*This article is reproduced from Clear Wild Hope
Chinese catering has not adjusted its relationship with capital for thirty years.
In the past, there were Tan Fish Head, Pretty Jiangnan, and Da Niang Dumplings as a lesson, and now there is a big drama of capital "siege" and new catering trapped.
On March 1, Haidilao announced that Yang Lijuan was transferred to THE POST of CEO, and the former CEO Daniel Zhang continue to serve as chairman of the board of directors and executive director.
After closing 300 stores with a pre-loss of 4.5 billion, Haidilao changed coaches and its market value fell below HK$100 billion. This makes the key words of the opening year of Chinese catering 2022 follow the layoffs, salary cuts, store closures, and pre-losses, and there is another change of coach.
Wen Heyou, who aspires to "be the Disney of the restaurant industry", has also recently been exposed to large-scale layoffs. Sipping and nursing closed 200 stores in one go last year.
Chinese restaurants were robbed.
This "hottest track of China's big consumption" is indeed difficult to describe as thriving at present.
On February 8, Nesher's Tea released its annual performance forecast loss of 135 million yuan to 165 million yuan. The Xicha and Mo Mo Dim Sum Bureaus have also successively exposed the news of layoffs, and the tea and lele tea began to close at the end of last year.
In the past two years, with the repeated epidemics and the catalysis of capital, the great leap forward of restaurant companies has been like a rainbow. Today, the great contractions are still echoing in the intestines. The two staged one after another, like a magic drama.
This is certainly not a panoramic view of Chinese catering, and the road to listing is also very close.
On February 22, Yang Guofu submitted a listing application to the Hong Kong Stock Exchange. At present, a total of 11 restaurant companies in the fields of fast food, hot pot and pasta have sprinted to the market.
It is expected that this year there will be a number of categories of "first shares" born.
Behind the intertwining of the tide of store closures and the tide of listing, It is difficult for Chinese restaurants to solve themselves in the face of capital "siege". At the same time, Chinese dining is also like a bottomless pit, making countless VCs fold here.
This is a failed "two-way rush".
And the theory of consumption cooling and catering cold is getting louder and louder, is this really the case?
01 Capital siege
As of the close of Hong Kong stocks on March 4, Haidilao's share price was reported at HK$17.26. The total market capitalization was HK$96.207 billion, a one-year decline of 71.99%.
Haidilao has long been considered the most promising version of Starbucks in China.
According to brand finance's "2021 World's 25 Most Valuable Restaurant Brands" list, Haidilao ranked 9th and was the only Chinese brand on the list.
At the end of last year, Haidilao announced the gradual closure of 300 stores.
On February 21, Haidilao issued a profit warning saying that its revenue is expected to exceed 40 billion yuan, an increase of more than 40%. Net loss in 2021 was approximately $3.8 billion to $4.5 billion. This is the first time that Haidilao has experienced an annual loss since its listing in 2018.
According to the data, Haidilao achieved a net profit of 1.646 billion yuan, 2.345 billion yuan and 309 million yuan from 2018 to 2020, respectively, totaling about 4.3 billion yuan.
In the first half of 2021, Haidilao also achieved a net profit of 94.53 million yuan, which means that Haidilao lost its net profit in the past three years since its listing within half a year.
Maximizing the brand with the help of capital power and accelerating the international expansion has been the main idea of Haidilao since its listing.
Daniel Zhang once said: It is better to stand on top of the sky than to cover the earth. The expansion rate of Haidilao is indeed fierce.
In 2019, Haidilao opened 308 new stores. From 2020 to the first half of 2021, Haidilao expanded 843 stores against the trend. As of June 31, 2021, Haidilao had a total of 1,597 stores worldwide.
The adventurous Daniel Zhang left behind his own judgment that "Haidilao has not really established a completely scientific system since its inception."
However, it is difficult to say that there is no element of capital wrapped up.
In fact, the collapse of Haidilao is only a microcosm of the catering track being driven by the wave of capitalization in the past two years, high-speed expansion and stall contraction.
The restaurant industry is one of the fastest growing industries in the Chinese economy, with Chinese catering accounting for about 80% of it.
