Text | Spoon Classroom, author | Song Xuan, Editor | continent
In 1996, the first rural base store was born in Chongqing; in 2010, the rural base store exceeded 100, and in the same year, the village base became the first chinese food stock on the New York Stock Exchange; in 2011, Mr. Rice's first store was opened in Chongqing; in 2019, the total number of rural base and Mr. Rice stores exceeded 1,000; in 2020, Mr. Rice entered Shanghai, and the number of single-brand stores exceeded 500...
In the year of its first listing, Li Hong, the founder of Rural Foundation, ranked third in the national catering rich list with a value of 2.224 billion yuan in the list of China's catering richest people released by Hurun, after Zhang Lan of Pretty Jiangnan and Pan Wei of Weiqian Ramen. Today, the first two have quietly retreated. And Li Hong once again proved the strength of the village base with her "confidence".
△ Li Hong, founder of Village Foundation
In 2022, Cunji submitted its prospectus for the second time, holding the signboard of "China's largest directly operated Chinese fast food group" (according to 2020 sales statistics, The market share of Cuncunji Group in the Chinese fast food market is 6.8%), which hit the Hong Kong Stock Exchange.
Today, where does the country base of the second IPO come from?
From "hitting a wall" to stepping on four "vents"
There is never a pit in entrepreneurship that can really be avoided...
In 1996, when Western-style fast food swept the country, the year when Village Ki was still called "Country Chicken", Li Hong and her husband, who started with Sichuan cuisine, were struggling to start in Chongqing. After seeing the KFC business next door, the "country chicken" also began to try to make Western fast food. But the opposite happened, and the "country chicken" business that sold Sichuan cuisine and Western-style fast food at the same time did not rise but fell. Li Hong, who hit the wall for the first time, decided to return to the "things she is good at", seriously made Chinese fast food, and from that moment on, set the development principle of "delicious and not expensive" to continue to this day.
After the first listing and financing, the rural base began to expand rapidly from 2010 to 2012, with a total of nearly 200 stores opened in three years, and the stores entered Beijing and Shanghai for the first time. But obviously, the "money" of financing for catering cannot be won, behind the rapid expansion is the decline in service quality and the rapid decline in net profit, and the result of the crisis in store-to-store revenue is a sharp decline in stock prices. Soon, Cunji closed all stores in Beijing and Shanghai and withdrew from the first-tier market. Until 2016, the village base chose to privatize and delisted from the United States.
△ In 2010, The Village Foundation was listed on the New York Stock Exchange
Looking back at the two folding halberds, the first folding halberd, the village base has clarified the brand positioning that continues to this day: firmly do Chinese fast food, and firmly take the route of delicious and inexpensive. After the second folding, the village base returned to internal strength and began to truly establish its own strong and efficient operating system. In the confrontation with capital, it is even more clear that the meaning and value of "money" in the catering industry...
The "wall that was touched" eventually became "practiced work", and the village base began to really mature.
The success of any thing lies in the "person", "thing" right, "time" right, all of which are indispensable. The village base that stepped on the pit and fell over quickly caught up with the fastest development of China's catering industry in the past 10 years... In the 10 years of gold, the village base stepped on at least four "outlets".
The first is the "era" outlet, the rapid development period of the rural base is the era of rapid development of China's catering industry, from 2010 to 2019 in the past ten years, the overall growth rate of China's catering industry exceeds and is close to the double-digit growth rate of rapid growth, the industry growth rate in 2015 is 16%, and the second year of 2016, the rural base completed the first listing, becoming the first chinese fast food stock. The scale of the catering industry has soared from 17636 trillion yuan in 2010 to 46721 trillion yuan in 2019, and in the same year, the number of stores of the rural base group exceeded 1,000 in 2019.
The second is the "track" outlet, the fast food light food track where the village base and Mr. Rice are located is the most important "just need" track in the catering industry, the scale of the fast food market in 2019 has reached 1.07 trillion yuan, in many snack fast food tracks, the fast food light food track has become the largest catering track in China's catering industry with a high proportion of 32.5%. The second is the taste track, where the spicy track where the village base is located as a Sichuan-style fast food ranks first among all flavor types with a proportion of 12% of consumer taste preferences. Looking at the entire Chinese food market, Sichuan Vegetable Market occupies the absolute top brand of various cuisines in the market with a revenue ratio of 22.8%.
