The Small Vegetable Garden goes public and continues to explore the value of "Standardization of Chinese Formal Dinners".
Everyone is like Sisyphus pushing a boulder uphill, and every "great struggle" contains the spirit of Sisyphus. In Sisyphus' story, the gods believed that there was no more terrifying punishment than repetitive and hopeless labor. But this punishment did not trap him; instead, it tempered his will. The best way to confront nothingness is to make life more fulfilling.
In order to help humanity escape from darkness and cold, Prometheus defied Zeus' ban and stole the fire from Mount Olympus. Zeus was extremely angry after learning about this and tied him to a cliff in the Caucasus Mountains, torturing him day after day. But Prometheus did not yield until Hercules rescued him. Nothing can defeat a person unless he surrenders first.
In ancient Greek mythology, many heroes have rich and colorful life courses, and these adventure stories are still quite inspiring for modern people: In a repetitive and busy work and life, striving to do the right things to the extreme and making daily life more lively is the meaning of life. Making a delicious dish that allows people to harvest love and warmth from it is the real value that catering enterprises should create.
On December 20, Xiaocaiyuan officially listed on the Hong Kong Stock Exchange.
The listing of Chinese catering enterprises has entered the third stage:
1.0 stage, represented by time-honored enterprises, with a long brand history, dishes with strong regional characteristics, and a large-store model. Their operations are closely tied to tourism consumption and cannot respond promptly to the consumption demands of young people.
2.0 stage, with the help of the Internet, players specializing in featured catering such as hot pot and pickled fish in sour soup have become internet-famous brands, with Haidilao and pickled fish in sour soup as representatives. However, taking pickled fish in sour soup as an example, the novelty period of single tasting has passed, and the product innovation space is relatively limited. Relying on an overly niche single category, the revenue ceiling of the enterprise will be relatively low.
3.0 stage, represented by Xiaocaiyuan, Chinese-style dinner enterprises focusing on the mass market have emerged. Balancing quality and efficiency seems like an impossible goal, but Xiaocaiyuan has precisely chosen the most difficult path in the Chinese catering industry. With stable-tasting dishes, more cost-effective prices, and a closer-to-the-community environment, it is leading a standardized and modernized transformation of Chinese catering.
The listing of Xiaocaiyuan marks a historic breakthrough in the Chinese catering field and greatly boosts the confidence of the catering market.
According to Frost & Sullivan's statistics, calculated based on the store revenue in the first three quarters of 2023, "Xiaocaiyuan" ranks first among all brands in the Chinese mass convenience Chinese catering market with a per-customer price ranging from 50 to 100 yuan.
As the exclusive external investment institution of Xiaocaiyuan, Jiahua Capital firmly believes that mass livelihood consumption will constitute the cornerstone of China's future society and is a broad and promising track. Xiaocaiyuan is a typical case of the concept of "entering the daily life and empowering the people's livelihood" advocated by Jiahua Capital.
Making money in mass Chinese convenience catering is hard work, and this is an era where making hard-earned money deserves respect. "A beauty with a sense of hardship is more appreciated. From nothing to something, from weak to strong, going through several cycles, with great challenges, it will generate a strong mental flow," Song Xiangqian, the founder of Jiahua Capital, said in an interview with 36Kr last year.
Wang Shugao, the founder of Xiaocaiyuan, is from Tongling, Anhui. His parents are both farmers. Due to his poor family background, he left school at the age of eighteen and entered society. He first opened a small restaurant in Tongling, which was 90 square meters and had a booming business. By 2012, he had opened 10 business hotels. Later, he encountered a failed investment in other places. In 2013, after taking several chefs to investigate in Chengdu, Chongqing, Hangzhou and other places, Wang Shugao decided to create a mass catering brand that is "delicious and affordable," and Xiaocaiyuan was thus born.
The spirit of the Hui merchants, who never give up and do things solidly, has been vividly reflected in Wang Shugao and his team over the past decade.
When Song Xiangqian was interviewed by the media, he said many times that China's consumer goods entrepreneurship and consumer goods investment require patience and dedication, starting with the end in mind. "This era needs a group of silent contributors with a firm heart to move forward."
