The people eat for heaven! Being able to eat fresh and delicious meals in addition to the daily busyness can undoubtedly increase a little happiness.
As Gen Z gradually becomes the main force of the consumer market, the demand of the catering market has also changed with the changes in the needs of Gen Z people, which provides a hot land for the development of new catering.
Compared with previous consumers, the Z generation group will pay attention to the experience brought by consumption itself while pursuing trend, appearance and quality, especially in terms of catering. Freshly fried dishes with "pot gas" and high-quality food with excellent cost performance are naturally more likely to gain their favor.
Adhering to the business philosophy of "delicious is not expensive", one of the largest Chinese fast food groups in China, Village-based Fast Food Chain Holdings Limited (hereinafter referred to as "Village-based Company"), submitted a listing application on the Hong Kong Stock Exchange on January 25, with Goldman Sachs and CMB International as joint sponsors.
The long slope of the catering track is thick with snow, and the growth rate of Chinese fast food is eye-catching
Throughout the development history of the entire industry, China's catering market has experienced rapid growth in recent years, and its total revenue has increased from 3.58 trillion yuan in 2016 to 4.67 trillion yuan in 2019, with a compound annual growth rate of about 9.3%. According to the Frost & Sullivan report, although the size of China's catering market fell to RMB3.95 trillion in 2020 due to the outbreak of the new crown, China still ranked second in 2020 in terms of the size of the catering market.
It is worth mentioning that under the influence of economic growth and increased disposable income, increased per capita annual food expenditure, rapid urbanization and other factors, China's catering market is expected to recover and grow rapidly in the next few years from 2021, from 2020 to 7.62 trillion yuan in 2025, with a compound annual growth rate of about 14%.
(Image source: Rural Foundation Company Prospectus)
Among them, China's fast food restaurant market is expected to grow further, reaching 1.81 trillion yuan in 2025. Chinese fast food restaurants dominate the Chinese fast food restaurant market, with a market share of more than 70% from 2016 to 2020 in terms of revenue. According to the Frost & Sullivan Report, from 2020 to 2025, the market is expected to grow at a compound annual growth rate of about 14% to reach $1.27 trillion in 2025.
As a leading enterprise in the field of Chinese fast food, Rural-based Company is expected to benefit from the rapid growth of the market space.
Dual-brand driving rapid growth
The story of Village Foundation began in 1996, when its co-founders Li Hong and Zhang Xingqiang opened their first restaurant in Chongqing.
After years of development, the company has also made great progress, according to the Frost & Sullivan report, according to the number of chain restaurants in 2020 and the revenue generated, the company has become China's largest direct-operated Chinese fast food group.
According to the prospectus, The company operates two distinctive brands: Village Foundation and Mr. Rice.
Among them, Village Base is the company's first brand, founded in 1996, is the interpretation of Sichuan cuisine on the modern fast food stage. According to a consumer survey conducted by Frost & Sullivan, Cunji ranked first among the first mentioned brands of Chinese fast food restaurant brands in southwest China.
Founded in 2011, Mr. Rice aims to create a "nap station" that brings delicious and relaxing moments to customers, especially office workers, as they spend their daily schedules.
In addition, the village-based company has introduced the weigh-in (rather than per-dish) model and the small bowl (as opposed to the whole main dish) model into Mr. Rice's brand business. In June 2020, Mr. Rice entered Shanghai. After moving in, Mr. Rice quickly topped the list of the most popular restaurants in many regions of Shanghai published by Dianping's well-known online restaurant review platform. According to a consumer survey conducted by Frost & Sullivan, Mr. Rice ranks first in the ranking of Chinese fast food brands in central China.
According to the Frost & Sullivan Report, from January 2019 to September 2021, the number of restaurants operated by the company increased from 638 to 1145, a growth rate of 79.5%, the fastest growth rate among the five direct participants.
By brand, among the 1145 directly operated restaurants, the village-based company operates 602 country-based restaurants and 543 Mr. Rice restaurants nationwide.
From the perspective of distribution, as of the first three quarters of 2021, the vast majority of rural restaurants are located in Chongqing and Sichuan, with 343 and 222 restaurants in Chongqing and Sichuan respectively, and Mr. Rice has 185, 104, 103, 81 and 70 restaurants in Hubei, Hunan, Sichuan, Chongqing and Shanghai respectively.
Driven by dual brands, although the company has been affected by the new crown epidemic in the past two years, its business situation has recovered.
According to the data, in 2019, 2020 and the first three quarters of 2021, the company achieved revenue of 3.257 billion yuan, 3.161 billion yuan and 3.424 billion yuan respectively, mainly from restaurant operations, including restaurant business and takeaway business; during the above period, it achieved net profits of 0.83 billion yuan, -2.424 million yuan and 163 million yuan respectively.
