Spicy hot can also be made on the market? Yang Guofu fired the first shot, or will set off a wave of catering listings?

Text/Xun Shilin

Seemingly inconspicuous businesses are often unexpected.

On January 27, the International Department of the China Securities Regulatory Commission (CSRC) disclosed that Shanghai Yang Guofu Enterprise Management (Group) Co., Ltd., the parent company of Yang Guofu Spicy Hot, submitted the "Approval of Overseas Initial Public Offering of Shares by a Joint Stock Limited Company". On December 8 last year, data from Tianyancha showed that Shanghai Yang Guofu Enterprise Management (Group) Co., Ltd. underwent a number of industrial and commercial changes, renamed to today's Shanghai Yang Guofu Enterprise Management (Group) Co., Ltd., the type of enterprise changed to a joint-stock limited company (unlisted, natural person investment or holding), while the company's business scope added brand management, Internet sales, catering management, etc.

There are many sources speculating that Yang Guofu Spicy Hot will submit a prospectus to the Hong Kong Stock Exchange as soon as February this year to apply for listing. "Spicy hot first stock" is coming?

Going public to survive?

"In fact, I am not optimistic about the current catering industry." Primary market investor Biwei (pseudonym) told this writer that she herself originally looked at the consumer industry, but in the past one or two years, she has begun to transform to look at technology projects.

"I'm not saying that the catering industry has a bad prospect, mainly because I personally feel that catering is a heavier type in the service industry, and the turnover rate of dinner is difficult to do high, and the fast food type may be slightly better." Bi wei said.

Biwei further explained that no matter what kind of catering, from the source of the layout of ingredients, enterprises even have to build their own complete supply chain, the overall model looks very bulky, to a certain extent limit the speed of development. "For example, Haidilao, on the surface, it is just more differentiated services such as nail art and dancing, but in fact it is not so simple, this is a comprehensive application of supply chain, human resource management, finance, creativity, capital operation and other capabilities."

"Especially during the epidemic period, the offline stores of catering have been affected to varying degrees to varying degrees." Bi Wei said.

According to the "2021 New Consumer Chain Brand Digital Transformation Trend White Paper" released by iResearch Consulting, the revenue growth trend of the catering industry from 2015 to 2019 was interrupted, and the national catering revenue in 2019 was about 4.7 trillion yuan, while in 2020, this figure became 4 trillion yuan, and the growth rate also decreased significantly.

Source: iResearch

Consumer industry analyst Chen Ji (pseudonym) told the author that the overall catering environment seems to be worse, the more the head of the catering company needs to "survive" itself.

He explained that whether it is the primary market or the secondary market, there have not been many investment and financing events in the past two years, and the brands that have run out and are more likely to be favored, such as the happiness cake that announced the completion of a new round of financing of 100 million yuan in December last year. "In the same way, at this time, Yang Guofu chose to go public, which is a good point in time, everything is cyclical, and the economic market also exists."

In addition, he also proposed that yang guofu such a restaurant brand is relatively easy to achieve chaining, at this point in time is also a relatively favored catering model for investors, although there are offline stores, but online sales may be affected a lot less, at this time the listing to get more funds, there is a good chance to take the lead in running out.

For the business model to be more important, Chen Ji put forward another view. He believes that the business model is not bad, it is important to see the sustainability of the brand, some brands seem to look explosive, the business looks unremarkable, but the life cycle is long, once the cost is apportioned, it has an advantage.

According to the official website of Yang Guofu Spicy Hot, in 2000, Yang Guofu first came into contact with Spicy Hot on the streets of Harbin, and later opened his own shop, and did not register Yang Guofu Spicy Hot until 2005. According to Yang Guofu's early interview, at the earliest, the cost of opening a store was low, the rent was about 1,000 yuan, the ingredients were cheap, and the labor was about 300 yuan a month. Influenced by him, many local people began to make spicy hot, and many shops directly named themselves "Yang Guofu Spicy Hot".

Interestingly, Zhang Liang, the boss of Zhang Liang, who is also a leading brand in the domestic spicy hot industry, also said that he is also from Bin County in Harbin, and the establishment of the spicy hot brand has also been influenced by Yang Guofu to a certain extent.