The data shows that the market size of the catering industry has grown from 2.8 trillion yuan in 2014 to 4.7 trillion yuan in 2019, with a compound annual growth rate of 10.9. It is expected that the speed will be about 6%-8% in the next 5 years.
According to the National Bureau of Statistics, in 2021, the annual revenue of the catering industry reached 4,689.5 billion yuan, an increase of 18.6% year-on-year, an increase of 17.4 billion yuan over 2019.
In fact, 2021 is also a big year for catering investment and financing.
In June 2020, CICC predicted that "Chinese catering is the most popular track for China's large consumption" and came to the conclusion that "comparing the United States, China's catering industry and fast food track is promising".
This is a commentary on the subsequent large-scale "bottoming" of capital in the catering industry.
Before the epidemic, Zhang Lan, the founder of Pretty Jiangnan, and Tan Chang'an, the founder of TanYutou, lost everything to the capital due to gambling, and the case of the loss of the initiative of the operation after the introduction of capital by the big lady dumpling also made the owners of the restaurant enterprises vigilant. Some people even shouted the slogan of "never combine with capital".
However, after the outbreak of the epidemic in 2020, restaurant companies generally have cash flow problems, and their attitude towards capital has begun to turn positive.
Another reason is oversupply of shopping malls. In the second half of 2020, the number of shopping malls with a construction area of more than 30,000 square meters has exceeded 6,000, but the vacancy rate of shopping malls nationwide has reached 11.77%.
The drainage capacity of catering is relatively strong, so shopping malls are willing to leave high-quality and low-priced shops to restaurant companies.
The increase in catering demand is huge, and the epidemic has accelerated its clearance.
In 2020, the total number of Chinese restaurant companies was 9.41 million, down 1.66 million compared with 2019.
The reduction of supply has made demand more concentrated and the competitive landscape optimized, which has magnified the ambitions of restaurant companies seeking expansion. The shopping mall provides sufficient and perfect supply space, and also lays the groundwork for the development of restaurant chains.
Therefore, in the mainstream context of "internal circulation drives large consumption", the catering industry has rolled up wave after wave of financing.
The data shows that there were 132 financing incidents in the catering industry in 2020. From January to August 2021, there were 86 catering investment and financing, with a total investment amount of 43.91 billion yuan, which has more than doubled the full year of 2020.
On December 2, 2020, Jia Guolong, the founder of Xibei, who claimed to never be listed, said: Having realized the power of capital, Xibei decided to go public.
VCs are full of confidence: they hope to invest in a number of local 100 billion market value restaurant chain brands.
Chinese restaurants have experienced an unprecedented wave of financing, and capital has become a siege trend.
02 Great Leap Forward for Restaurant Enterprises
According to the data of the public book, as of July 15, 2021, there are 12 investors who have made more than 4 sales, and the most numerous shots are the head agencies Sequoia and IDG. ByteDance, Meituan, Station B and other Internet companies have also entered the game.
After obtaining financing, the catering enterprises have unified actions: quickly open stores.
Taking Hefu Noodles as an example, as of the end of June 2021, the total number of Hefu Noodles stores nationwide exceeded 340. The number of new stores has doubled compared to 2020, and one store will be opened in about 2 days.
In 9 months, it completed 450 million yuan of Series D financing and 800 million yuan of Series E financing, the latter of which set a new record for the highest financing of chain noodle restaurants.
From a valuation of 1 billion to nearly 3 billion, it took only 3 months to meet the small face. At the end of 2020, there were more than 100 stores in Xiaomian, doubling compared with 2019. But by July 2021, it had grown to 150.
Chen Xianggui, who was established in July 2020, completed the "over 100 million yuan financing" and "200 million yuan financing", which took only 5 months. By December last year, there were more than 200 directly operated stores.
At that time, almost all the VC/PE in the consumer track were frantically looking for noodle restaurants in the world, but the new tea drink was obviously crazier.
In June 2020, the number of Michelle Ice City stores exceeded 10,000. In January 2021, Michelle Ice City completed the first round of financing of 2 billion yuan, and by October 2021, the number of stores exceeded 20,000, and the total number of stores opened in the previous 20 years was completed in just over a year.
