Source: IT Orange (itjuzi521)
Author: Winter Snow Editor: Judy
The opening and closing of small restaurants does not seem to cause too many waves, and we can only feel the shock of the industry from the replacement of the surrounding stores. And some other restaurants that have a firm foothold, the next step is to open a store, open a store, open a store again... The laying of one store after another is also a symbol of the "solid" family foundation of the enterprise, but it is always the most difficult to balance between scale and economy, especially under the impact of external forces, so capital frequently "patronizes" fast food restaurants after the epidemic. And what will happen to the fast food market, which is extremely fragmented, after connecting with capital?
The COVID-19 pandemic is a watershed moment for Chinese catering to embrace capital
For a long time in the past, small scattered husband and wife restaurants were self-sufficient, and there was a clear distinction between them and capital, and at the same time, capital rarely took catering as an investment field, but the digital acceleration of scale, the emergence of chain stores, standardization and replicable characteristics, making the catering industry successfully attract capital attention.
For the catering industry, the outbreak of the global new crown pneumonia epidemic in 2020, the industry is struggling, embracing capital has become the only choice for you to survive in difficulties, whether in the primary market or the secondary market, large-scale catering enterprises have begun to frequently clash with capital.
First of all, in the primary market, IT orange data shows that in the 9 years from 2011 to 2019 (that is, before the epidemic), a total of 114 financing incidents occurred in China's Chinese catering field, an average of less than 13 per year; in the 2 years from 2020 to February 2022 (that is, the epidemic so far), a total of 78 financing incidents occurred in China's Chinese catering field, with an average of 3 financing incidents per month.
In 2021, Hefu Lao noodles received 800 million yuan E round financing from Tencent, CMC Capital, Zhongwei Capital and Longhu Capital; Banu Mao Mao Hotpot has received three consecutive financings totaling nearly 1 billion yuan after the new crown pneumonia epidemic, introducing well-known investors such as Tomato Capital and CPE Yuanfeng; Rural Base completed 300 million yuan Pre-IPO financing in 2020; in addition, Chinese restaurant brands such as Fat Sauce Milan, Xijie Fried Skewers, Long Ago, Kwa Father Fried Skewers, sauce bones and so on have all received capital injection after the epidemic.
But when hot money pours into a track, "traffic, expansion" often becomes the first requirement of capital betting, and the business model and sustainability behind the enterprise become the second consideration - the internet celebrity restaurant Wenheyou Restaurant has obtained 500 million yuan of Series A financing and billions of yuan of Series B financing in 2021, with a post-investment valuation of 10 billion, under the support of huge funds, WenheYou's new project was launched, but at the beginning of this year, Wenheyou fell into layoffs and new project closures.
According to IT Orange statistics, nearly 200 capital bets have been placed on Chinese catering enterprises in the past decade, of which 19 institutions have invested 3 or more. Focus on the catering industry investment institutions Tomato Capital Investment 11 Chinese catering enterprises, the public is familiar with the Banu Mao Belly Hot Pot, Small Wild Pepper, Gui Phoenix, Auspicious Wontons, Fish You Together, etc. Behind the tomato capital figure; after tomato capital, the absolute fund, the absolute fund is also focused on food chain and catering industry investment, jointly initiated by the absolute food and hungry, the absolute fund is the investor of Hefu Lao noodles, a long time ago, small wild pepper and so on.
Star Capital Sequoia China ranks third with 6 Chinese-style catering enterprises such as Rural Base, Yunhai Cuisine, Ma Jiyong, etc.; Sequoia China is followed by BaifuKu Holdings, which is a hongyi investment focus on the investment layout and operation management platform in the catering field, and the Chinese catering enterprises invested in include Hehegu, West Young Master, etc., most of which are chain brands.
In addition, Zhen Fund and Tiantu Capital each invested in 5 Chinese-style catering enterprises; 5 capitals such as Today Capital and Tiantu Capital invested in 4; and 8 investors, including Meihua Venture Capital and Source Code Capital, have invested in 3 Chinese-style catering enterprises.
While Chinese catering enterprises are sought after by capital in the primary market, they are trying to move towards the secondary market. Before 2020, there will be less than 10 Chinese catering companies landing on the capital market, and in 2015-2020, only Haidilao will have a successful IPO. But 2020 seems to be a watershed year, with Jiumaojiu being listed on the Hong Kong stock market in January 2020 and the Tongqinglou A-share IPO in July of the same year. In addition to these two, Laowang, Green Tea Restaurant, Qixintian, Rural Ji and Yang Guofu Spicy Hot have also submitted Hong Kong stock prospectuses one after another; Lao Niang's uncle and Lao Xiang Chicken have all signed a listing counseling agreement to be listed on A shares; and Hefu Lao noodles have also recently issued an announcement to plan overseas listing.
Behind the crowded listings is the impact of the epidemic on the catering industry – companies are looking to seek capital shelter through listings. On the other hand, enterprises seeking to be listed have reached an order of magnitude in terms of scale and volume, and meet the listing conditions. First of all, from the perspective of volume, most of the chain stores have exceeded 100, and in addition to Yang Guofu's spicy hot, they are all directly operated models, and the number of direct sales stores of Laoxiang Chicken has reached 3100, and the rural base has also reached 1145. In addition, the revenue scale of 10 Chinese-style catering enterprises in 2020 is basically 1 billion to 3 billion, and the net profit is concentrated in around 100 million.
