99 Fen On The First Day Of Listing, A 56% Increase In Brand Expansion Remains To Be Seen.

In January 15th, the 99 Fen International (09922.HK) listed on the stock exchange of Hongkong and became a Chinese restaurant after listing 06862.HK. On the first day of listing, 99 Fen rose 56.06% to HK $10.3, the latest total market value of HK $13 billion 700 million.

24 years ago, Guan Yihong, the founder of the group, started from a noodle shop in Haikou. Up to now, there are 99 Fen brands of "99 Fen", "too two", "2 eggs", "encouraging" and "not a big uncle is a chef". As of December 2019, 99 Fen operated 287 direct restaurants and managed 41 franchised restaurants, covering 39 cities in China, of which 143 and 121 were 99 Fen and two respectively.

The domestic demand growth and demand diversification brought by the upgrading of consumption is reshaping the development logic of China's catering industry. In the face of the changing consumer market, 99 Fen, how can we maintain the momentum of rapid growth? With the maturity of the 99 Fen brands, can Tai two, a new fist brand, take up the banner and continue to lead the whole group?

Up to now, there are 90 Fen "99 Fen", "too two", "2 egg pancakes", "encouraging" and "that uncle is the chef" five self created brands. - Gan Jun photo

Landing Hong Kong stock

In 1995, Guan Yihong, a native of Shanxi who graduated from University for five years, came to Hainan. He bought a small noodle shop by chance, and was named "Shanxi Noodle King". At first, the noodle shop only had 57 square feet, and only 6 tables could be dropped. Under the careful operation of Guan Yihong, the noodle shop becomes a large noodle shop step by step.

In 2002, Guan Yi hung went out of Hainan for the first time, and went to a restaurant in Guangzhou, where the catering culture was deeply rooted. In 2005, because of the limitation of trademark registration, Guan Yi gave up his original store name and changed it to "99 Fen" to register and set up a company.

In 2009, catching up with the expansion bonus of shopping malls, 99 Fen began to operate in the form of brand, aiming at shopping centers and opening fast fashion and light catering mode. After entering the Baiyun Wanda Commercial Center in Guangzhou, 99 Fen northwest cuisine was red and then stationed in several commercial centers.

From 2013 to 2015, it was the 99 Fen period of rapid expansion of stores. In 2013, it opened 55 stores and broke 95 in 2014. By 2015, the number of 99 Fen stores has reached 140. Among them, 99 main business revenues in Guangdong and Southern China have overwhelming advantages.

That is to say, in this year, 99 Fen opened multi brand operation stage, launched the "too two" pickled fish brand; in 2017, launched the "2 eggs" pancake brand, the brand opened in 2018 to join the mode; in 2019, launched the "encouragement" and "that uncle is the chef" brand. In August 28th of the same year, "99 Fen" submitted a prospectus to the HKEx, to be listed on the Hongkong main board IPO.

According to prospectus disclosure, in 2016, 2017, 2018 and the first half of 2019, 99 Fen of business income was 1 billion 164 million yuan, 1 billion 469 million yuan, 1 billion 893 million yuan and 1 billion 237 million yuan respectively. Among them, "99 Fen" Northwest food and "too two" sauerkraut fish as the core brand of the group, the income generated by the two accounted for more than 98%.

Zhu Dan Peng, an analyst with China's food industry, believes that the bright spots and growth points of the 99 Fen groups are all concentrated on too two brands. But the sauerkraut fish category is too single, and has the limitations of the crowd. This will bring certain risks to the sustainable development of the 99 Fen future.

Reporters noted that after 99 Fen had sought to be listed on the A shares, and began restructuring in 2015, but later received the China Securities Regulatory Commission's inquiry. Considering that the listing schedule will be delayed and uncertain due to the overall A share review process, in 2017, 99 Fen decided to withdraw the application of A share listing and began preparations for listing on the Hongkong stock exchange.

According to 99 Fen aspects, in 2020, the group plans to set up 18 99 Fen restaurants, 80 too two restaurants and 24 other brand restaurants in the first tier, new front-line and provincial capital cities. It is expected to open 20 99 Fen restaurants in the first tier, new front-line and provincial capital cities in 2021, 100 two restaurants and 36 other brand restaurants to enhance the supply and support capacity of restaurants.

"As the number of restaurants continues to increase, the company will also renovate existing central kitchens and upgrade equipment and facilities to support the rapid expansion of restaurant networks." 99 Fen in a circular.

Multi brand expansion

According to the latest plan, about 370 self catering restaurants will be opened in 99 Fen from 2019 to 2021, of which about 240 are two restaurants, about 54 99 Fen restaurants and about 76 other brand restaurants. For the 2 eggs that have been opened, the Group expects to open about 460 new restaurants from 2019 to 2021.

Industry analysts believe that the 99 Fen brand has matured, and now can serve as the whole 99 Fen group growth engine is too two sour fish.

Comparing the two key data, we can find that in the first half of 2019, the price of the 99 Fen brands was 56 yuan, the turnover rate was only 2.3, the price of passengers at two was 75 yuan, and the turnover rate was 4.9, which was higher than that of seabed (4.8), but the price of seabed fishing passengers was higher than 104.4 yuan. Over the same period, another listed catering company had 57.4 yuan and 2.4 seats for its customers.

According to Sullivan report, in recent years, China's catering service market is experiencing rapid growth, with total revenue rising from 28925 billion yuan in 2014 to 42716 billion yuan in 2018, with a compound annual growth rate of 10.2%. It is estimated that from 2018 to 2024, China's catering service market revenue will grow at a compound annual growth rate of 9% and reach 71582 billion yuan in 2024.

Although industry statistics show that the catering industry is still a sunrise industry, fierce competition and the ecological changes brought about by the takeaway platform still grim every practitioner.

Zhu Danpeng believes that the difference between SKU and seabed fishing is that whether it is 99 Fen or too two, they are faced with a single category problem. For example, too two, the capacity of pickled fish market is not large, followed by net red dining is often lacking in cultural heritage, and the core competitiveness of sustainable development is not strong. In his view, the next 99 Fen groups should start with the upgrading of categories, and appropriately diversify their brands.

The reporter noted that in recent years, several brands of 90 Fen new brands have been positioned differently -- "2 eggs" showing the product form, "chew" and "not uncle is the chef" in the pancake fruit, respectively, which are Sichuan cold pot string and boutique Cantonese brand.

"Phased brand diversification can increase body size, but the cost of trial and error in this way is very high, and it will distract the energy of the group." Zhu Danpeng said. According to the prospectus, in addition to 99 Fen and two, other brands still have negative operating profits. In addition, the group also needs to face the industrial challenge of the rising cost of labor and materials.

Open alliance may be the next 99 Fen choice. Besides, the peripheral products may become a new way out. After all, it has always claimed that "too much sour food is better than fish", which has a certain advantage on sauerkraut. "Two"