the net profit margin is only 4.8%.
Previously, in October 2021, Chinese fast food farmers and uncles have reported the news of preparing for listing. Today, the rural base is once again standing at the door of the IPO, and the new "first stock of Chinese fast food" has increased in variables.
Scrambling for the first share of Chinese fast food, the village base "killed" back
"Country base? Is it that copycat version of KFC? "In the impression of many people, Village Ki is a fried chicken shop that runs in the county town by rubbing KFC traffic.
However, almost no one knows that the village base was previously called "country chicken", and from the first day of birth, it was to sell Sichuan vegetables, not to make fried chicken.
In 1996, Li Hong, a native of Chongqing, and her husband opened a Sichuan restaurant called "Village Chicken" at the Liberation Monument in Chongqing. Soon after, the "foreign fast food" KFC drove into Chongqing, and the restaurant owners at that time were so good that the restaurant owners at that time were red-eyed. So Li Hong and her husband adjusted the dishes in the store, replacing the classic Sichuan dishes with fried chicken, burgers and fries.
It turned out to be a failed transformation. Not long after, Li Hong and his wife still made back the classic Sichuan dishes that were freshly fried, and the price was quite cheap, and most of the Sichuan rice sets were only 12 yuan.
Village-based store Source / Weibo
In the following ten years, the rural base took root in the second- and third-tier cities in the Sichuan-Chongqing region. In 2006, the "village chicken" was officially renamed "village base", shouting the slogan of "where KFC is driven, the village base will be opened", and once entered beijing, Shanghai and other first-tier cities.
In 2010, the number of rural base stores exceeded 100. Also in September of that year, The Village Foundation was listed on the New York Stock Exchange and sat on the throne of "the first share of Chinese catering", which was once a unique scenery.
The countryside base, which has a single taste and is difficult to solve the problem of expansion, has been mired in losses in the second year of listing, and then the stock price has continued to decline with net profit. In 2016, the village base was delisted from the US stock market.
After the delisting of the village base, he chose to retire to Sichuan and Chongqing and re-polish the restaurant model. In the past 5 years, the former "first chinese fast food stock", with the blessing of Sequoia China Capital, has opened stores to thousands of stores in a fully direct mode.
According to the prospectus, as of September 30, 2021, Cunji has 1145 directly operated restaurants, of which 602 are "Village Ki" brand stores and 543 are "Mr. Rice" brand stores.
Distribution of Mr. Village-based and Mr. Rice Stores Source / Prospectus
Rural base is spicy sweet and sour, rich in flavor of classic Sichuan cuisine, signature dishes such as Kung Pao chicken, pickled pepper beef, etc., most of them are sold in the set menu mode, the unit price of customers is between 15-30 yuan, the store is mainly open in the southwest region, of which 343 in Chongqing, 222 in Sichuan, Shaanxi, Guizhou, Yunnan a total of 37.
Mr. Rice includes Hunan, Jiangsu, Zhejiang, Guangdong flavors, signature dishes such as chili fried meat, sweet and sour ribs, etc., using innovative weighing dishes and small bowls of vegetables to sell, customers can spend 20-35 yuan to eat three to four dishes. In addition to its 184 stores in Sichuan and Chongqing, it opened 289 stores in Hubei and Hunan, and in 2020, Mr. Rice entered Shanghai and currently opened 70 stores.
As a Chinese fast food that focuses on "delicious and not expensive" and "extreme cost-effective", the stores of Village Base and Mr. Rice are mainly small restaurants, with exquisite location and clear target audience.
Among them, 50%-60% of the village base and about 30%-40% of Mr. Rice are opened in commercial pedestrian streets or comprehensive functional commercial areas, and the target audience is tourists or nearby office workers; about 10%-15% of the village base and about 40%-45% of Mr. Rice are opened near the office building, and the target audience is office workers; and about 10%-20% of the village-based and Mr. Rice are opened in residential areas, and the target customers are community residents. In addition, there are also some stores opened in transportation hubs, near hospitals, busy streets and other high-traffic places.
Second IPO, is the old problem solved?
Rural Foundation, which was delisted due to continuous losses, knocked on the door of the IPO again after 5 years of dormancy, where did the confidence come from?
