Wen 丨 Han Xiyan
The first share of noodle restaurants, the first share of spicy hot pot, the first share of seafood hot pot, the first share of brine flavor...
In 2022, Chinese fast food is lining up to go on sale.
Some analysts also said, "This year is likely to appear a wave of catering companies listing, because the head of the company to compete for listing will form a chain reaction, it is estimated that more companies in order to maintain competitive advantage, will also join the listing army." ”
In the past, the traditional and pyrotechnic business of catering seemed to be far away from the words "listing" and "capital". However, after experiencing the baptism of the epidemic, in order to survive and occupy the market, more and more restaurant owners have taken the initiative to embrace the capital market.
Of course, the catering business itself is also full of temptation, huge potential, and the future can be expected. The track space is vast, but the catering service enterprises present a situation of categories and no brands. In this case, capital is eager to find the next Chinese catering McDonald's or KFC.
However, just by embracing capital, it will not solve the problem of the Chinese catering industry itself. The dilemma of thin profits, serious product homogenization, single service, poor experience, etc. are all problems that need to be solved.
"And in the primary and secondary markets, the short-term 'irrationality' of capital will pass sooner or later." An investor who has long followed the catering track has come to this conclusion about Pencil Road. The catering industry will also return to its fundamentals, and the Chinese catering industry will still rely on itself if it wants to run out of the so-called "100 billion market value brand".
In 2022, Chinese fast food was lined up for listing
Few people could have imagined that the spicy hot shops that are common on the street could one day ring the bell and go on the market.
Recently, the International Department of the China Securities Regulatory Commission disclosed that Shanghai Yang Guofu Enterprise Management (Group) Co., Ltd. has submitted the "Approval of Overseas Initial Public Offering of Shares (Including Ordinary Shares, Preferred Shares and Other Stocks and Derivative Forms of Shares)". At present, the progress has reached the stage of receiving materials, and there are still many links waiting for feedback and notifications.
This means that once the material is approved, Yang Guofu's spicy hot can impact the "first hot stock".
In 2022, Yang Guofu is not the only catering enterprise going to the capital market. On the eve of the Spring Festival, the news that Hefu Fish noodles were going to IPO detonated the long-dormant consumer track. At almost the same time, the Chinese fast food chain brand Rural Ki has submitted a Hong Kong stock IPO prospectus, in addition to Laoxiang Chicken, Banu Hot Pot, Cantonese Hot Pot Laowang, Seafood Restaurant Qixintian, Lao Niang Uncle, Xibei also clearly expressed their intention to list.
For a time, it seemed that the exchange was "occupied" by catering enterprises. This phenomenon did not come out of thin air, and when communicating with investors in the consumer sector, basically everyone mentioned one factor: the epidemic.
An investor told Pencil that before the epidemic, most restaurant owners did not have the concept of "financing" in their minds. "Ask the business owner, is there a financing plan? The bosses either asked why they were raising money, or they replied that there would be no past, present, and future. ”
However, after experiencing the baptism of the epidemic, more and more restaurant owners have taken the initiative to embrace the capital market, and the rapidly reducing passenger flow, turnover rate, customer unit price and other indicators have forced catering brands that have not worried about cash flow in the past to contact more capital to improve the speed of opening stores and rapidly increase market share. "Track, model, valuation", the popular phrase in the Internet circle in the past, has also begun to appear frequently in the mouths of catering people.
Therefore, starting from the second half of 2020, financing events in the catering field have occurred frequently. According to relevant statistics, there were 115 financing incidents in the catering industry in 2020, and the amount of financing exceeded the sum of the previous 5 years. Entering 2021, the financing fever is more than enough, and the data of enterprise investigation shows that in 2021, there will be more than 220 financing incidents in the domestic catering track, and the disclosed financing amount will exceed 50 billion yuan.
"Just like all investors are talking about hard technology now, during that time (from the second half of 2020 to 2022), many investors have gathered into chain noodle restaurants and fast food restaurants." said the investor.