In 2020, shuyi burned more than 3,000 new stores, but in the past ten years before that, it only opened more than 3,000 stores.
In February last year, the first store opened in The Season, and by the end of January 2022, the total number of stores has exceeded 300, with an average of 1.2 days to open a new store.
On January 7, Nai Xue's tea, which lost 400 million yuan in four years, announced that it would open 326 new stores in 2021. Heytea added more than 200 main stores in 2021, and completed a $500 million Series D financing, and the valuation soared to 60 billion yuan.
As of July 2020, a total of 225 stores have been opened in Changsha. By November 2021, when the official announcement of the closure of 87 stores, it was revealed that the number of stores had reached nearly 500.
According to the statistics of the "21 Data News Lab", in 2021, there were 59 related financings in the upstream and downstream of the tea industry, involving more than 15 billion funds, and the participants were more famous institutions such as Temasek, Sequoia China, UBS, Hillhouse and so on.
Coffee shops and snack shops are not far behind.
Manner Coffee completed four rounds of financing in half a year, valued at $2.8 billion, and M Stand Coffee completed a 500 million yuan B round of financing.
Born in June 2020, Mo Mo Dim Sum Bureau completed 5 rounds of financing in only 1 year and 3 months, with a post-investment valuation of 2 billion yuan to 3 billion yuan.
In 2021, ramen, coffee, new roasting, new tea and other subdivision tracks, capital are crazy into the game, and present the characteristics of "one new, two big and two high".
A new: From the perspective of the time of brand establishment, brands within three years account for nearly 36%, especially brands within one year account for nearly 11%.
Big deals, big institutions. The average value of each food and beverage investment is more than 360 million. Internet companies such as Alibaba, Meituan, and ByteDance have become the main force in the primary market.
High frequency, high valuation. In the offline catering investment events from January to November 2021, more than 20% of brands completed 2 rounds or more of financing. Valuations have repeatedly reached new highs, with a valuation of less than 100 square meters of a single store of nearly 100 million yuan.
For example, the valuation of coffee brands Manner, M stand and baking brand Mo mo dim sum bureau exceeds 100 million yuan, and the valuation of a single store in Hutou Bureau is as high as 375 million yuan.
According to the latest valuation and the number of stores, the valuation of the Heytea single store reached 71.51 million yuan after weighted calculation, and the value of Naixue's tea single shop was about 25.09 million yuan.
This has enabled the scale of China's restaurant chain to enter the era of 10,000 stores in advance.
Data from Meituan shows that the proportion of restaurant chains with more than 10,000 stores increased from 0.7% in 2018 to 1.4% in 2020, doubling in three years.
At the same time, according to the "2021 China Catering Investment and Financing Big Data Report", this proportion will rise to 3.8% in 2021, and it will increase by 2.7 times in one year.
The process of capitalization of restaurant enterprises is also accelerating. Because capital prefers chained and highly standardized categories, it is easy to copy.
But the more turbulent the wave of capitalization comes, the shorter the window period for restaurant companies to polish.
As a result, the catering industry began to emerge a wave of listings, and the tide of store closures also followed.
03 Listing is not the end
As early as 1988, there were restaurant companies on the Hong Kong Stock Exchange that passed the IPO, and so far, 21 restaurant companies in China have landed on the capital market.
But the share of the overall capital market is negligible.
As of December 31, 2021, there were a total of 4603 listed companies on the Shanghai main board, the Shenzhen main board, the ChiNext board, and the science and technology innovation board, but only 8 companies related to catering, accounting for a very low proportion.
Therefore, the catering industry is not only a "big industry, a small company", but also a "small section".
The reason for this situation is not only the difficulty of restaurant companies to go public, but also the lack of demand for listing by restaurant companies. For example, in the past few years, most restaurant companies have said that they will never go public, and even refuse to meet with the capital side.
However, the epidemic has not been repeatedly eliminated, and capitalization has become a major key to the development of restaurant enterprises.
On February 22, Yang Guofu submitted a prospectus to the Hong Kong Stock Exchange. On January 25, Chuang Ji submitted an IPO application to Hong Kong stocks.