The third is the "takeaway" outlet, since 2015, the takeaway industry as a whole has entered an explosive growth period, and the industry scale has grown rapidly from 49.07 billion yuan in 2015 to 653.57 billion yuan in 2019, and the annual growth rate of the industry was as high as 404%. As a player of the fast food track, the country base naturally and quickly enjoyed this first wave of dividends, and the prospectus shows that the takeaway revenue contribution rate of the country base group will reach 34% in 2021.
The fourth is the "capital" outlet, from 2019, catering capitalization has broken out in various categories, and only in 2021, the financing events in the catering industry disclosed have reached 220, with a total financing amount of more than 50 billion yuan. The successful listing of Jiumaojiu and Haidilao has allowed capital to finally see a feasible exit channel. Cunji apparently did not waste this window opportunity, receiving 300 million yuan of investment from Sequoia China in 2020, and has since begun a series of listing preparations.
Any successful enterprise is the darling of the "era", at the right time, doing the right thing, is a rare opportunity to start a business, obviously the development process of the village base or intentionally or unintentionally stepped on this era can give a brand the best configuration.
"Good quality and low price" and "efficient profitability"
"Good quality and low price" is always the best consumer experience pursued by consumers, and it is also the most coveted market opportunity for operators, but very few people do it... The price positioning given by the village base is very clear - delicious and not expensive. When all catering brands are pursuing consumption upgrades, it is obviously necessary to limit themselves to the word "not expensive".
Behind the "not expensive" is not only a simple price advantage, but also to have a super high store operation efficiency and super cost control ability, coupled with Mr. Rice's choice of the "stir-fry" model, but also to increase labor costs, on this basis can also do "not expensive" then need the depth of basic skills.
From the perspective of the customer unit price track, today's "low-priced" catering is still the mainstream consumer market in China's catering market, from the perspective of snack fast food categories, the unit price segment below 15 yuan still occupies the most mainstream consumer unit price position, accounting for 44.7%, followed by 16-30 yuan the unit price of customers accounting for 40.1%. After the unit price exceeds 30 yuan, the market will no longer exceed double digits.
According to the village-based prospectus, in Q1-Q3 2021, the average consumption of rural base singles is: 25.9 yuan; although Mr. Rice operates in a more inclined high-line market, the unit price of customers is also not high, and the per capita unit price in 2021 is only 22 yuan.
However, such a low unit price did not affect the overall profitability of Village Base and Mr. Rice.
According to the prospectus, the sales of rural single stores in 2019-2021 averaged 12,100 yuan in three years, and the average daily ping effect of single stores increased year by year from 2019 to 2021: 53 yuan, 49.7 yuan and 56.4 yuan respectively. Same-store revenue rose 18.9% against the trend in 2021.
Mr. Rice's figures are even better, and his single-store ping effect has also risen for three consecutive years from 2019 to 2021: 45.9 yuan, 49 yuan and 65.5 yuan. Same-store revenue will increase by 42.1% in 2021.
Obviously, at the age of 26, the rural base has balanced the "high quality and low price" and "efficient profitability" in the operation process, and it is the combination of low price and high efficiency that can enable the village base to achieve rapid recovery and growth in 2021, when the epidemic is stable.
"Mr. Rice" is taking on the burden of profitability
In 2022, the village base is 26 years old and Mr. Rice is 11 years old, and although the latter is still a teenager, he is shouldering the profit responsibility of the entire village base. The prospectus has a simple and clear positioning for both brands, village-based - Sichuan fast food, Mr. Rice - office canteen.
As of the third quarter of 2021, 602 stores in Village Base and 543 stores in Mr. Rice. In 2019, Mr. Rice's operating profit accounted for only a quarter of the overall profit of the Village Foundation Group, and in just 2 years, by 2021, Mr. Rice's contribution to the revenue of the entire Village Foundation Group has increased to 46%, and the contribution of the Shanghai area will increase rapidly in 2021. Here are a few sets of numbers we try to better understand the similarities and differences between Village Base and Mr. Rice:
1. Site selection model
Both Murayoshi and Mr. Rice have four types of stores, namely: business district stores, office area stores, residential stores, and transportation hubs/hospitals/takeaway stores. However, the proportion of different store types of the two brands is very different, and the rural base is more biased towards the business circle store, and the proportion of the store type to the total number of rural store stores is 50-60%. Mr. Rice is more inclined to the office area store, accounting for 40-45%. From the perspective of store size, the area of the business circle stores and office area stores that occupy the main store types is generally 200-300 square meters before 2019, and the area of newly opened stores after 2019 is reduced to 100-200 square meters, and the investment amount of a single store is controlled at 80-1 million yuan.
