Reporter | Ma Yue
Edit | Ya Han Xiang
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On March 8, Green Tea Group Limited (hereinafter referred to as "Green Tea Group") passed the listing hearing of the Hong Kong Stock Exchange. If all goes well, it will be officially listed on the main board of the Hong Kong Stock Exchange in late March or early April.
The road to an IPO by Green Tea Group has been bumpy. As early as March 2021, Green Tea Group submitted a prospectus to the Hong Kong Stock Exchange for listing on the Main Board of Hong Kong, but as of the end of September, the prospectus had not been updated for 6 months and showed invalidity; it was not until October 5 that Green Tea resubmitted the prospectus.
Green Tea Group's most well-known restaurant brand, Green Tea Restaurant, originated from the Green Tea International Youth Hostel founded by Wang Qinsong and Lu Changmei in 2004, and also provides backpacker travelers with affordable meals. In 2008, the duo opened their first green tea restaurant in Hangzhou.
According to the latest prospectus, as of the latest practicable date, Green Tea operated a total of 236 restaurants, covering 18 provinces, 4 municipalities directly under the central government and 3 autonomous regions in China. In 2021, Green Tea opened 59 new restaurants and plans to open 75 to 100 new restaurants per year from 2022 to 2024. From 2018 to 2020, the total number of restaurants in Green Tea Group increased from 107 to 180, with a compound annual growth rate of 28.3%.
When Green Tea Group first submitted its prospectus, there was not much confidence in the company's current situation.
In 2018 and 2019, the operating income of Green Tea Group was 1.311 billion yuan and 1.736 billion yuan, respectively, and the profit during the year was 44.401 million yuan and 106 million yuan, respectively. Due to the impact of the epidemic, in 2020, Green Tea Group turned from profit to loss, with a loss of 55.262 million yuan, a year-on-year decrease of 9.6% to 1.57 billion yuan, except for Guangdong, where revenue increased by 8.7% year-on-year, and the income of other regions declined to varying degrees.
The updated prospectus shows that revenue in the first nine months of 2021 was 1.694 billion yuan, an increase of 58.25% compared with the same period in 2020.
Green Tea Group Prospectus
In terms of brand positioning and products, Green Tea Group has positioned itself as a cost-effective "new Chinese fusion catering" - in addition to featuring Hangzhou cuisine, it has also added Sichuan cuisine, Cantonese cuisine, Lu cuisine, Beijing cuisine and other dishes of different Chinese cuisines.
And "cost-effective" has become its key word and one of its most important business strategies for more than a decade. At the beginning of its opening, green tea restaurant attracted customers with cheap items such as "5 yuan of cucumbers, 10 yuan of Dongpo meat and 17 yuan of steak", and then reduced costs in terms of rent, manpower and raw material procurement through chain operations, becoming the "fast fashion restaurant" at that time.
According to the prospectus data, from 2018 to 2020 and the first nine months of 2021, the per capita consumption of green tea was 54.8 yuan, 58.4 yuan, 61.3 yuan and 60.2 yuan respectively - it can be seen that the parity consumption of "60 yuan per capita" is not an empty phrase.
Wang Qinsong, the founder of Green Tea Restaurant, publicly stated in 2014 that he would refer to the per capita consumer price range of the most popular merchants on the top 10 of the city where the store is located, and the general per capita consumer price of the final pricing of green tea restaurants would not exceed 15% of the price range.
As a result, green tea restaurants arose 10 years ago when China's social networks first emerged with affordable consumption, explosive items and stylish decoration environment, and caught up with the segmentation of China's catering industry and the opportunity for shopping malls to increase the transformation and adjustment of catering around 2012, becoming the "first generation of Internet celebrities" in major shopping malls to attract consumers in a long line.
The reason why green tea restaurants can maintain a parity strategy depends heavily on the high turnover rate. "We are 50 yuan per capita, but we spend 5 million yuan on decoration costs." Unlike other catering companies, people may make money when the restaurant guests are full, but after the green tea is full, the table starts to make money. Wang Qinsong once said, "We are using a low price that is almost costly in exchange for customer flow, so restaurants like ours must pay attention to the turnover rate." ”
But the epidemic has also affected the turnover rate of green tea restaurants.
According to the prospectus, in 2018, 2019 and 2020, the turnover rate of Green Tea Group was 3.48 times/day, 3.34 times/day and 2.62 times/day, respectively. In the first nine months of 2021, the turnover rate of Green Tea Group reached 3.32 times per day, a significant increase compared with the same period last year, but it has not yet returned to pre-epidemic levels.
The reduction in the turnover rate can be multi-factor. On the one hand, the reduction in passenger flow caused by the epidemic; on the other hand, it may come from the increase in store density to dilute the passenger flow; moreover, the current changes in China's catering environment, in the context of social network influence and young people's increasing disloyalty to brands, the trend of catering categories has become more and more elusive as fast fashion, and the life cycle is also shortening. The more restaurants in shopping malls open, the more fierce competition in different sub-categories.
From the perspective of indicators such as stores and income scale, there is a certain gap between green tea restaurants and Xibei and Taier sauerkraut fish, which are also well-known shopping mall chain catering brands. Jia Guolong, the founder of Xibei, who also plans to go public, has disclosed that its revenue was more than 6 billion yuan in 2019, 5 billion yuan in 2020, and about 5.5 billion yuan in 2021, and its current number of stores is 369. The current number of stores of Taier Sauerkraut Fish is 355, with revenue of about 2 billion yuan.
"Green Tea Restaurant is listed with illness after experiencing losses." Zhu Danpeng, an analyst in the Chinese food industry, once said, "It is not realistic to expand through the listing to break through the bottleneck of development." Many Hong Kong-listed catering companies have experienced sharp fluctuations in their stock prices because their recovery in the post-epidemic era has not been as expected, which will affect the market's judgment of green tea restaurants. ”