Almost at the same time, Lao Xiang Chicken announced that it had completed the Pre-IPO round of financing, which was one step closer to A shares. Also preparing for the A-share listing is the old woman's uncle, and the Zhejiang Securities Regulatory Bureau has disclosed the public documents for its counseling filing.
Ziyan Food also updated its A-share prospectus and continued to sprint to "the first share of food and brine".
Also in January, the hot pot chain Qixintian submitted a prospectus to the Hong Kong Stock Exchange.
On the evening of January 13, the Securities Regulatory Commission (CSRC) issued a review committee to announce the IPO of Wufangzhai. In September last year, the Cantonese-style hot pot chain "Laowang" applied for an IPO in Hong Kong, after Green Tea Restaurant had also disclosed a prospectus.
For a time, 11 catering companies simultaneously launched IPOs, and the catering industry ushered in a wave of listings.
But is listing the end?
The current performance of listed restaurant companies is not optimistic, and since February 2021, stock prices have generally declined.
As of March 4, 2022, Jiumaojiu Restaurant fell by 42.53% in one year, Naixue's tea fell by 71.21%, and the decline in feeding compared with the morning market also reached 74.69%.
From 1994 to August 2018, Haidilao went to Hong Kong to ring the bell, and Daniel Zhang played steadily for 24 years, only to exchange for the Haidilao Empire that covers the entire industrial chain layout of hot pot base production, food supply chain, digital system and so on.
But two years of radicalism, it still collapsed to this point.
The main purpose of the listing of restaurant companies is to solve the development fund by addressing the capital market. However, the above cases show that in the case of poor operating conditions and poor stock price performance, it is difficult for listed restaurant companies to raise funds from the capital market.
On the contrary, after the restaurant enterprises are integrated into the capital market, in addition to the fluctuations of the operation itself, they will also be affected by the emotions of the capital market, and good and bad will be amplified.
So, going public is not the end.
So why is this wave of restaurant companies still eager to go public? Because of capital needs, listing means that capital has the means to liquidate and exit paths.
Therefore, capital requires rapid development and large scale, so that the smoother the exit.
This leads to the current growth logic of too many restaurant companies is like this: set up a brand, financing marketing, rapid expansion, continuous losses, E or F round after the IPO, to survive.
But catering itself is a slow job that requires meticulous work and the pursuit of long-term gains. So the normal path should be: set up a brand, survive, expand the store at a steady pace, consolidate the product, achieve profitability, and IPO at the right time.
The logic of the two is almost irreconcilable.
A recent report by HSF also pointed out that the excessive enthusiasm of the capital market for the consumer track has begun to correct, and consumer stock prices have generally fallen sharply. The valuation of consumer enterprises in the primary market has also returned to rationality after soaring.
Listing is not the end of enterprise development, and financing and raising funds to open stores quickly are not the only way for restaurant companies to develop.
04 Track callback
According to the data, from 2019 to 2021, there were 2.36 million newly registered restaurant enterprises, 2.472 million and 3.167 million respectively, and the number of restaurant enterprises cancelled was 875,000, 858,000 and 885,000 respectively. In 2021, the number of new registrations and cancellations of restaurant enterprises hit a record high.
In 2021, at least 25 catering brands will have large-scale closures or closures, and well-known brands are involved in Haidilao, Sipping and Feeding, Dicos, Tea Beauty, New Elements, Xuliushan and so on.
The tide of closing stores to the tide of listing, the new registration to the amount of cancellation, this is the current development trend of the catering industry: development in contradictions, adjustment in development.
This is also in line with the general law of China's economy, and the main line points to the correct natural future.
Therefore, the track is just a pullback, the depth and breadth should be within the acceptable range, and it is difficult to avoid the occurrence of industry reshuffle.
The Great Leap Forward was bound to be followed by a great contraction. According to FMCG reports, the recent monthly sales of Mo mo dim sum bureau have been declining, and single-store sales have fallen from the highest peak of about 1 million / month to about 300,000 / month.
Hutou began reaching out to investors at the end of last year to seek a new round of financing and hopes to finalize the financing agreement in March 2022. But as of now, there is no news of the completion of the financing.
