Every step was followed, but none of them were impressive.
Editor’s note: This article is from the micro-channel public number “ignite new consumer” (ID: xinxiaofei007) , Author: Xu Linyan.
How big is the “food market” in China?
Data from China Catering Report 2019 shows that the scale of China’s food and beverage market in 2019 exceeded 4 trillion for the first time, reaching 4.27 trillion yuan. Hot pot, with a revenue of 960 billion yuan, has become the largest segment in the country, and it can be said to be a well-deserved “golden food”. After the resumption of work, it has been planned for many people to meet friends who have not seen each other for a long time.
With the persistent efforts of diners, hot pot companies have also embarked on the road of going public. Xiabu Xiabu became the first hot pot brand listed in China; in 2018, Haidilao, which was established earlier, also successfully landed on the Hong Kong Stock Exchange … However, it was expected that the hot pot market with a scale of nearly 600 billion yuan in 2020, In this outbreak, measures such as quarantining people’s homes and distancing themselves from crowded places have been hit hard.
Xiabu Xiabu previously issued a profit warning announcement. The announcement said that the company’s net profit attributable to owners in 2019 is expected to decrease by 28% -38%. As for the reasons, the company’s explanation was mainly due to changes in the international accounting standards related to leases. Prior to the release of the semi-annual report, Xiabuxiabu also made a profit warning that the net profit would decrease significantly.
Is the adjustment of accounting standards significant to the company? Is Xiabuxiabu, whose stock price fluctuates at the bottom of history, good investment value? After SARS, Xiabu Xiabu had a turnaround due to its “one person, one pot” model. After the epidemic, can Xiabuxiabu come closer to its 10 billion yuan revenue target?
Xiabuxiabu’s performance and diversified operations
What affects Xiabuxiabu ’s net profit is IFRS 16 Leases, which was released by the International Accounting Standards Board in January 2016 and became effective on January 1, 2019. The core change in this accounting standard is the elimination of a clear division between on-balance sheet financial leases and off-balance sheet operating leases, and the use of a single on-balance sheet accounting model, requiring lessees to record rental expenses related to lease contracts. Under depreciation and amortization. Xiabu XiabuIn this regard, it is stated that, as the group currently operates a large restaurant network that includes more than 1,000 restaurants, the impact of applying IFRS 16 will be significant.
However, for Haidilao, the proportion of property rents that have a significant impact on Xiabuxiabu can be said to be drizzle. According to the Dongxing Securities Research Report, the leasing ratio of property in the catering industry is generally around 20%. Although Xiabuxiabu has been excellent, this figure has reached 12%, but it is still inferior to Haidilao. Property rental in Haidilao accounted for 4.0% in 2018, and even lower to 0.9% in 2019.
According to industry insiders, changes in accounting standards will indeed affect the company. This adjustment of Xiabu Xiabu was that the leased assets were treated as off-balance sheet assets in the accounting treatment, and no depreciation was provided, so it would not affect the income statement, but it is now cancelled. However, if there is no problem in the operation of the enterprise, its profit level can be restored to its expected level in the future. At present, investors need to consider whether the profitability of Xiabuxiabu will recover in the future? How has the company been operating in recent years? Is it worth the bottoms at this time?
Xiabu Xiabu originated in Taiwan and was founded in Beijing in 1998, creating a new business style of stylish hot pots. The company’s business was bleak for a time, but after SARS, the eating concept of eating and drinking opened the door to the national market for Xiabuxiabu. The company’s main “one person, one pot” has become popular, coupled with the price of being close to the people, Xiabu Xiabu borrowed the momentum to rise.
In December 2014, the company was listed on the Hong Kong Stock Exchange and became “the first stock of hotpot chains”. For a period of time, Xiabuxiabu Group’s stock price trended well, climbing from HK $ 4.07 / share all the way to a high of HK $ 17.72 in 2018.
In recent years, the company’s revenue performance has been satisfactory, but the net profit has not seen much improvement, and the growth rate has experienced a serious decline since 2016. Currently the company’s stock price has been cut.
(Data source: Wind)
What happened to Xiabu Xiabu around 2016? Diversity is one of the answers. The company has been looking for profit growth points beyond its basic business.
Facing the consumption upgrade and the increasingly fierce competition, the Group launched the high-end casual dining brand “Minato” in 2016, mainly for family gatherings and business dinners. Its decoration style is also different from Xiabu Xiabu, focusing on tabletop Zen Wind dining. Since the launchIt’s moving very fast. According to the 2019 Interim Report, there were 61 stores opened and operated by Minato. By the end of December 2019, Minato had completed its goal of 100 stores, and the 100th store was Shanghai China Resources Times Square.
According to this calculation, entering 2019, the speed of opening stores has increased to nearly 7 stores per month. The profit made in 2018 was turned from loss to profit. Minato’s expansion has achieved good results. Xiabuxiabu continues to explore consumer groups. In 2019, “in xiabuxiabu”, which is positioned as a young and new generation of consumer groups, was born, and also followed the mid-to-high-end line.