The first is the trillion-dollar market size. The prospectus cites Frost & Sullivan as saying that from 2020 to 2025, the Chinese fast food market is expected to reach 1,268.5 billion yuan in 2025 at a compound annual growth rate of 14%. Moreover, in China's catering market, Chinese food accounts for 78.9% of the share, of which Sichuan cuisine accounts for 22.8%.
The second is relatively stable revenue and profitability. In recent years, the restaurant business and takeaway business of the village base have developed well and are in a state of continuous growth.
According to the rural-based prospectus, the revenue in 2019 was 3.26 billion yuan, of which the restaurant business revenue was 2.4 billion yuan and the takeaway business revenue was 850 million yuan; the revenue in 2020 was 3.16 billion yuan, of which the restaurant business revenue was 2 billion yuan and the takeaway business revenue was 1.14 billion yuan; in the first three quarters of 2021, the revenue was 3.42 billion yuan, the restaurant revenue was 2.26 billion yuan, and the takeaway revenue was 1.16 billion yuan.
Village Base and Mr. Rice Revenue Comparison Source / Prospectus
Judging from the prospectus, the young brand "Mr. Rice", which was founded in 2011, has grown significantly faster than the "village-based" brand.
In 2019, the village-based revenue with 469 stores was 2 billion yuan, accounting for 63.7% of the total revenue; Mr. Rice had 378 stores with a revenue of 1.18 billion, accounting for 36.3% of the total revenue.
In 2020, due to the impact of the epidemic, the business hours of some restaurants were reduced, the traffic dropped or temporarily closed, and the revenue of the two major brands declined, the former was 1.98 billion and the latter was 1.17 billion. However, this year, The Village-Based and Mr. Rice are still expanding, with 530 Village-based stores and 439 Mr. Rice stores.
By the end of September 2021, the number of rural-based stores increased to 602, and the revenue increased by 450 million yuan to 1.85 billion yuan compared with the same period in 2020; Mr. Rice stores increased to 543, and the revenue doubled from 780 million yuan in the same period to 1.57 billion.
From the perspective of operating profit and profit margin, from 2019 to the end of September 2021, the operating profit of the village base increased by only 10 million, and the operating profit margin increased by 1.9%; but Mr. Rice's operating profit increased by 84 million, and the operating profit margin also increased by 3.9%.
Generally speaking, the single-day revenue of chain catering enterprises = the number of restaurants x the average turnover rate x the number of units x the unit price of customers. Among them, the turnover rate is a core indicator to measure catering enterprises, and it is also a determining factor in profitability.
Village-based, Mr. Rice's main performance indicators Source / Prospectus
Judging from the prospectus, Mr. Rice's turnover rate is significantly higher than that of the village base. From 2019 to the end of September 2021, the overturning rates of the village base were 2.8, 2.2 and 2.8, respectively, and Mr. Rice was 3.3, 3.4 and 4.2, respectively.
However, in the asset-heavy all-direct operation model, high rent, water and electricity, raw material costs, labor costs, coupled with the commission of takeaway platforms, the profit situation of the rural base is not impressive.
According to the prospectus, in 2019, the net profit of the rural base was 80 million yuan, and the net profit margin was only 2.5%; in 2020, due to the impact of the epidemic, the group once fell into a loss dilemma with a net loss of 2.42 million yuan; in the first three quarters of 2021, the situation improved, its net profit was 160 million yuan, but the net interest rate was only 4.8%.
"The positioning of the village base is mass catering, the unit price of customers is not high, and the profit margin is not related to the brand positioning, which is difficult to change for a while." Lin Yue, chief consultant of Lingyan Management Consulting, analyzed the opening of pineapple finance and economics, and the rural base should give play to its characteristics of parity, open up the sinking market in fourth- and fifth-tier cities, and may have the opportunity to fight a "turnaround battle".
Although the profit margin is not high, many analysts believe that if it is listed, it is still necessary for the village base to adhere to the direct operation model.
