The last time Yang Guofu became an Internet celebrity on the Weibo hot search list, it was in 2020.
At that time, Zhao Liying caused controversy among netizens because of her actions in the variety show "Chinese Restaurant", so Zhang Liang, a model who had been on fire because of "Where Daddy Goes", posted Weibo solidarity.
As a result, weibo was released, the painting style was magically distorted, and his comments were cue out of "Zhang Liang Spicy Hot" by fans:
I hope you concentrate on managing your own restaurant, your spicy hot is too low, adding sesame sauce is money, and the dishes are more expensive than others, it is really a black heart business.
As a result, Zhang Liang himself replied:
Go eat Yang Guofu ah...
So Yang Guofu took the opportunity to do a wave of marketing, but also invited Zhang Liang as a spokesperson. Of course, in the end, Zhang Liang did not accept this invitation, otherwise Yang Guofu's spicy hot would become "even Zhang Liang said delicious spicy hot".
"In 2020, there are still people who don't know that Zhang Liang's spicy boss is not a model Zhang Liang" Although this hot search event is somewhat "wise" netizens' contributions, there is a fact that cannot be denied -
Yang Guofu Spicy Hot and Zhang Liang Spicy Hot have ruled the spicy hot market in the country!
20-30 yuan per capita, meat and vegetarian collocation, delicious taste, for many people are very convenient choices.
According to Tencent News data, as of the end of 2019, the number of Yang Guofu spicy hot and Zhang Liang spicy hot stores in Chinese mainland has exceeded 5,000, equivalent to the sum of the number of KFC + McDonald's stores.
Source: Tencent News "One Picture to Read" column
The duel between the two sides was very fierce, but the road to listing was eventually preempted by Yang Guofu's spicy hot.
On February 8, Yang Guofu submitted listing application materials to the International Department of the China Securities Regulatory Commission; on the evening of February 22, Yang Guofu's spicy hot prospectus appeared on the website of the Hong Kong Stock Exchange, and everything about this "spicy hot first stock" and former Internet celebrities was finally spread out to the public.
Northeast spicy hot to the global
The owner of "Zhang Liang Spicy Hot" is not a model Zhang Liang, but he is also called "Zhang Liang", and in an interview, he personally clarified to Caijing that Yang Guofu is his "cousin-in-law of the aunt's family", the two are ordinary people, Zhang Liang decided to open spicy hot is also because Yang Guofu's spicy hot business is thriving.
According to the shareholding structure of the prospectus, the main controllers of Yang Guofu's spicy hot, Yang Guofu, Zhu Dongbo (Yang Guofu's wife) and Yang Xingyu (the son of the two), the shareholding ratios are 38.79%, 38.79% and 19.39% respectively, in addition, Yang Guofu himself also controls 3.03% of the voting rights through the equity incentive platform, and the three have signed a "concerted action agreement" in January this year.
That is to say, before the IPO, almost 100% of Yang Guofu's spicy hot hot belonged to Yang Guofu's family of three and had never raised funds externally.
Source: Prospectus
In a previous interview with the Red Restaurant Network, Yang Guofu once expressed his simple views on the financing, which can be said to be similar to the values of the Weilong brothers who make spicy noodles:
With the natural reproduction of the market, there is no consideration at present, and I feel that it is more practical to do catering or do a hand by myself.
It was not until 2021, seeing that the catering track continued to heat up, Yang Guofu changed his attitude towards capital, saying that he would introduce foreign funds and hoped to bring new ideas to the development of enterprises.
From the very beginning, Yang Guofu and his wife made spicy hot, and they all relied on themselves. They started with roadside stalls in 2000, starting with prawn porridge and side dishes, and earned their first pot of gold in 2001. Only later did he hear about this "spicy hot sauce" that originated in Sichuan, and decided to improve the soup base and make a distinctive base.
According to the Red Food Network, the original improvement process was not smooth. Yang Guofu recalled:
At that time, the learning peers bought back the spices and put them in the pot to fry, and even tried to use the watercress sauce to develop the base, although there was a profit, but the customer's evaluation was not good, so they decided to close the storefront and wait for the success of the research to open again.
After several openings and closures, a unique base material formula was developed.
In 2003, in Yonghe Street, Harbin, Yang Guofu's first store of Spicy Hot Spicy was finally officially opened.
Source: Red Food Network
Because the rent, ingredients, and labor were very cheap at that time, many relatives and friends joined. In the counties around Harbin and other places, Yang Ji spicy hot shops opened more and more, reaching dozens, involving more and more wide range, increasing influence, which also formed the later Yang Guofu franchisee form.