In the primary and secondary markets, Chinese fast food is the absolute "C" position of Chinese catering
In recent years, among the Chinese catering enterprises seeking to be listed, only Tongqinglou and Green Tea Restaurants are traditional cuisines, and although Jiumaojiu is also a traditional cuisine, it has extended its business tentacles to Chinese fast food, and Laowang and Qixintian are hot pot barbecue categories. In addition to the above enterprises, other companies seeking to be listed, such as Lao Niang Uncle, Lao Xiang Chicken, Village Ji, Yang Guofu Spicy Hot and Hefu Noodles, are all Chinese fast food enterprises. While Chinese fast food occupies the "C bit" secondary market, it is also the "C bit" of the primary market.
IT Orange data shows that in the primary market, Chinese fast food financing accounts for half of Chinese catering, and this form has rarely changed in 10 years. In stages, from 2011 to 2019 (that is, before the epidemic), the proportion of Chinese fast food financing incidents was 67%, and in the more than 2 years since 2020 (that is, after the outbreak), the proportion of Chinese fast food financing events has increased by 2 percentage points again to 69%. Well-known VCs/PE such as Today Capital, Matrix Venture Capital, Zhen Fund, Hillhouse Venture Capital, idg capital and so on participated. In addition, among the investors in the field of Chinese fast food, there are CVC figures such as Jiumaojiu, Hungry, Delicious, Xiaohongshu, Yuanqi Forest, and Xijiade Dumplings.
Chinese fast food fits the public lifestyle in the new era, the relatively low-cost high-frequency model ensures sufficient flow of people, while the fast food industry seizes the digital wave to achieve intelligent and standardized procurement, processing and warehousing logistics, which is conducive to achieving scale, and then becomes the absolute "C" position of the catering industry.
Chinese fast food: NEARLY 700 billion market, CR5 accounted for only 2.9%
Chinese fast food has become the "C" bit of catering, but the "C" bit of Chinese fast food does not seem to be so dazzling. Frost & Sullivan data shows that the size of the Chinese fast food market reached 659 billion in 2020, of which the company with the largest market share accounted for only 0.7%.
According to Frost & Sullivan Frost & Sullivan data, the size of the Chinese fast food market has grown from 564.6 billion in 2016 to 755.6 billion in 2019, and under the influence of the new crown pneumonia epidemic, it will drop to 658 billion in 2020, and by the post-epidemic era in 2021, China will achieve accurate epidemic prevention and control, the market economy will recover steadily, and it is expected that the size of the Chinese fast food market will reach 767.7 billion in 2021 and break through the trillion mark by 2025.
Under the market size of 700 billion, the Chinese fast food market is highly fragmented, with CR5's market share of only 2.9% in terms of total commodity transactions in 2020. Yang Guofu spicy hot in 2020 total commodity transactions of 4.9 billion, market share of 0.7%, the number of stores in 2020 is 5238; Zhang Liang spicy hot with 4.6 billion transactions, 5200 stores ranked second; ranked third for Laoxiang chicken, the total number of commodity transactions in 2020 4.1 billion, the number of stores 3100; the number of rural ki and Mr. Li in 2020 are about 1000, two ranked 4th and 5th with 3.2 billion and 2.5 billion transactions respectively.
Chinese fast food is characterized by "fast", low threshold, flexible site selection and obvious geographical advantages, in addition to large chain stores, hidden in the streets and alleys of mom-and-pop shops and specialty small shops are still an important part of the market. Of course, in industries where the market is so dispersed and the industry threshold is low, it is too early to talk about the leader, and there is a greater possibility of overtaking in the corner.
Dining, fast food, retail? Who is the second growth curve?
Standardized superposition can be copied, the cost of superimposed stores is low, and the concentration of the superimposed industry is low, making traditional catering enterprises such as Haidilao and Xibei aim their business second growth curve at fast food. In 2019, Haidilao's fast food restaurant "Eighteen Yu" noodle restaurant opened in Jiuxianqiao, Beijing, and in 2020, Haidilao's "Laopai Noodles" under Haidilao in Jinniu District, Chengdu opened.
Xibei's exploration in the field of fast food can be said to be repeated defeats, it has launched Xibei oatmeal noodles, Xibei yogurt house, bow Changzhang and other fast food brands, but have not achieved the desired effect, and now Xibei will bet the fast food business on Jia Guolong kung fu cuisine - it is reported that Jia Guolong kung fu cuisine is a new brand launched by Xibei in 2020, within the group, Jia Guolong kung fu cuisine is known as "Chinese small restaurant", which is suitable for dine-in and takeaway.
While traditional catering aims at fast food, fast food has also begun to consider the second growth curve, and retail is the main direction of attack, of course, retail is the field that all traditional catering companies are trying to get involved in, Yang Guofu spicy hot prospectus shows that it launched the first batch of retail products in January 2021, as of September 30, 2021, there are more than 3900 spicy hot restaurants selling Yang Guofu spicy hot retail products. In addition to Yang Guofu, Haidilao, Meizhou Dongpo, etc. have also begun to open up new retail markets for catering.
Analyzing the reasons for this, it is nothing more than "having the ability to have demand", that is, consumers have demand for convenient catering services, and catering enterprises have the ability to provide retail products, coupled with the stable customer base formed by catering enterprises and the accumulated brand recognition, etc., which provide convenience for them to develop retail business.
epilogue
The catering industry, whether it is capital "patronage" or looking for a second growth curve, is seeking a way to develop scale, but there are still a few on the water, and those stores that can be seen everywhere hidden in the "underwater" may be more able to appreciate the temperature of "water".
However, in the industry where the market is extremely fragmented, the connection between enterprises and capital is actually infinitely possible, after all, the market of 700 billion yuan is still scattered in small stores everywhere. Under the influence of the epidemic, it is possible for enterprises with capital support to harvest the market, and supplemented by the whole process supply chain and digital system, the future catering industry is not without the possibility of repositioning.