We are one of the renowned self-operated chain restaurants in China’s mass Chinese cuisine market. According to Frost & Sullivan, the mass Chinese cuisine market is a sub-segment of Chinese cuisine market with average spending per consumer below RMB100. Capitalizing on our deep comprehension of China’s evolving catering industry, the anticipated modernization and industrialization in the industry, and the inherent consumer demand, we strategically ventured into the growing mass Chinese cuisine sector. Since our establishment in 2013, we have been striving to offer consumers home-style flavor dishes and attentive services at affordable prices. We aspire to establish our Xiaocaiyuan restaurants as the “home kitchen” widely acknowledged by Chinese consumers. As of the Latest Practicable Date, we had 663 self-operated restaurants under operation, with a coverage of 146 cities or counties across 14 provinces in China. Currently, our major areas of restaurant operation are in Eastern China. According to Frost & Sullivan, in terms of the restaurant revenue for 2023, Xiaocaiyuan ranked first among all brands in China’s mass Chinese cuisine market with average spending per consumer between RMB50 and RMB100, accounting for a market share of 0.2%. The market size, measured by revenue, of the mass Chinese cuisine market with average spending per consumer between RMB50 and RMB100 was RMB2,252.9 billion in 2023, accounting for approximately 55.2% of the overall Chinese cuisine market.
China’s economic and social landscapes are experiencing complex and significant transformations. The growth of the disposable income per capita of urban households remains stable but at a slower rate, the rising urbanization rate and the changes in the demographic structure are fueling the growth of the mass Chinese cuisine market. As a result, the dynamic and evolving mass Chinese cuisine market accommodates the persistent and increasing demand of the vast consumer base for affordable dining experiences, demonstrating its immense size and growth potential. In 2023, the mass Chinese cuisine market reached a market size of RMB3,618.7 billion, making it the largest segment within the Chinese cuisine industry. The market size of the mass Chinese cuisine market is projected to increase at a CAGR of 9.1% from 2023 to 2028 and reach RMB5,587.1 billion in 2028. Particularly, the sub-segments with average spending per consumer below RMB50 and between RMB50 and RMB100 have both demonstrated strong growth momentums, with their respective market sizes being RMB1,365.8 billion and RMB2,252.9 billion in 2023, and expected to reach RMB2,137.6 billion and RMB3,449.5 billion in 2028, respectively. We believe that the present market dynamics and future growth prospects present favorable external conditions and opportunities for our continued development.
Our Performance
In 2021, 2022 and 2023, we have achieved rapid growth and maintained profitability, exceeding the industry level. These not only showcase our business resilience amidst the COVID-19 pandemic but also underscore our capacity for robust recovery in the post- pandemic period. In the eight months ended August 31, 2024, we achieved stable growth and expansion in terms of restaurant network, revenue and net profit as compared to the same period in 2023.
‧ Revenue. Despite the challenges brought by the COVID-19 pandemic to the catering industry in China, our revenue increased from RMB2,645.8 million in 2021 to RMB3,213.4 million in 2022, and further increased to RMB4,549.4 million in 2023. In 2023, our revenue increased by 41.6% as compared to that in 2022. Our revenue increased from RMB3,070.3 million in the eight months ended August 31, 2023 to RMB3,544.0 million in the eight months ended August 31, 2024.
‧ Number of self-operated restaurants. The total number of our self-operated restaurants increased from 278 at the beginning of the Track Record Period to 640 as of August 31, 2024.
‧ Same store sales growth. Our same store sales for Xiaocaiyuan restaurants increased by 1.2% from 2021 to 2022, and further increased by 20.8% from 2022 to 2023. Our same store sales for Xiaocaiyuan restaurants decreased by 11.4% in the eight months ended August 31, 2024 as compared to the same period in 2023.
‧ Restaurant-level operating margin. In 2021, 2022 and 2023, we recorded restaurant-level operating margins of 15.9%, 14.2% and 19.7%, respectively. In the eight months ended August 31, 2024, we recorded restaurant-level operating margins of 17.8%.
‧ Profitability. Despite the adverse impacts brought by the COVID-19 pandemic, our net profit increased from RMB227.1 million in 2021 to RMB237.6 million in 2022, and it further increased by 124.0% to RMB532.1 million in 2023. Our net profit also increased by 1.5% to RMB400.6 million in the eight months ended August 31, 2024, as compared to RMB394.8 million in the eight months ended August 31, 2023. Our net profit margins were 8.6% in 2021 and 7.4% in 2022, increased to 11.7% in 2023, and remained stable at 11.3% in the eight months ended August 31, 2024.
In the eight months ended August 31, 2024 as compared to the same period of 2023, our same store sales for Xiaocaiyuan restaurants decreased by 11.4% and our restaurant-level operating margins decreased from 21.3% to 17.8%, mainly due to (i) the base effect as a result of the rapid surge in spendings of consumers in China’s catering market during the first several months in 2023 following the gradual phasing-out of the COVID-19 pandemic, which was in line with the spending trends in other consumer sectors according to Frost & Sullivan; (ii) our adjustments to the menu item prices to accommodate the preferences of consumers, demonstrating our long-term commitment to bringing cost-effective experience to our customers; for example, in the eight months ended August 31, 2024 as compared to the year of 2023, (a) the average price of Cauldron Cooked Spring Chicken decreased from RMB64.5 to RMB54.9, and (b) the average price of Slate Garlic Prawn decreased from RMB55.7 to RMB53.3; and (iii) some of the newly opened Xiaocaiyuan restaurants in the eight months ended August 31, 2024 were still in their ramp-up period as of August 31, 2024.
Source: Xiaocaiyuan (00999) Prospectus (IPO Date : 2024/12/12) |