After more than 10 years of development, Qixintian International Holdings Limited (hereinafter referred to as Qixintian) intends to sprint to the Hong Kong stock market after more than 10 years of development.
Qixintian Restaurant focuses on seafood products such as crabs, featuring "one pot and two eats", that is, the combination of seafood and hot pot, which are two completely different ways of eating. According to Frost & Sullivan data cited in the Listing Application Documents, the company is the largest seafood restaurant in China and ranks third in the Chinese hot pot restaurant market.
Qixintian does not seem to be satisfied with the current industry position, the next 3 years the company plans to open 300 stores, compared with the current number of 256 stores, the scale will be more than doubled.
It is worth mentioning that the turnover rate of Qixintian is not advantageous compared with the leading enterprises haidilao and sipping and feeding, and Haidilao and sipping have closed a large number of stores last year. While the COVID-19 pandemic is not over, what are the prospects for large-scale expansion against the trend of the company?
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Together, the Nguyen family controls 98.01% of the company
The establishment of the Qixintian brand can be traced back to 2006. In this year, Ruan Tianshu, founder, chairman and executive director of the company, founded the Qixintian brand and opened the first Qixintian Restaurant in Jiangyin City, Jiangsu Province.
"Nguyen Thanh Shu has over 19 years of experience in the F&B industry. Prior to founding Qixintian, he co-founded a number of catering companies. According to the listing application documents of Qixintian, Ruan Tianshu and TianShu International, which he controls, hold about 62.79% of the shares of Qixintian and are the controlling shareholders of Qixintian.
Qixintian is a family business. Zhang Xiubing is Ruan Tianshu's brother-in-law, Ruan Tianjun, Ruan Tianjiang and Ruan Tianbing are the brothers of Ruan Tianshu, Ruan Jianxin, Ruan Shuangjian and Ruan Yanfeng are ruan Tianshu's nephews, and Chen Yun and Chen Jun are Ruan Tianjun's sons-in-law, and together they and Ruan Tianshu control 98.01% of the shares of Qixintian.
In terms of operation, qixintian is characterized by "one pot and two eats", focusing on the dual concept of seafood + hot pot, that is, consumers first eat a pot of fried seafood after ordering, and then add soup bases and side dishes to become hot pot after eating.
The special operation of "one pot and two eats" has achieved good results for Qixintian. In the first three quarters of 2019, 2020 and 2021, Qixintian's revenue was 1.285 billion yuan, 1.426 billion yuan and 1.480 billion yuan, respectively, and the corresponding net profit was 81.157 million yuan, 172 million yuan and 259 million yuan, respectively.
It can be seen that since the outbreak of the new crown pneumonia epidemic, the performance of Qixintian has not decreased but increased. In this regard, Qixintian's listing application documents mentioned that this is due to the company's adaptability and rapid response to the new crown pneumonia epidemic, as well as the increase in demand for takeaway services.
Qixintian also attributed the company's performance growth in part to the continuous efforts of menu optimization and innovation, so that the company maintained a relatively high per capita customer price. According to the data of the first three quarters of 2021, the per capita unit price of diners in Qixintian was 131 yuan, exceeding the per capita consumption level of 107.3 yuan in Haidilao in the first half of 2021.
The growth of Qixintian's performance may also be related to its continuous expansion of scale: the total number of restaurants in the company has increased from 115 on January 1, 2019 to 256 at present, an increase of 122.6%. All of the company's restaurants are self-operated restaurants.
According to Frost & Sullivan quoted in the listing application documents of Qixintian, qixintian is the largest seafood restaurant in China in terms of revenue and number of restaurants in 2020, accounting for 1.2% of the total market share of the highly fragmented Chinese seafood restaurant market; according to the revenue of self-operated restaurants in 2020, Qixintian is the third largest hot pot chain restaurant in China.
The overturning rate is not advantageous over Haidilao and Sipping
Since its establishment more than ten years ago, Qixintian has mainly laid out in Jiangsu Province and surrounding areas, but the company is not satisfied with this situation and intends to expand to other regions.
According to the plan, in the three years from 2022 to 2024, Qixintian will open 300 new restaurants, which exceeds the company's current total of 256 restaurants.
Qixintian's large expansion plan may be related to its optimistic judgment of the industry. According to frost & sullivan quoted in the company's listing application documents, China's seafood restaurant market grew from 105.7 billion yuan in 2016 to 121.5 billion yuan in 2020, with a compound annual growth rate of 3.5%, and it is expected to continue to maintain a strong growth momentum from 2020 to 2025, from 121.5 billion yuan to 246.3 billion yuan, with a compound annual growth rate of 15.2%. In addition, the revenue of China's hot pot restaurant market will grow from 395.5 billion yuan in 2016 to 438 billion yuan in 2020 at a compound annual growth rate of 2.6%, and is expected to grow to 850.1 billion yuan in 2025 at a compound annual growth rate of about 14.2%. "We believe that our 'one pot, two eats' approach allows us to take advantage of the strong growth opportunities in the Chinese seafood restaurant market and the Chinese hot pot market."
