The bad fruit is cut and sold, and the hundred orchards that are impacting the IPO apologize! More than 90% of franchise stores, quality control is difficult to profit

After being interviewed to expose food safety problems, in the early morning of May 7, Baiguoyuan issued an apology statement on its official Weibo.

Previously, a blogger @ Insider Picket Bureau secretly visited two stores in Baiguoyuan and found that there were problems such as cutting the spoiled fruit and continuing to sell the fruit overnight and cut open.

In the apology statement, Baiguoyuan admitted that the store involved did have relevant problems and deliberately evaded the inspection of the headquarters. To this end, Baiguoyuan has launched five rectification measures.

Red Star Capital Bureau noted that just 5 days ago (May 2), the Hong Kong Stock Exchange just disclosed the listing application materials submitted by Baiguoyuan, and about 99.72% of the more than 5,000 offline stores in Baiguoyuan are franchised stores.

Infographic Baiguoyuan Fig. IC photo

Food safety problems were exposed

Baiguoyuan: The stores involved have been required to close for rectification

On the afternoon of May 6, the blogger @Insider Picket Bureau released a video of a secret visit to the Baiguoyuan store on multiple platforms, and the two stores that were secretly visited were located in Chengdu and one in Wuhan.

The video shows that the two stores visited have many problems, including cutting the spoiled fruit, selling small fruits at the price of large fruits, letting the moldy apples go unchecked, and continuing to sell the cut fruits overnight.

When the undercover visitor noticed a box of beer pears in a store, the clerk of the store replied that the box of beer pears had been placed for a month and a half, "Some stores have been there for two or three months, and one and a half months is less." ”

"Who threw it?" No one cares, (customers) eat problems anyway, it's not my business, who sells it counts whose business. For example, if you sell it, he will look for you. The clerk said in the video.

Screenshot from the @Insider Pickets video

After the release of this video, the chaos in the Baiguoyuan store quickly attracted the attention of the public.

In the early morning of May 7, @Baiguoyuan, a Weibo account certified as "Shenzhen Baiguoyuan Industrial (Group) Co., Ltd.", issued an apology statement, "Sorry, I have betrayed everyone's trust in us!" ”

Baiguoyuan said that after the relevant videos were released to the network, the company attached great importance to and set up an emergency working group at the first time to conduct in-depth self-examination, and the stores involved had problems such as illegal grading of fruits, selling overnight fruits and cutting fruits, and deliberately avoiding headquarters inspections.

For the stores involved, Baiguoyuan has required them to suspend business for rectification in accordance with the relevant management measures, and ordered the franchisees to suspend and re-educate the employees of the stores involved, during which they will re-learn the store operation norms, and only after passing the assessment can they take up their posts.

In order to prevent the recurrence of similar behavior, Baiguoyuan has launched a number of rectification measures, including the production of courseware to issue publicity, further strengthen the store SOP operation training, strengthen supervision and supervision and other inspection and guidance of stores.

Screenshot from Weibo

Just filed a prospectus

In 2021, the revenue will exceed 10 billion, and more than 99% of the stores will be franchised

Red Star Capital Bureau noted that on May 2, the Hong Kong Stock Exchange just disclosed the listing application materials submitted by Baiguoyuan.

In the "Risk Factors" section of the Prospectus, Baiguoyuan states that failure to maintain food safety and consistent quality may have a material adverse impact on our brand, business and financial performance.

However, among the offline stores of Baiguoyuan, almost all of them are franchised stores where the quality of goods is difficult to control, and franchised stores contribute 80% of revenue.

In 2021, Baiguoyuan's annual revenue was about 10.289 billion yuan and net profit was about 226 million yuan.

Among them, the revenue of self-managed franchised stores is about 8.125 billion yuan, accounting for about 81.3% of the total revenue; the revenue contributed by self-operated stores is only 0.48 billion yuan, accounting for about 0.4% of the total revenue; other businesses (regional agency, direct sales, online sales) contribute about 1.816 billion yuan, accounting for about 18.2% of the total revenue.

As of April 22, 2022, Baiguoyuan's offline store network has 5,351 stores, covering more than 130 cities in 22 provinces and cities in China. Among them, 5336 are franchised stores and 15 are self-operated stores, accounting for 99.72% of the franchised stores.