Around 2010, Yang Guofu rectified and standardized the franchise model, and after reorganizing the brand, he opened the store out of the three eastern provinces. Subsequently, Yang Guofu also invested in the establishment of ten major ambient logistics distribution centers in Harbin, Shenyang, Beijing, Zhengzhou, Qingdao, Nanjing, Shanghai, Hangzhou, Guangzhou and Chengdu.

In 2015, Yang Guofu moved his headquarters to Shanghai, and there was the aforementioned Shanghai Yang Guofu Enterprise Management (Group) Co., Ltd. According to the latest data disclosed on the official website, Yang Guofu currently has more than 6,000 franchise stores in 5 overseas countries and 31 provinces, municipalities directly under the central government and autonomous regions of China.

In 2019, Yang Guofu said in an interview that Yang Guofu's revenue for the year is expected to be 1.3 billion yuan, of which the franchise fee accounts for about 20%, and most of the other revenue comes from the sale of seasonings, ingredients, kitchen equipment, restaurant furniture and so on to franchisees.

So, after the listing, will spicy hot be a good business?

Trend

"If the listing is to seek more funds, I personally think that there are still many hidden worries in this type of spicy hot." Chen Ji explained that spicy scalding as a kind of snack, compared with the meal, the model is lighter, the investment is relatively small, so the choice of head brand to join the business is easy to become the first choice of many catering entrepreneurs, which is also one of the important reasons why Brands such as Yang Guofu and Zhang Liang can expand rapidly. Moreover, Yang Guofu himself adopts the way of self-built supply chain, which standardizes the process to a certain extent, which is also one of the important reasons why entrepreneurs are willing to choose to join.

"Even though there are so many benefits, one of the hidden concerns is food safety." Chen Ji said.

Compared with direct stores, franchise stores have lower constraints on entrepreneurs, but share a brand with the parent company, and it is difficult for brands to operate and manage uniformly, and one of the most likely problems in the catering industry is food safety.

In 2017, there were more than 20 Yang Guofu spicy hot spots on a takeaway platform that did not match the licenses. In 2018, Yang Guofu's spicy hot was exposed to employees cutting meat in the kitchen with their feet on the desk, and their toes touched the meat many times. In 2021, some video bloggers released the real scene of the kitchen after Yang Guofu's store on the media platform, the ingredients in the warehouse continued to be used after being bitten by rats, and the pig lungs were not cleaned and directly boiled, which also sent Yang Guofu spicy hot to the hot search.

Li Ying, an entrepreneur in Tianjin, told the author that she had originally considered starting a business in catering, but since seeing Yang Guofu's spicy hot scalding exposed to these negative news, she did not like the model of franchise stores very much. "However, those brands with better tonal brands, such as Xicha, do not accept to join, and those of us who always want to do something entrepreneurs do not have the confidence to create their own brands.

Judging from the overall development status of the market, the spicy hot industry seems to have entered the era of the stock market. According to the enterprise investigation data, from 2016 to 2019, the registration volume of spicy hot-related enterprises in the mainland has increased year by year, but the growth rate has gradually narrowed, and in 2020, due to the impact of the epidemic, the number of enterprise registrations has declined significantly, and it will gradually pick up in 2021. From 2016 to 2021, the number of registrations of spicy hot ware related enterprises reached 30,000, 39,500, 42,100, 43,900, 34,900 and 37,200 respectively.

It is precisely in this case that the secondary market has ushered in a wave of listings of catering enterprises.

In September 2021, Cantonese hot pot Laowang submitted a prospectus to the Hong Kong Stock Exchange; in September 2021, Chinese fast food chicken signed a listing counseling agreement to prepare for listing on the main board of the Shenzhen Stock Exchange; in January 2022, Chinese fast food Rural Foundation submitted a listing application to the Hong Kong Stock Exchange.

Chen Ji believes that as the number of catering enterprise registrations enters the platform period, catering enterprises that are temporarily at the head are trying to take the lead. "Compared with the United States and other countries, the concentration of our catering chain enterprises is relatively low, there are 2 catering companies in the top 100 listed companies in the United States, while there is not a catering company in the top 100 listed companies in China, and the overall pattern is that the water is big and the fish is small, which also means that there is still a lot of room for growth of domestic catering listed companies."

"Therefore, I personally expect that now that catering companies are only the beginning of listing, there will be more catering companies that surprise you in the future, and the catering companies at the head will run farther and farther." Chen Ji said.

(Editor: Chen Yuqi Proofreader: Yan Jingning)