However, there are also different views in the industry. Chinese food industry analyst Zhu Danpeng recently in an interview with the "Daily Economic News" reporter analyzed that in general, the formation of a strong brand effect or scale effect of enterprises can explain the construction of a moat. The "one pot, two eats" eating method is easy to copy, and it is difficult to form industry barriers or moats.
Although the hot pot track is hot, this business is not easy to do. In addition to Qixintian, the other two more ranked hot pot leading enterprises are Haidilao and Yapu Sipu.
Following the closure of more than 300 restaurants last year, the recent Haidilao announcement said that it expects a net loss of about 3.8 billion yuan to 4.5 billion yuan in 2021. In addition, another hot pot leading enterprise, namely Sipping And Feeding, has also closed its stores sharply in 2021, and has not yet climbed out of the trough of performance.
Compared with Haidilao and Sipura, the turnover rate of Qixintian is not dominant. From 2019 to the first three quarters of 2021, the turnover rate of Qixintian was 2.1 times/day, 2.1 times/day and 2.2 times/day, respectively; although the overturn rates of Haidilao and Yapu Yapu declined, they also remained at 3.0 times/day and 2.3 times/day as of the first half of 2021.
Zhu Danpeng believes that in general, the turnover rate of catering enterprises reaches more than 3 times / day, which means that the traffic is better, and the turnover rate of 2.1-2.2 times / day in Qixintian is relatively low. This turnover rate also shows that there is some room for improvement in its own traffic, customer stickiness, etc., and the company does not yet have the advantage of expansion.
For Qixintian's 300-store expansion plan, Zhu Danpeng is not too optimistic. He said that many companies will describe a beautiful vision before going public, but whether it can be realized is unknown.
Since 2020, most employees have adopted the outsourcing model
According to the listing application documents of Qixintian, in the first three quarters of 2019-2021, the company's net profit margin was 6.3%, 12.1% and 17.5%, respectively. One of the important reasons for the significant increase in the net profit margin of Qixintian is the reduction of the company's employee costs.
As of the end of 2019, the end of 2020 and the end of September 2021, Qixintian had 4707, 4279 and 5269 employees respectively, including 4707, 1713 and 1834 employees respectively, and the remaining were outsourced employees.
In 2020 and the first three quarters of 2021, outsourced employees accounted for most of Qixintian's employees. The background of the change in the employee structure is the company's human workforce change. "Since 2020 we have been working with third-party HR companies. Under the relevant agreements, third-party human resources companies provide us with employees (including waiters and other restaurant employees) to ensure adequate manpower and effective manpower allocation between different restaurants. ”
Correspondingly, in the first three quarters of 2019, 2020 and 2021, the employee cost of Qixintian accounted for 23.9%, 18.3% and 17.2% of the company's revenue, respectively, and the proportion of the company's employee cost to revenue gradually declined.
Of course, the listing application document of Qixintian did not directly state that the reason for the decline in employee costs was due to the employee outsourcing model, but boiled down to: the gradual implementation of the piece-rate wage system since 2019, which improved operational efficiency; the number of hourly workers as a percentage of the total number of employees increased; and the company continued to strive to develop takeaway services.
"Daily Economic News" reporters searched on platforms such as Weibo and Dianping Network and found that many messages commented that the service quality of the store was not good. The listing application document of Qixintian also indicates that the company employs outsourced employees in restaurants through outsourcing companies, so its control over them is limited.
Qixintian's internal control has also had major flaws. In February 2018, the Suzhou Customs Anti-Smuggling Sub-Bureau launched an investigation into Jiangsu Qixintian (a subsidiary of Qixintian's main operating company) and the company's shareholder Ruan Tianbing for suspected smuggling of general goods and articles and tax evasion. It alleges that between April 2012 and February 2018, Qixintian falsely declared a lower or higher price when declaring the price of live crab imported from Southeast Asian countries, resulting in a net tariff difference of about RMB780,000. Although the procuratorate finally decided not to prosecute, Jiangsu Qixintian was recovered about 3.63 million yuan for live crabs.
In addition, many stores in Qixintian have fire problems. According to the listing application documents, due to fire-related issues, the Company closed ten restaurants after 30 September 2021 and until the last practicable date, and suspended the operation of one restaurant as of the last practicable date. In addition, 6 of the company's operating Chinese restaurants have not yet obtained fire safety inspection approval.
For the listing of Qixintian Sprint, Zhu Danpeng believes that the company's current operating model and product matrix do not have core competitiveness, and there are many uncertainties in its sprint listing.
On March 7, in response to related issues, the Daily Economic News reporter called Qixintian and sent an interview email to the company, but the company declined the reporter's interview.
Reporter | Chen Qing
Editor| Chen Junjie, He Xiaotao, Wang Jiaqi, Yi Qijiang
Proofreader | Sun Zhicheng
| the original article of the daily economic news nbdnews |
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