According to The Village Foundation, the 2020 loss was mainly due to the decline in foot traffic due to the COVID-19 epidemic, the temporary closure of restaurants and the reduction of business hours, partially offset by the growing takeaway business.
In fact, the COVID-19 pandemic has not only affected village-based companies, but the entire industry has been impacted. According to the Frost & Sullivan Report, revenue from Chinese fast food fell by 12.8% from RMB755.7 billion in 2019 to RMB659 billion in 2020.
By brand, in the above periods, the rural-based revenue accounted for 63.7%, 62.9% and 54.1% respectively, and Mr. Rice's revenue accounted for 36.3%, 37.1% and 45.9% respectively. In addition, from the perspective of ping efficiency growth, the average daily ping efficiency of a single store in the first three quarters of 2021 increased to 56.4 yuan, an increase of 17.3% year-on-year, and the average daily ping effect of a single store in the first three quarters of 2021 was 65.5 yuan, a year-on-year growth rate of 41.8%, and Mr. Rice showed an accelerated development trend.
Multiple competitive advantages show the true color of the leader
As The largest direct-operated Chinese fast food group in China, Village-based Company also ranks first among the top five direct-operated participants in terms of the speed of corporate expansion, mainly due to the company's five competitive advantages.
First, the ultimate value for money quality food. Adhering to the long-term business philosophy of "delicious and not expensive", the company adheres to the use of high-quality ingredients and freshly prepared, and maintains reasonable prices while providing customers with a variety of high-quality and delicious dishes.
In addition, in order to meet the dining experience needs of a new generation of consumer groups, the company has made efforts in other aspects, such as making menus more "beautiful", customizable to meet personalized dining choices, and novel weighing models that give customers greater choice diversity under a given budget.
This series of efforts has made the village-based company a benchmark leading the development of new Chinese fast food. According to a consumer survey conducted by Frost & Sullivan, about 99% and 98% of the surveyed customers who had visited Mr. Village Ki and Mr. Rice were satisfied with their dining experience, and about 99% and 96% of the surveyed customers who had visited Mr. Village Ki and Mr. Rice respectively were interested in visiting Mr. Village Ki and Mr. Rice again. According to the same survey, deliciousness, a wide selection of dishes, the ultimate price-performance ratio, high-quality ingredients and freshly fried and ready-made are the main reasons for customers to visit again.
Second, strong product development capabilities. Freshness is an important demand for diners, on the one hand, the ingredients are fresh, and at the same time, the products can be constantly innovated. Using high-quality ingredients, the company's product team has also ventured to introduce new dishes, regularly updating the menu and introducing new dishes to cater to the changing tastes of customers.
With excellent products and strong product development capabilities, Rural Foundation has accumulated an excellent reputation in the hearts of customers.
Third, scale advantage. Scale has a positive effect on reducing costs, which is especially important for the asset-heavy F&B industry.
As mentioned above, according to the number of chain restaurants and the revenue generated in 2020, The Village Foundation Company is already the largest directly operated Chinese fast food group in China. The Company opened 252 new restaurants in 2019, 2020 and nine months ended 30 September 2021 respectively. According to the Frost & Sullivan report, the company is the fastest growing group among China's top five directly operated Chinese fast food groups, with a growth rate of 79.5%, based on the growth rate of the number of restaurant chains from January 2019 to September 2021. Mr. Rice's development history in Shanghai is particularly a testament to his outstanding ability in scale, which further strengthens his scale advantage and forms a good positive feedback loop.
Fourth, it is highly standardized. If you want to open stores quickly and efficiently, standardized products are one of the most core prerequisites, which is one of the reasons why KFC, McDonald's, and hot pot restaurants can sweep the country.
After more than 25 years of deep cultivation in the fast food restaurant industry, The company has combined traditional Chinese cooking techniques with modern large-scale chain restaurants to establish a highly standardized business model covering standardized cooking processes and integrated supply chain management, which has helped the company's rapid expansion;
Fifth, excellent brand power and operational capabilities. After years of development, the company's two major brands have a very high degree of recognition, and the operation experience of the rural base company is also very rich, which has laid a very good foundation for further expansion in the follow-up;
Of course, as a veteran player who has been deeply involved in the catering market for many years, the village-based company has many advantages, and the above is only a small part of it.
epilogue
With the rise of the new catering trend in the catering industry, the village base company adheres to the freshly fried and freshly made products, providing the ultimate cost performance has grown into the leader of new Chinese food.
From the current situation, if the rural-based company can be successfully listed on the Hong Kong stock market, this will help it further enhance its popularity on the one hand, and on the other hand, it can achieve rapid expansion through the support of the capital market, obtain higher industry status and more market share.
Author | Yan XIV
Edit the | Sukie