The catering brand that was once praised by capital on the altar, the tide of capital has gone, and it is not a bad thing to be down-to-earth. The inflection point of the capital tide retreat appeared in the second half of 2021, under the national strategic turning point, capital has switched to the science and technology track.
A top investor said in an interview with People that investing in new consumption now is equivalent to "standing at the bottom of the chain of contempt."
This metaphor is controversial, although the "hot money" of the catering industry should indeed cool down, but "science and technology to revitalize the country" at the same time also have to dress and eat. Especially in the catering industry, a huge base is necessary to support people's livelihood. As of January 12, 2021, there were 9.608 million restaurant companies in the mainland. The registered capital of 8.393 million companies with registered capital of less than 1 million yuan, accounting for 87% of the total.
In 2021, the revenue of catering units above designated size will be 1,043.4 billion yuan, accounting for 22.2% of the total revenue of the whole industry.
"Catering units above designated size" refers to an annual revenue of more than 2 million yuan, and at the same time, there are more than 40 employees at the end of the year. This means that the remaining 77.8%, or 3,646.1 billion yuan, was created by small shops and restaurants all over the streets.
They have not had an easy time in the past few years.
Epidemic prevention and control, macroeconomic fluctuations, rising rents, high raw material prices, and soaring labor costs have made it difficult for them to survive. But the difficulties faded slightly, and they sprung up like mushrooms in the city, silently guarding the fireworks in the world.
Small shop catering represents the most tenacious force in China's economy.
In 2022, the epidemic continues, and it is still difficult for small shops and restaurants.
On February 18, the National Development and Reform Commission and other 14 departments issued the "Several Policies on Promoting the Recovery and Development of Difficult Industries in the Service Industry": it will guide Internet platform enterprises such as takeaway to further reduce the service fee standards for merchants in the catering industry and reduce the operating costs of related catering enterprises.
On March 2, Ele.me announced that it will invest 20 million yuan to help merchants bail out, and all merchants in medium- and high-risk areas will receive commission reductions. On the 3rd, Meituan released six measures, announcing that it would reduce the commission rate for "small and medium-sized catering merchants that have been seriously affected by the epidemic and have operational difficulties".
But on top of the base, China should still develop large-scale restaurant chains, and the wandian era heralds the arrival of a new node.
This means that the catering industry has entered the accelerated stage of chaining, scale and branding, and the trend is irreversible.
However, the competition of the user base is the foundation of all large-scale catering.
Taking prepared dishes as an example, in 2020, there will be 69,000 enterprises of various types of prepared dishes, and in 2021, it will increase to 89,700. The first flavor of the pre-made dish is on the market, making this subdivision full of bustling tide catchers.
According to the NCBD's "2021-2022 China Prepared Vegetable Industry Development Report", the prepared vegetable market is expected to exceed 830 billion yuan by 2025.
There are also new tea drinks, which have higher efficiency and better operating margins than other categories.
Cathay Securities research report shows that the effectiveness of mature tea stores can reach 91,000 yuan / square meter, and the profit margin is close to 30%.
However, the "2021 New Tea Beverage Research Report" pointed out that there are currently about 378,000 new tea stores, an average of 687 cities across the country, and each city will have more than 550 milk tea shops.
Oversupply, high gross profit, high ping efficiency can not be talked about, most of the new tea stores can only end dismal.
Ai Media Consulting data shows that less than 20% of new tea shops can operate for more than a year, and nearly 80% of new tea shops eventually close.
Therefore, the catering industry, a seemingly simple industry, has long-term practitioners in awe.
They know how to look at problems through cycles, how to stay in the market for a long time and positively, and how to continue to provide popular solutions for customers' catering needs.
This is the core competitiveness.
Not every brand has to go to a thousand stores, but to be a Chinese version of Starbucks, McDonald's, Disney. What suits you can support long-term planning.
China's long-standing food culture also determines that Chinese cuisine is destined to bloom with a hundred flowers and a hundred schools of thought. It is precisely because there is no food culture in the United States that it is easier to standardize, centralize, and giant.
Perhaps, all restaurant companies should slow down and be friends with time, go through the cycle, and realize value.
Although, becoming an evergreen tree in the restaurant industry may be more difficult than becoming an internet giant.