The head catering brand is even more sought-after, and the valuation is even higher. For example, Hefu Fishing Noodles has been queued up by many well-known domestic VC/PE institutions to grab shares. Founder Li Xuelin once revealed that the valuation of the E round of financing of Hefu Lao noodles is 7 billion yuan, but in the financing process, some capital even gives a valuation of 14 billion yuan, and some quotations are even as high as 16 billion yuan.
The same is true from the primary market to the secondary market.
If you want to have a big development, you must use the power of capital, as a VC investor focusing on catering said in an interview with the media, "At present, these companies choose to IPO, a very important reason is to survive, and then to occupy the market, they are also in the early layout of the post-epidemic era." ”
On the other hand, through the listing, the enterprise is elevated to the group operation, which is also the appeal of the restaurant owner as an entrepreneur.
"This year, it is likely that there will be a wave of catering companies going public, because the head companies competing to go public will form a chain reaction, and it is estimated that more companies will join the listed army in order to maintain their competitive advantage." Some analysts said.
Looking for Chinese dining at KFC or McDonald's?
"With a unified franchise and operation model, as well as low costs and huge market space, it is difficult to think of spicy hot or not." Yang Guofu, who has been established for 19 years, analyzed it after announcing the preparation for listing. In the first half of 2020, Yang Guofu opened 508 stores in 180 days, an increase of 101% over the same period in 2019. As of now, the number of stores is about 6,000.
This model is also applicable in restaurant circuits such as ramen restaurants and hot pots that are easy to replicate on a large scale. "Large-scale and rapid replication" is the commonality of the above-mentioned catering brands preparing for listing.
For example, Hefu Noodles, which has been established for 10 years, has been running wild on the way to open a store for the past two years. In 2021, the number of new stores added to Hefu Lao noodles doubled compared with 2020, and a new store was opened every 2 days, and there were more than 100 stores in Shanghai, North China, Jiangsu and Zhejiang. Its important investor, Absolute Taste Food, also said in the announcement that after eight years of deep cultivation of Chinese fast food, Hefu Noodles has achieved a business model that can be quickly copied.
In addition to the old brands, a number of start-up brands are not to mention more. For example, a restaurant chain brand has opened more than 1,000 stores in the past two years, and still maintains the trend of rapid store opening.
The development of chaining is actually a process of rapid replication, standardization is a problem that must be solved, and standardization requires huge supply chain support. Now, among the Chinese chain fast food brands that are lined up for listing, behind the wild scale of each brand store, there is a complete set of supply chain support such as factories and logistics. For example, the rural base, the central kitchen uniformly produces sauce, distributes to each store, the store only needs to complete the stir-fry according to the proportion, there is a complete standardized meal model.
The ability and space for "large-scale, rapid replication" is also one of the factors that invest in Chinese-style catering projects. A restaurant entrepreneur told Pencil that during the financing period, one of the most profound questions asked by investors was: How to open 5,000 or even 10,000 stores?
The most important reason for the influx of capital and entrepreneurs is undoubtedly the huge potential of China's catering market, and the future can be expected.
In 2019, the size of the mainland catering market exceeded 4.6 trillion yuan, becoming the world's second largest catering market after the United States. However, from the perspective of per capita catering consumption, the per capita catering consumption in the mainland is only 18% of that of the United States. If the per capita catering consumption level of the United States is taken as the benchmark, the theoretical catering market in the mainland can reach 25 trillion yuan, which is beyond imagination.
Another important reason is that the concentration and capitalization of the domestic catering industry are low, and there are a large number of potential listing opportunities. Qing Yong, CEO of Tomato Capital, once estimated that if you compare the population of the United States and Japan with the proportion of listed companies in catering enterprises, China should have about 240 (benchmarking the United States) and 1,000 (benchmarking Japan) listed catering companies respectively.