In the era of mass consumption equality, focus on "mass convenience Chinese catering"
The successful listing of Xiaocaiyuan as a mass Chinese dinner brand is the choice of the times.
In the past few years, China has experienced a new round of consumption upgrade fever, but it ended abruptly. A neglected and cruel fact is that China has just entered the threshold level of high-income developed countries, with low per capita purchasing power and per capita disposable income, and insufficient effective demand.
A speck of dust in the times is a mountain when it falls on each person. We cannot talk about the meso industry and the microeconomic operation without considering the macro situation.
"In the future, there will also be continuous emergence of consumption upgrades, new consumption products and categories, but perhaps not like in the past." Song Xiangqian said in an interview with the media.
China's economic structure is transforming from a production-oriented society to a consumption-oriented society, which will go through a long cycle, perhaps even longer than the 30 years that Japan has experienced. Song Xiangqian calls this a "great change" and believes that the founders at the forefront of the industry are not fully prepared to welcome the arrival of this downward cycle, "and a very long process of psychological and policy transformation is needed."
Jiahua Capital believes that China's consumption shows the characteristics of the transition from the third consumption era to the fourth consumption era, and consumers' simple and practical consciousness is reshaping the face of the Chinese catering industry. And mass convenience catering has the characteristics of essential demand, high frequency and extreme cost performance, representing the direction of the "high quality and low price" quality revolution, which is in line with the development trend of the Chinese catering industry and even the overall consumer market.
The catering industry is an ancient industry, but in terms of catering industrialization, only the United States does the best. It has more than 60 related listed companies and has reached a market value of tens of billions or even hundreds of billions of US dollars. Taking KFC and McDonald's as examples, the core reason why they can go global and continue to pass through cycles is that they focus on the mass catering category and adhere to standardized operation management. France has given birth to the Michelin food culture, and a small shop in Japan can be run by five generations. We appreciate the spirit of doing the things we love to the extreme, but deliciousness and tradition cannot last long. Only by relying on scale and standardization can we win.
Although China has a catering market with a scale of up to 5 trillion yuan, a global chain catering giant has not emerged for many years. A consensus has been formed: In the past, there were many opportunities, and relying only on relatively low-level market competition methods such as economies of scale and price competition will gradually be cleared by the requirements of new-quality productivity, high-quality growth and the connotation of Chinese modernization. All industries are facing an efficiency revolution, and truly modernized, chained and standardized Chinese catering brands will have a larger market space.
According to Frost & Sullivan, Chinese-style dinner accounts for about 55% of the Chinese catering market, but in the field of Chinese-style dinner, there are few chained brands. Consumers' expectations for Chinese-style dinner brands are also increasing year by year, such as delicious and affordable, healthy and delicious, fresh ingredients, freshly made with a wok flavor, convenient dining, unified national standards, multi-period operation, etc.
Hot pot is currently the Chinese-style dinner category with the highest degree of standardization, and Xiaocaiyuan is also solving the problem of standardization. The difference is that previously in shopping malls, consumers' choices were concentrated on single-category trendy catering such as grilled fish and grilled meat, which have a stronger periodicity and attract a limited crowd; while Xiaocaiyuan is a scarce supply for shopping mall gathering scenarios, with a richer category, more essential demand, and higher cost performance, which can meet the consumption demands of daily dining, family and friend gatherings, celebration banquets and other scenarios.
Affordability is also an important factor for Xiaocaiyuan to gain a large user group. From 2021 to 2023, and the first eight months of this year, the per capita consumption of in-store customers of "Xiaocaiyuan" was 66.1 yuan, 65.8 yuan, 65.2 yuan and 59.5 yuan respectively. In contrast, the per capita customer unit price of Haidilao is around 100 yuan.
What kind of enterprise to become, what kind of brand image to establish, and what kind of services to provide for the society, these three propositions determine the long-term value and industry status of the enterprise. As early as 2022, more than 10 colleagues from Jiahua Capital's investment team stationed in Tongling, Anhui, deeply participated in the development planning of Xiaocaiyuan, and clarified the long-term strategic positioning of the enterprise: Focus on "mass convenience Chinese catering".