In the years that followed, 200-300 franchisees joined almost every year.
In 2007, "Yang Ji Spicy Hot" was officially renamed "Yang Guofu Spicy Hot". In the year after that, Yang Guofu's distant relative, the man named Zhang Liang, took a different route from other relatives, did not choose to join, but opened a new shop called Zhang Liang Spicy Hot, became the boss himself, and became a brand that was almost considered by netizens to "replace" Yang Guofu.
However, with the increase in the number of stores, the management of franchisees has become a problem, in 2010, Yang Guofu once stopped joining for rectification, redesigned the visual image, and proposed the concept of "fast food spicy hot".
By 2012, Yang Guofu spicy hot franchise stores reached 800, and after the reorganization, out of the three eastern provinces, began a larger commercial layout, it was also in this year, Yang Guofu spicy hot moved the headquarters to Shanghai.
As of September 30, 2021, there were 5,738 restaurants under the Yang Guofu brand, an increase of more than 500 compared with 2019, including three self-operated restaurants in Shanghai, covering franchised restaurants in 31 provinces and cities in China. At the same time, Yang Guofu has gone abroad, with a total of 21 overseas franchise restaurants in Australia, Canada, South Korea, the United States, Japan and Singapore.
Spicy hot not only out of the country, but also deeply loved overseas, on social media, South Korean netizens are like this to comment on spicy hot:
Spicy hot absolute faucet
The prospectus cites Frost & Sullivan's report that China's catering market can be divided into Chinese catering, Western catering and other catering. Chinese catering can be divided into formal meals and fast food, and spicy hot food belongs to the fast food category.
In terms of fast food caliber, the market size will be about 659 billion yuan from 2020, and it is expected that the compound growth rate will reach about 10.1% during 2025.
Among them, the compound growth rate of the spicy hot market in the past three years is about 10.5%, the market size in 2020 is about 114.2 billion yuan, and it is expected that the compound growth rate will reach 11.5% by 2025, the market size will reach 197.3 billion yuan, and most of the market is concentrated in third-tier cities and below, which will also be the focus of future brand development.
The spicy hot market is currently showing a clear chain trend, and it is expected that the compound growth rate of the chain spicy hot market in the next 5 years will be about 15.3%.
By the end of 2020, Yang Guofu ranked first in Chinese fast food based on the total transaction volume and the number of restaurants.
In addition, according to the revenue, total transaction volume and number of restaurants, Yang Guofu is absolutely ranked first in China's spicy hot market.
The prospectus does not disclose the names of the last four companies, but according to the time of establishment and category, the "A Group" in the two charts should be "Zhang Liang Spicy Hot".
Just looking at the spicy hot market, two spicy hot chain brands from the northeast have now ranked in the absolute head of spicy hot, and are not in the same order of magnitude as other competitors.
However, from the perspective of market share, the gap between Zhang Liang and Yang Guofu is not large.
At present, the market is still very fragmented, and from 2019 to 2021, the number of registrations of spicy hot-related enterprises reached 43,900, 34,900 and 37,200 respectively.
According to public information, as of now, there are 176,600 spicy hot-related enterprises in China, of which Jilin and Heilongjiang rank in the top two in the country with 21,700 and 16,500 respectively, and the total number of related enterprises in the three eastern provinces accounts for 27% of the country.
Northeast spicy hot can take the market from the hands of Sichuan, the birthplace, mainly thanks to the improvement of taste in the northeast region - mainly using "bone broth" soup base, and most of Sichuan's spicy hot or "impounding vegetables", the taste is closer to Sichuan-style hot pot, the soup base is "red soup", can not be directly quoted, promotion is more difficult.
Developing a suitable soup base is the first and most critical step in the success of Northeast Spicy Scalding. Not only Yang Guofu, but also Zhang Liang.
But for greater success, "standardization" is needed. Because there is no need to rely on recipes and cooks, only the purchase of basic ingredients and the right soup base and ingredients, you can control the "standardization" process, so the standardization of spicy hot is easier to achieve than other Chinese food and the difference between stores is smaller.
Yang Guofu first formulated a unified product standard:
Spicy and hot bone broth should be boiled for 5 hours, noodles and flour are made of standardized brewing, dishes are standardized cleaning... It is also stipulated that 50% of the ingredients in the store are supplied by the headquarters, and the other 50% is provided by suppliers who have qualification certificates such as ISC inspection reports and are filed and uniformly certified by the headquarters.