The track space is vast, but the catering service enterprises present a category, no brand, in this case, it is not difficult to understand the mood of capital eager to find the next Chinese catering McDonald's or KFC.
Irrational dilemma
However, for the prospects of catering brands to be listed, people in the industry are not blindly optimistic.
Some insiders believe that the epidemic is a booster for catering enterprises to embrace capital, and the cash flow of catering enterprises before the epidemic is generally better, and the sudden outbreak of the epidemic has exposed the fact that the hematopoietic capacity of catering enterprises is insufficient. Corresponding to the lack of anti-risk ability, the acceleration of store opening with the help of capital often leads to the dilution of the company's single store profits, and the return on investment is reduced.
In the secondary market, it can be intuitively seen that the valuation of the catering sector has experienced a sharp cooling in the past period of time. Affected by multiple factors, the overall performance of the A-share and Hong Kong stocks in the catering sector was relatively sluggish, of which the stock prices of Haidilao, Jiumaojiu and Sipping fell by more than 40% throughout the year.
Some analysts believe that compared with other industries, the catering industry has a low entry threshold, high replicability, and fierce competition, and the industry attributes determine that catering people have to bear hardships and stand hard work. This also means that in the catering industry, it is difficult for speculators and wind chasers to have long-term living space.
In fact, at the end of last year, the investment and financing of the catering industry in the primary market has already shown signs of "turning off the fire and cooling down". Some investors even told Pencil Road that they no longer look at catering, and many investment institutions are in a wait-and-see state.
"In the primary and secondary markets, the short-term 'irrationality' of capital will pass sooner or later." One investor concluded this about Pencil Road. And catering will certainly return to its fundamentals, and its own problems are far from being solved by financing or listing.
In fact, the operating performance of multiple catering brands that sprinted for IPOs was not ideal. When combing through a number of public prospectuses and financial data, it was found that the phenomenon of low net profit of Chinese restaurant chain enterprises was common. The net profit margin of the village base is 4.8%, the net profit margin of the green tea restaurant is 5.3%...
Low net profit is also a double-edged sword. Some relevant experts said in an interview that the net profit of Chinese fast food is low, although it shows that it has a competitive price advantage, good quality and low price, and can form differentiated competition with foreign catering brands, but in the long run, once consumers get used to more affordable products, the follow-up launch of high-profit new products, the market acceptance will be relatively limited.
The dilemma of thin profit is only one of the problems that Chinese catering brands need to solve, and the traditional and pyrotechnic business of the catering industry seems to have a low threshold, but it is actually very difficult to operate well. In addition to facing the problems of increasing labor costs, high food costs and high rents in the industry, most Chinese restaurant companies also have to face the dilemma of serious product homogenization, single service, and poor experience.
Moreover, the current competition in the catering industry has risen from the product dimension to the comprehensive dimension, including the competition of supply chain, food safety, store environment, brand marketing, etc. For listed catering enterprises, whether it is cross-regional personnel management, supply chain assurance, or the construction of operating systems, it is a challenge that must be solved.
Listing is also another double-edged sword for catering companies. Listing will bring greater operating pressure to companies, investors in the secondary market will use a magnifying glass to monitor the company's every move, and the slightest performance will be magnified in the stock market.
The delisting of the rural base is a lesson for the past, which has had the experience of listing on the US stock market, but due to the decline in performance or even losses, it finally chose to withdraw from the US stock market. At that time, some people in the industry also analyzed the dismal performance of the rural base after the listing: the loss of the rural base was related to its weak foundation and lack of staying power after the listing, which referred to its operation and listing less than three years after the injection of capital, and the seedlings were encouraged, and the scale at that time was not enough to drag the big net that was rolled out after the listing.
"After the listing of enterprises, they will basically encounter a spell, and almost all listed companies will make great progress after getting money in the first year, which deviates from the normal rhythm of the catering industry and its own development." The relevant person in charge of the village base also said so.
The deep problems of Chinese-style catering enterprises cannot be solved by capital.