In the era of mass consumption equality, seizing the consumption pain points of social trends such as the miniaturization and aging of families, Xiaocaiyuan takes empowering the family kitchen of the common people as its mission, deeply cultivates the high-frequency and essential catering needs, and forms a sustainable high-repurchase growth model.
Based on standardization, make delicious and affordable dishes
The Xiaocaiyuan brand is positioned as "New Anhui Cuisine". The founding team is composed of chefs and has a strong product-oriented complex. When they carry out product innovation, they mainly consider three aspects: the stability of raw material supply, food safety and the degree of food standardization.
In terms of ingredient selection, the company sources directly from the source and ensures the quality of the ingredients through standardized and large-scale purchasing. For example: The main ingredient "rice" is directly sourced from the Wuchang origin in Liaoning, "chicken" is from free-range in the mountainous areas of southern Anhui, "water" uses Nongfu Spring, and "oil" uses non-GMO soybean oil from Arowana; The supply of the signature dish "Huizhou Stinky Mandarin Fish" is directly sourced from the preferred origin in Anhui, and the taste has been repeatedly debugged for half a year: Another signature dish, "Farmhouse Braised Pork", uses five-layer pork belly from the market on the same day as the raw material.
In terms of the formula, Xiaocaiyuan pays attention to local conditions. Previously, 36Kr once wrote that Xiaocaiyuan's menu is divided into four seasons of spring, summer, autumn and winter, and the formulas provided to stores in various provinces and cities across the country are not the same. For example, the team will adjust the fermentation time to make the flavor of the signature dish Huizhou Stinky Mandarin Fish more suitable for the local people's eating habits.
In terms of cooking, Xiaocaiyuan follows the trend of healthy eating and uses cooking methods with less oil, less salt and fewer seasonings. The home-cooked flavors that are suitable for both the north and the south make Xiaocaiyuan perform quite well in the East China market. A senior consumer financing consultant in Beijing believes that Xiaocaiyuan has great market potential in the North China region because its flavors are more broad-spectrum and suitable for the northern market.
In terms of menu design, Xiaocaiyuan has streamlined the nearly 100 SKUs at the beginning to about 60, leaving only dishes that both conform to the brand positioning and respect the market choice.
The "new Chinese style" innovation of the dishes is also extended to the store design. The standard store of Xiaocaiyuan is about 300 square meters, filled with wooden furniture, and the decoration adopts Chinese ancient architectural elements such as horse-head walls and natural landscapes, giving a sense of leisure and warmth.
Nowadays, more and more consumer brands are exploring the sinking market, and Xiaocaiyuan has already occupied a place in the sinking market. Currently, 53% of Xiaocaiyuan's stores are located in second and third-tier cities. Opening stores in small cities has lower operating costs. Reflecting on the performance level, the profit margins in 2021, 2022, 2023 and the eight months ended August 31, 2024 are 15.9%, 14.2%, 19.7% and 17.8% respectively.
In order to become a national brand, Xiaocaiyuan is accelerating the exploration of first-tier and new first-tier cities. According to 36Kr, Xiaocaiyuan plans to open more than 1,000 stores by the end of 2026.
Due to its high-quality products and experience, Xiaocaiyuan is naturally a suitable choice for family gatherings in shopping malls. However, in order to meet more essential and diversified dining demands, Xiaocaiyuan is also exploring new store types. For example, Jiahua Capital participated in the grinding of the community store "Caishou" of Xiaocaiyuan from 0 to 1. According to 36Kr, "Caishou" has been successfully piloted in Nanjing and Shanghai.
This is an era where good people who do business will be rewarded. From 2021 to 2023, Xiaocaiyuan's revenues were 2.646 billion yuan, 3.113 billion yuan and 4.549 billion yuan respectively, with year-on-year growth rates of 21.5% and 41.6% in 2022 and 2023 respectively. In the first eight months of this year, Xiaocaiyuan's revenue increased by 15.44% from 3.070 billion yuan in the same period of 2023 to 3.544 billion yuan. The recovery of China's consumer market is slow, but Xiaocaiyuan has achieved counter-trend growth, which fully validates the effectiveness of the company's strategic positioning of focusing on "mass convenience catering".