Then in 2013, Yangguo Fujian became a large-scale standardized food processing plant covering an area of 20,000 square meters, and gradually increased production capacity since then.
The exclusive base material + standardized factory led Yang Guofu to embark on a road of "selling vegetables factory" and became a "Dingdong buying vegetables" with fixed customers.
50%+ income is selling vegetables
According to the data disclosed in the prospectus, Yang Guofu achieved revenue of 1.182 billion yuan, 1.114 billion yuan and 1.163 billion yuan in the first three quarters of 2019-2021, respectively, and in 2020, due to the new crown epidemic, the income declined.
From the perspective of income composition projects, nearly 95% of Yang Guofu's income comes from franchisees, and self-operated restaurants only contribute less than 1% of revenue.
However, it is interesting that the franchise fee and the subsequent system maintenance fee account for a small proportion of Yang Guofu's income, only about 5%. The prospectus does not disclose the specific cost of joining, but it is pointed out that the validity period of joining is generally five years.
According to the statistics of a franchise website, in general, the total reserve of Yang Guofu franchisees to open stores is about 340,000 yuan, usually for a return period of 5-7 months.
Among them, the franchise fee is only about 30,000 yuan, and there is another 20,000 brand deposits, and the rest are mostly decoration, equipment procurement, food procurement and training.
Source: Understand the franchise website
More eye-catching than the franchise fee is the "sale of goods", which accounts for more than 80% of the total revenue, excluding the upfront equipment costs, and about 75% of the annual income still comes from various ingredients.
Of these, only 25 percent come from home-grown goods.
But this 25% of homegrown goods is the key to determining that 50% + resale.
Because the homegrown products are spicy hot soup base and other key seasonings.
The "resales" that contribute the most revenue are all sorts of other ingredients that are not exclusive – beef, pork, chicken, and all kinds of greens.
Therefore, Yang Guofu's business model is: not directly to consumers, with exclusive "seasonings" to bind franchisees, in order to sell non-exclusive other dishes.
That is, a "Dingdong buy vegetables" with a fixed customer.
However, Yang Guofu has a management system that will review whether the number of non-exclusive dishes purchased by franchisees is in line with its historical orders (the system is uniformly monitored by Yang Guofu), and only when the two match, will the procurement plan be approved.
Franchisees have gone very smoothly on this road, and in the first 9 months of 2021 alone, the company has more than 500 franchisees.
However, this relatively asset-light model puts more profit margins to franchisees, so Yang Guofu's gross profit margin is not high, and the main cost is the cost of resale of third-party ingredients.
From 2019 to 2021Q3, Yang Guofu's gross profit margin was 27.9%, 28.7% and 30.2% respectively, and the reason for the increase in gross profit margin in 2021 was the further expansion of the capacity of the Sichuan plant, which increased the scale effect.
But the advantage is that Yang Guofu's expenses are not high, the sales expenses are only about 2%, and indeed no money is spent on marketing; the management expenses are only about 7%, and the net profit margin of the latest period is more than 10%.
In the first nine months of 2021, Yang Guofu achieved a net profit of 202 million yuan, which doubled compared with the same period in 2020.
Source: Prospectus Second Curve
Although they are all standardized, Yang Guofu has embarked on a completely different path from Haidilao, Haidilao is not allowed to join, all are directly operated stores; and Yang Guofu has brought relatively stable cash flow to himself with the asset-light model of joining, which basically matches the profit.
But it also puts its brand value and life into the hands of franchisees, one glory and one loss.
So now, it has found a second growth curve for itself – retail products.
In January 2021, Yang Guofu Group officially launched its first retail product to the market, the spicy hot self-heating pot, taking an important step towards the development of retail catering. As of September 30, 2021, Yang Guofu has launched a total of 16 categories, including spicy hot self-heating pots, multi-serving self-heating hot pots and hot pot soup bases, but currently accounts for single digits in total revenue.
From the initial consumer-oriented, to the later franchisee-oriented, and now back to continue to face consumers, Yang Guofu at this time may be no small challenge.
On the other hand, in recent years, some spicy hot emerging brands are also rising.
In October 2017, Fuke Spicy Hot received RMB 10 million financing from BaifuKu Holdings. In June 2021, the spicy hot brand "Little Wild Pepper" completed a round of financing of 10 million yuan.
Everyone is also looking for a breakthrough in their own, some take takeaway as a breakthrough, some taste is richer, in the small pepper and Xu Xiaoshu spicy hot, the price of a bowl of spicy hot has been explored to forty or fifty pricing.
How far can Yang Guofu go on the road of brand endorsement and fresh supermarket?