2. Operational data
Overall, Mr. Rice's operational efficiency is slightly higher than that of the village base. As mentioned above, in 2021, the average daily ping effect of the rural base single store is 56.4 yuan, and the ping effect of Mr. Rice is 65.5 yuan. There are two reasons why Mr. Rice's ping efficiency is higher, one is that Mr. Rice's average single store area is smaller, and the average area of his stores in 2021 is 187 square meters, while the average area of village-based stores is 215 square meters. The second is that Mr. Rice overturned faster, with an average daily turnover rate of 4.2 times in the first three quarters of 2021, an average of 557 orders received by stores per day, an average daily turnover rate of 2.8 times in rural areas, and an average daily order volume of 468 orders.
△ Mr. Rice's overall efficiency is better
3. Expansion plan
Obviously, in the medium to long term, Mr. Rice has a greater significance for the entire village base. This can also be seen in its announced future expansion plans.
The expansion plan of the village base is to open 90-110 restaurants in 2022 and 140-160 restaurants in 2023. To this end, the village base plans to invest 180-270 million yuan.
Mr. Rice's expansion plan is to open 160-180 restaurants in 2022 and 200-240 restaurants in 2023. To this end, the village base plans to invest 280-420 million yuan.
△ Country Base and Mr. Rice's National Store Map
From the perspective of expanding the region, the expansion of the rural base is still rooted in Chongqing and Sichuan, and at the same time enters the first-tier and new first-tier markets. Mr. Rice's preferred city to open a store is the first-tier and new first-tier cities. At the same time, in the prospectus, Rural Ji deliberately emphasized that in the next two to three years, Mr. Rice's main city to open stores is Shenzhen, which also shows that after the success of Mr. Shanghai Rice, Mr. Rice is seeking to copy the first-tier city operation experience to Shenzhen and other regions.
The wrestling of the market has only just begun
Today's village base holds a good report card. But from the perspective of the market as a whole, maybe it's just getting started. The epidemic has regressed the scale of the catering industry to 3 years ago, starting from 2018, the growth rate of the entire catering industry began to slow down, the growth rate fell below double digits, coupled with the baptism of the epidemic, today's catering industry is gradually falling into a state of stock competition.
At the same time, from 2015 to 2020, the revenue contribution of chain enterprises in China's catering industry increased from 12% to 17%, but compared with 61% in the United States and 53% in Japan in 2020, the space for Chain Catering in China is still very large. This also shows from the side that although the future Chinese catering industry market will remain relatively fragmented for a long time, chain competition will become more intense.
Of course, for the rural base, the competition between brands can not be ignored, of which the hometown chicken who started a business 7 years later than the rural base is one of them.
Similar to the village base has a similar experience, around 2010, the hometown chicken also began to expand nationwide, but similar to the village base suffered have failed, and from 2011 to 2015, the hometown chicken store began to gradually shrink back to the Base Camp in Anhui. From 2016 to 2019, the chicken restarted expansion, the number of stores in 2020 quickly exceeded 1,000, it is reported that during the period from 2011 to 2019, its profit increased by 33 times, and the sales revenue increased by more than 32 times. In September 2021, LaoXiang Chicken began listing counseling and filed with the Anhui Securities Regulatory Bureau to prepare for listing on the main board of the Shenzhen Stock Exchange.
Catering companies that are also eager to try to go public include industry giants such as Yang Guofu, Xibei, and Hefu Noodles, which also have better fast food models and even supply chain stories.
At last
In The Village Foundation's prospectus, there is a small detail: As of January 2021, more than 25% of the 2430 managers and chefs of the Village Foundation have worked in the company for more than 10 years.
Although this is not a performance expression, it is not difficult to find that high-quality enterprises often have a stable and strong management team, the industry is changing, the model is changing, as long as the "people" are there, everything is possible.
In the history and data of the development of the village base, we have not seen the blind pursuit of the wind, did not see the feat of opening and closing, it has never been called an internet celebrity, nor has it ever been deeply involved in the center of public opinion. Some are the modification and iteration of the store model bit by bit, and some are the unremitting pursuit of the essence of catering operations. Maybe that's what we're learning from these restaurant giants.
The data and pictures in this article are from: Rural-based Prospectus, CITIC Securities Research Department, "China Catering Big Data 2021", "China Catering Business Parameters Blue Book 2020".