Xiabu Xiabu also noticed the continuous penetration of the Internet into the catering service industry and the transformation of consumer spending habits. In 2016, the company launched the “Xiabu Xiaoxian” take-away service, making full use of business hours such as lunch and dinner during peak hours to increase sales density. In addition, in 2017, the company also launched an instant hot pot business, “Steamed Hot Pot”.
Similarly in 2016, the company also established a seasoning joint venture to produce and sell soup bases, dipping sauces and seasoning dipping sauces. In order to further expand, attracted by the new tea drink economy, the Group opened a separate tea shop-tea rice tea in 2018. The Dahongpao pearl milk tea in the store is quite popular. It is also because of the booming economy of the new tea drinking industry that there are many entrants and fierce competition. There are not a few milk tea shops that close down every year. Up to 12%. Whether Xiabu Xiabu Group can find a foothold in the new tea industry still needs time to verify.
It can be seen that Xiabu Xiabu Group has made a lot of efforts to “upgrade and fight against monsters” along the way. But these efforts don’t seem to pay off well. On the whole, it seems that Xiabuxiabu is following up every step, and every hotspot does not want to miss, but each step has not been impressive. When launching the mid-to-high-end brand “Minato”, Haidilao has become a leader in the same field; when hot pot take-out was started, Haidilao already had a layout during the SARS period, and other major brands have also launched this service one after another; they started to make milk tea The new tea concept is no longer new.
Originally the “one person, one pot” parity line has occupied a place in consumers ’hearts, but now with the so-called upgrade of the shop, not only per capita consumption has become higher, but its own characteristics have also become blurred. It feels like the company’s endogenous growth, although there is room for it, is limited.
Haidilao, which is also working in many fields, is full of profits in 2019, and the net profit growth rate is more than 40%. The company’s takeaway business and food sales business have achieved rapid growth. In 2019, the revenue of these two businesses was 449 million yuan and 494 million yuan, with growth rates of 38.6% and 220.5% respectively. In addition, in terms of takeaway business, Haidilao also has counterfeit food with more fast food properties than hot pot. In March of last year, Haidilao acquired 100% of U Ding Cao Cai’s parent company, You Ding You.Equity, therefore, the takeaway business is likely to become a highlight of Haidilao in the future.
How does the cost control that Xiabuxiabu has been emphasizing during the expansion process? Take the largest proportion of raw materials, consumables and employee costs as examples:
(Data source: Wind)
In terms of the overall expansion of Xiabuxiabu, its cost control is still adequate. The ratio of raw materials, consumables and staff costs to revenue did not increase significantly.
However, the company’s rollover rate has dropped significantly. Industry insiders said that the turnover rate is the reuse efficiency of the dining table, and it is an important indicator of restaurant profitability. Taking Beijing, which has the highest level of rollovers as an example, it has decreased from 4.3 times in 2014 to 3.6 times in 2018, and as low as 3.1 times in mid-2019.
(Data source: Wind)
“There is a small shop in the mall opposite my house, but the area is quite large, but it feels deserted every time I pass by. It is rare to wait in line for a few hours outside Haidilao.” Zhou Jing (pseudonym) ) Said. The turnover rate of Haidilao has also declined in the latest 2019 annual report, which is mainly reflected in first- and second-tier cities. This change deserves long-term observation. However, in general, its performance is still significantly better than Xiabuxiabu, with a turnover rate of 4.7 in first-tier cities and 4.9 in second-tier cities.
Industrial competition is fierce
Because of the low barriers to entry in the hot pot market, many participants have faced fierce competition in Xiabuxiabu.
Take Courier as an example. There are many competitors at the same price. For example, it is known for its meticulous and responsive service attitude, which allows customers to experience deep sea fishing. At present, the market value has exceeded 100 billion, and its leading position in the hot pot industry is relatively stable. In addition, the company is constantly digging for new technologies to create a smart restaurant experience. In 2019, the company opened 3 new technology restaurants, which will be beneficial in the long run.Low staff costs while ensuring the quality of service; Banu hot pot, featuring bursting belly, has financed nearly 100 million yuan against the trend under the impact of the epidemic.
According to public data, at present, Baru Hotpot has opened 66 directly-operated stores across the country, covering more than 20 cities such as Beijing and Shanghai; the characteristic hotpot dad stir-fries with steak as the bottom of the pot, and is determined to create a differentiated hotpot. The brand, which has been recognized by consumers since its launch in 2018, can be said to be a dark horse in the hot pot industry in Chengdu. And this Sichuan-Chongqing hot pot is currently the most mainstream one in China, with a high market share.
In the fiercely competitive environment, and in the process of continuous expansion of diversified layouts, I hope Xiabuxiabu will come out with a clear path of characteristics.