Screenshot from the official website of Baiguoyuan

Baiguoyuan mentioned in the prospectus, "Our franchisees manage the business independently and are responsible for the daily operation of their respective stores. Therefore, the success and quality of our franchised stores ultimately depend on the franchisees themselves. ”

The two stores that exposed the problem this time are also franchise stores, in the secret visit video, the clerks are basically knowingly committing crimes, knowing the relevant regulations of Baiguoyuan, but still taking the interests of the store as the first.

For example, the clerks know that they can't sell overnight fruit cut fruit, "if you sell overnight, you will be fined, the first time you will be fined 500 yuan, and the second time you will be fined 1,000 yuan." For example, the next time you go to training, ask if the store sells overnight melons, and you say no. ”

Insufficient user stickiness and fierce market competition

Baiguoyuan faces multiple difficulties

In addition, Red Star Capital Bureau found through the Black Cat Complaint Platform that in the 30 days up to May 7, Baiguoyuan had a total of 57 complaints, an average of about 1.9 complaints per day. In addition to quality problems such as crushed fruit and moldy guiyuan, there are also high prices, wrong goods, and poor service attitude of the staff.

Judging from the cumulative number of complaints, baiguoyuan has a total of 1281 related complaints on the black cat complaint platform.

Screenshot from Black Cat Complaint Platform

Consumer dissatisfaction may have led to a certain extent the stickiness of Baiguoyuan users. As of April 22, the number of Baiguoyuan members exceeded 67 million, and the number of paid members exceeded 780,000, but the average number of monthly active members in 2021 was only more than 7 million, accounting for only 10.45%.

In addition, fruit retailers are also facing competition from channels such as farmers' markets and fresh supermarkets, and with the development of fresh e-commerce, their development space has been squeezed again.

According to the Prospectus of Baiguoyuan, among the main channels of fruit retail in China, the proportion of farmers' market channels and modern retail channels is the highest, accounting for 25% and 37% respectively in 2021.

From 2016 to 2021, the proportion of fruit franchise chain retail channels increased slightly from 10.8% to 13.5%, while e-commerce channels increased significantly from 3.3% to 12.8%.

Three IPOs in two years

Compete with peers for the "first share of fruit retail"

In fact, this IPO is already the third impact of Baiguoyuan in two years.

As early as June 2020, Baiguoyuan submitted overseas listing application materials to the International Department of the China Securities Regulatory Commission, which is intended to be listed on the main board of the Hong Kong Stock Exchange.

In November 2020, Baiguoyuan signed a counseling agreement with Minsheng Securities to IPO on the Shenzhen Gem And filed a counseling filing with the Shenzhen Securities Regulatory Bureau, but there was no follow-up.

Red Star Capital Noted that the three major fruit retailers known as "Nanbaiguo, Beixianfeng and Xihongjiu" are all impacting IPOs.

According to the Frost & Sullivan report cited by Baiguoyuan, Baiguoyuan has the largest distribution network in China's fruit industry. According to the retail sales of fruits in 2021, it ranks first among all fruit franchise retail enterprises in China, and its scale is 2.8 times that of the second place.

However, just a few days before the disclosure of the prospectus of Baiguoyuan, on April 29, Chongqing Hongjiu Fruit Co., Ltd. (hereinafter referred to as "Hongjiu Fruit") also submitted a prospectus to the Hong Kong Stock Exchange.

According to the prospectus, Hongjiu Fruit's revenue in 2021 was 10.280 billion yuan, the profit during the year was about 292 million yuan, and the adjusted profit was about 1.090 billion yuan, which was almost the same as that of Baiguoyuan.

In addition, Xianfeng Fruit Co., Ltd. (hereinafter referred to as "Xianfeng Fruit") also signed a listing counseling agreement with CITIC Securities in December 2019, but after four phases of listing counseling, the listing counseling was terminated in January 2021.

In February 2021, according to the official website of the Zhejiang Securities Regulatory Bureau, Xianfeng Fruit once again accepted the counseling of CITIC Construction Investment on the initial public offering of shares.

At present, if Baiguoyuan wants to successfully IPO, there are still many problems that need to be solved. It is not known who the "first share of fruit retail" will be spent.

Red Star News reporter Yang Peiwen intern reporter Zhang Luxi

Edited by Tao Yueyang