Edit | Yu Bin
Produced by | Chaoqi Network "Yu see column"
The most recognized catering brand by the people of Chongqing is not a certain hot pot nor a certain small noodle, but a rural base known as "Chongqing canteen".
In January this year, the Chinese fast food brand with more than 1,000 directly operated stores disclosed its IPO prospectus, which launched an impact on the Hong Kong stock market. In fact, this is actually the second time that the village base has been publicly listed.
In September 2010, Rural Key landed on the New York Stock Exchange in the United States, becoming the first Chinese catering enterprise listed on the main board of the United States in China, and won the title of "the first share of Chinese fast food". However, The village base did not get as hot as it was in Chongqing in the capital market, not only the stock price fell all the way, the performance also fell into consecutive years of losses, and the entry into the north also failed, and finally launched privatization and delisting in 2016.
After 6 years, can the rural base that is preparing for the "second palace" tell a new story in the capital market?
"Delicious is not expensive" is the hard truth of Chinese dining
In Chongqing, KFC can't beat the countryside. However, the country base, abbreviated as "CSC" in English, cannot get rid of the shadow of the cottage KFC.
Now 26 years old, Village Ki once embarked on a road of cottage KFC. In 1996, Li Hong, a native of Chongqing, opened his first restaurant at the Liberation Monument in the center of Chongqing, but at that time the restaurant was called "Village Chicken", which was a Sichuan restaurant focusing on chicken. But the next year, KFC moved into Chongqing, and the first store was across the street from the "country chicken" at that time.
The explosion of KFC has made countless catering people red-eyed, and Li Hong is also one of them. At that time, Li Hong also changed her Sichuan restaurant into a "foreign fast food" with fries and burgers, but the effect was not good.
But Li Hong also summarized the reasons for KFC's popularity: one is delicious, the other is clean and bright environment is good and hygienic, the red chair white table is highly efficient, and the third is that the location is in the area with the largest flow of people.
Hamburger fries are a spice, but Chinese still have to eat freshly fried meals every day. Therefore, in 1999, Li Hong cut off the Western dishes, not only imitating the bright decoration and ordering mode of KFC red and white tones, but also returning to the classic Sichuan cuisine that is mainly fried and freshly made, such as pickled pepper slippery chicken rice, Kung Pao chicken rice, sauerkraut meat shredded rice noodles, which are classic dishes that meet the tastes of the public in Sichuan and Chongqing, and emphasize that unlimited rice and soup can be added. Compared with KFC's per capita consumption of more than 20 yuan, Li Hong's Chinese fast food is half cheaper, and the meal package is only 12 yuan per capita, highlighting the characteristics of "delicious and not expensive" and "extreme cost performance".
In 2006, "Country Chicken" was renamed "Country Chicken", without concealing that it imitated KFC's business philosophy, and also shouted out the slogan of "where KFC opens, Country Base will open to where", by 2010, the total number of village base stores has exceeded 100, and in September of the same year, village base took the lead in landing on the New York Stock Exchange, which was immeasurable.
Small profits may not be oversold, and profits are still barely enough
Disappointingly, after the US stock market listing, Village Base did not gain capital optimism because of the title of "the first stock of Chinese fast food", and the stock price fell from the opening price of $26.45, fell below $5 in less than 5 years, and finally delisted at a price of $5.23/ADS in 2016.
Now many people believe that the village base should not choose to list on the New York Stock Exchange. At that time, a large amount of capital mainly flocked to the Internet and other outlet enterprises, and the domestic Chinese catering industry did not have standardized specifications at that time, and at that time, overseas investors were limited by information reasons and did not understand Chinese catering enterprises, believing that Rural Base was just a copycat imitator of KFC in China's county market.
Fundamentally, though, the land-based, small-margin sell-top doesn't actually win financial success. According to public information, the net profit attributable to the mother from 2010 to 2014 was 62.81 million, -6.95 million, 75.63 million, 39.55 million and 37.95 million, respectively. Less than 6 years after the listing, the number of stores has rushed from more than 100 to 1,000, but the scale of profits has not only not achieved multiple growth, but has declined all the way, and even fell into a loss in the second year of listing.
There is no doubt that the "delicious and not expensive" and "extreme cost performance" created by the rural base are the best consumption experiences pursued by consumers, and the unit price of 12 yuan can harvest the most extensive catering consumers. However, behind the "ultimate cost performance" is not only the low price, but also the cost of raw materials, staff and decoration leases. Once the cost control ability and store operation efficiency are weakened, the thin profit cannot achieve overselling, and the ultimate cost performance can only make the catering brand enter the dilemma of increasing revenue and not increasing profits.
Judging from the latest listing prospectus, 6 years have passed, and the total number of stores in the village base has opened more, but it has not changed the old problem of difficulty in making profits. According to the prospectus data, from 2019 to the first three quarters of 2021, the operating income of the rural base was 3.257 billion, 3.161 billion and 3.424 billion, respectively, but the net profit was only 82.7 million yuan, -2.42 million yuan and 163 million yuan, respectively, in addition to the general loss of the catering industry caused by the epidemic in 2020, the net profit margin in the first three quarters of 2019 and 2021 was only 2.5% and 4.8%.
In the capital market, less than 5% of the net profit margin can still only be regarded as hard money earned. In contrast, McDonald's, which has 40,031 stores worldwide, has a net profit margin of 32.49% in fiscal 2021, and KFC China, which is imitated by Rural Foundation, also has a net profit margin of 14.9% in 2021.
