BaiFu Reports RMB370 Million First-Half Revenue and RMB46.42 Million Gains From Share Sales

This is an English adaptation of a FoodBud historical article originally published on September 4, 2021.

BaiFu Holding reported interim results for the six months ended June 30, 2021: revenue reached RMB370 million, up 51.85% year on year. Profit attributable to equity holders was RMB5.242 million, compared with a loss of RMB94.591 million in the same period of 2020.

BaiFu is a multi-brand foodservice platform backed by Hony Capital, built around what it describes as investment, operations and digital capabilities. Hony and BaiFu had invested in 14 brands across categories including rice meals, noodles, hot pot, malatang, roujiamo and health-focused light meals. The portfolio included Meeting Xiaomian, Seesaw Coffee, Baozaihuang, Xishaoye, Yuexiaopin, Meinai Xiaoguan, Fook, Dafulan, Haosepai Salad, Hehegu, Xinladao, Pizza Marzano, Quanjincheng and Quanwei.

More Than 600 Directly Operated and Franchised Stores

In the first half of 2021, COVID-19 still appeared sporadically in some regions, but the overall situation had stabilized and China's restaurant industry was gradually returning to normal.

For the six months ended June 30, 2021, BaiFu's systemwide sales, including all directly operated and franchised restaurants under its brands, rose from RMB560 million in the first half of 2020 to RMB1.08 billion, an increase of 92.2%. Half of its brands recorded growth of more than 100%.

As of June 30, 2021, BaiFu's brands had more than 600 stores in total, including 419 directly operated stores and 182 franchised stores.

BaiFu expanded direct operations by introducing southern China brands such as Fook and Dafulan into the Beijing-Tianjin-Hebei region. It also formed a joint venture with experienced franchisees in Northwest China to expand portfolio brands into Shaanxi, Gansu, Ningxia, Qinghai, Tibet and Xinjiang.

On franchising, several BaiFu brands had initially completed franchise models in the first half of 2021. Xinladao developed a younger sub-brand around fresh fish hot pot and a smaller Suobian fish format for lower-tier cities. Hehegu focused on franchise growth within a 1,000-kilometer radius of Beijing, including cities such as Nanjing and Zhengzhou. Meeting Xiaomian's standardized products and broad regional flavor acceptance supported cross-regional expansion. Baozaihuang, formerly Zihuangbao, adjusted its taste profile for southern markets and saw franchise growth in East China cities such as Nanjing and Hefei. Dafulan and Fook also developed smaller, lower-investment store models for franchise expansion into lower-tier markets.

Digital Capabilities and Membership Growth

In the first half of 2021, BaiFu's brands connected WeChat and Alipay mini-programs to improve service efficiency and customer experience. Together with other initiatives, stored-value and points-based members increased from about 11.6 million at the start of the year to about 15 million by June 30, 2021.

In June 2021, BaiFu signed a deeper digital business cooperation agreement with Alibaba Cloud. The goal was to jointly build a cross-brand data middle platform, using Alibaba Cloud analytics products and BaiFu's own operating methodology to create a customer-demand-led analytics system and support digital transformation and operating improvements.

Investment Gains From Meeting Xiaomian and Other Brands

BaiFu said most of its minority-owned portfolio brands had grown significantly from the time of initial investment.

Baozaihuang, formerly Zihuangbao, received two investments in February and June 2021 from Tibet Yuankun, an institution under Century Golden Resources Group. Meeting Xiaomian received two investments from funds under Shenzhen Country Garden Venture Capital; its valuation on June 28, 2021 had nearly tripled from March 2, 2021.

BaiFu also said several other brands were expected to seek new financing rounds in the second half of 2021 based on operating performance. Because investments in associates were measured using the equity method rather than fair value, valuation increases were not reflected in the income statement. In the first half of 2021, BaiFu realized gains by disposing of small stakes in associates.

According to BaiFu's announcement, during the six months ended June 30, 2021, the group sold certain interests in Guangzhou Meeting Xiaomian Catering Management Co., Ltd. and Shenzhen Yuyang Meichu Network Technology Co., Ltd., the company behind Haosepai. After the disposals, both remained associates of the group. As of the announcement date, the group had not yet received the consideration, which was included in other receivables on the interim condensed consolidated balance sheet as of June 30, 2021.

The disposal gains totaled RMB46.42 million.

BaiFu first invested RMB25 million in Meeting Xiaomian in November 2016 at a valuation of RMB100 million. Five years later, the brand's valuation had increased 120 times. The article also noted that, in less than three months, another fund participated by Country Garden Venture Capital made a further investment in Meeting Xiaomian, while BaiFu's wholly owned subsidiary Qixin Holdings agreed to sell part of its stake to that fund. Compared with March 2, 2021, Meeting Xiaomian's valuation had nearly tripled, from RMB1 billion to RMB3 billion.

Beyond Meeting Xiaomian, Seesaw Coffee, another brand in BaiFu's investment ecosystem, completed an A+ financing round of more than RMB100 million in July 2021, with Heytea taking a stake.

Note: Financing, valuation and forward-looking figures are historical references from 2021.