"Under the full direct operation model, the expansion speed of brand stores is relatively slow, but the advantage is that the degree of standardization is high, and the control of store operations, personnel training, food safety and other links is stronger, which is helpful to the overall output of the brand, especially when the brand is in the stage of shaping reputation." Lin Yue said.
The old country chicken and the old woman and uncle are running wildly, and the village is anxious?
Want to go on the market of Chinese fast food, not to mention the village base. Before that, the discussion about the "first share of Chinese fast food" fell more on the "old country chicken" and "old lady uncle".
In October 2021, the old country chicken and the old woman uncle invariably spread the news of preparing to go public. It is reported that in September 2021, Lao XiangJi and Guoyuan Securities signed a listing counseling agreement and filed with the Anhui Securities Regulatory Bureau; at the same time, Lao Niang's uncle and CITIC Securities signed a counseling agreement and filed with the Zhejiang Securities Regulatory Bureau.
It is worth mentioning that the old country chicken and the old woman are ready to be listed on the A-share market, but this time the village base sprint is the Hong Kong Stock Exchange. Chinese food industry analyst Zhu Danpeng to open pineapple finance analysis, Hong Kong stock threshold is relatively low, the listing progress is relatively fast, from the thirst for funds and listing efficiency, Hong Kong stocks are undoubtedly a better choice.
This also indirectly shows that in the face of wild competitors, the village base has to be anxious.
Like the village base, lao niang uncle and lao xiang chicken are regional Chinese fast food brands, adopting a direct operation model, not open to join, and in recent years, the two major brands have significantly accelerated the speed of opening stores with the blessing of capital.
Born in Huzhou, Zhejiang Province, the old uncle was originally a wonton shop of only 79 square meters. Founded in 2000, the brand focuses on Jiangsu and Zhejiang-style rice fast food. In the past ten years, the old uncle has experienced 5 rounds of financing and currently has nearly 400 directly operated stores in Jiangsu, Zhejiang, Shanghai and Anhui.
Old Lady Uncle Fast Food Source / Weibo
The first store was opened in Hefei in 2003, when the name was "Feixi Old Hen". In 2018, Lao Xiang Chicken received a first round of financing of up to 200 million yuan from Jiahua Weiye Capital.
In May last year, LaoXiang Chicken announced that the number of stores nationwide exceeded 1,000, and set a target of opening 1,500 direct stores in 2023. At present, Laoxiang Chicken Store has been stationed in first-tier cities such as Beijing and Shanghai. At the beginning of January this year, Laoxiang Chicken completed the Pre-IPO round of financing, which was invested by Guangfa Qianhe and Maixing Investment, and the listing road was accelerated again.
Zhu Danpeng believes that capital injection is not a bad thing, "the use of the leverage of the capital market, in order to quickly leverage local enterprises to improve the shortcomings, the formation of scale, branding, which is also the intensification of competition in the catering industry, consumer side forced the development of the industrial side." ”
However, if you want to get a piece of the Chinese fast food competition, the key is how to make special features.
"From the perspective of consumption, Chinese fast food must be more able to match the dietary structure and consumption habits of Chinese consumers than foreign fast food, and the problem is how to innovate, upgrade and iterate on brands and products." In Zhu Danpeng's view, this is a problem that all Chinese fast food companies have to face and solve.
Hometown Chicken Store Source / Weibo
In the past two years, Laoxiang Chicken has frequently exerted efforts in brand marketing, and is also regarded as an attempt to go out of the circle of Chinese catering brands.
For example, the hometown chicken invited Yue Yunpeng to endorse, and also repeatedly went out of the circle through marketing actions such as "the boss tore the employee's joint salary reduction letter", "200 yuan in the village to open the earthy taste conference", "clucking" and so on. Shu Congxuan, the boss in his 50s, also registered Weibo and Xiaohongshu, and appeared on the Internet to interact with netizens. A series of marketing actions, deeply rooted in the true transmission of today's Internet celebrity consumer brands, has the posture of "conquering" young people.
But as a catering company, "clucking" is obviously not enough. Chinese fast food brands born from the locality currently have a certain degree of regional restrictions, and if they want to carry out a national layout after listing, cross-regional taste acceptance, supply chain building, store management, etc., will be a greater challenge.
*The caption is from @Village Base.