In today's raw material prices, labor costs, rent, water and electricity are rising today, as a Chinese fast food brand known for its low prices, if The village base wants to continue to maintain the original market competitiveness of the brand, then at the sales end, it does not dare to increase the price of dishes, and it is impossible to reduce the cost of raw materials on the cost side. From this point of view, even if the number of stores continues to expand, it is difficult for the rural base to break the strange circle of increasing revenue and not increasing profits.
According to the prospectus data, the unit price of the village base is also declining, and in the first three quarters of 2019, 2020 and 2021, the average consumption amount per order was 26.6 yuan, 25.6 yuan and 25.9 yuan, respectively. Moreover, the chinese fast food with high efficiency and low unit price has not achieved obvious success in the flow of customers, from 2019 to the first three quarters of 2021, the average number of daily orders placed by rural base single stores has dropped from 515 to 468, and the turnover rates are 2.8, 2.2 and 2.8, respectively, compared with the turnover rate of Taier sauerkraut fish, which is also planning to be listed on Hong Kong stocks, in 2019, 2020 and the first half of 2021, respectively, 4.8, 3.8 and 3.7, although the overturning rate of Haidilao hot pot with high unit price and long consumption time has declined year after year, it is still at 3.4 in the first half of 2021.
It is true that the low customer unit price can attract a wider range of consumers, more stores and more customers are also positively correlated with the overall revenue, and Weibo's profits can support expensive costs. However, when low prices can not continue to provide catering brands with a high turnover rate, that is, single-store customer flow, in today's continuous rise in various catering costs, whether the "small profits, high sales" model pursued by the ultimate cost performance is worth a question mark.
Does the new story of "starting another stove" make the village base more confident?
Although the financial data has not improved significantly, The village base is still eager to land on the Hong Kong stock market to compete for the throne of "the first stock of Chinese catering".
Since the epidemic, capital has been pouring into the Chinese catering industry, and while the financing events of the catering track have increased, many established Chinese catering brands are also trying to land on the capital market. Although there are only 10 catering enterprises in the two major markets of A-share and Hong Kong stocks, the catering enterprises that have tried to land on the Hong Kong stock market in the past year include green tea restaurants, Yang Guofu spicy hot, laoxiang chicken, lao niang uncle, Hefu Lao noodles, LaoWang and other well-known Chinese catering brands.
There is no doubt that competing for the title of "first share" can help rural base to get more capital attention, help brands get more financing in the capital market to help them expand stores on a larger scale, and gradually form the dream of scale, branding and standardization.
So, does the rural base have the confidence to impact the Hong Kong stock market this time?
Although in terms of financial data, The village base has not yet broken the dilemma of "small profits and quick sales", but it tries to use diversified business to help it reach more passenger flow.
From 2010 to 2012, the number of new stores opened by Cunji was 51, 72 and 68 respectively, and even 6 stores were opened in Beijing and Shanghai. However, the rapid expansion has not brought more business to the rural base, management and profitability have not kept up with the expansion speed, and the products do not meet the tastes of the market outside Sichuan and Chongqing.
Therefore, the brand abandoned the strategy of conquering the market outside sichuan and Chongqing with a village base, but instead created another Chinese fast food brand called "Mr. Rice" in 2011, which includes the flavors of Hunan, Jiangsu, Zhejiang, Guangdong and other regions in addition to Sichuan cuisine, and adopts an innovative mode of weighing vegetables and small bowl dishes for sale. As of the end of September 2021, Cunji had a total of 602 stores, while the total number of stores outside Sichuan-Chongqing was only 37, while Mr. Rice had a total of 543 stores, and the total number of stores outside Sichuan-Chongqing was 359.
From the perspective of financial data, the Mr. Rice brand created for the market outside Sichuan and Chongqing is obviously successful, although the unit price of customers is 3.9 yuan lower than that of the rural base, but the average number of orders placed per day in a single store is 89 more, the turnover rate has reached 4.2, the average daily ping effect of a single store has reached 65.5 yuan, and the share of the overall revenue of the rural base has risen from 36.3% in 2019 to 45.9% at the end of September 2021.
Obviously, Mr. Rice has been more successful than the rural base in the "small profits, high sales" business strategy, the turnover rate and ping effect have not been reduced because of the expansion of the number of stores, nor because of the comfort zone of the Sichuan-Chongqing market and encountered water and soil dissatisfaction, so mr. Rice has solved the dilemma of the saturation of the rural Kichuan-Chongqing market and the water and soil dissatisfaction of the sichuan-Chongqing market, and has a stronger and better ability to replicate and expand stores, so as to help the rural base go farther and wider for a longer time, which is bound to be just around the corner.
However, on the trillion-level track of Chinese fast food, the pressure of the rural base is not the competition of the capital market, nor the similar Chinese fast food brands such as laoxiang chicken and old mother-in-law, but continue to imitate the foreign households such as KFC McDonald's to establish and strengthen their own brand system and standardized scale system.
Thin profits do not necessarily sell more, but the ultimate cost performance will inevitably sell more, such as the 26-year-old local catering brands such as the rural base still need to learn lessons from the experience of the first listing, do not run too far under the drive of capital, but to make deep efforts in quality, safety, taste, management, supply chain, etc., and further explore the business strategy of localization and high-quality expansion of catering brands in cross-regional development, so that it is possible to break through the dilemma of "increasing income without increasing profits".