This is an English adaptation of a FoodBud historical article originally published on January 12, 2022.
On January 12, 2022, Qixintian, founded in 2006, submitted an application to the Hong Kong Stock Exchange for a proposed listing on the Hong Kong Main Board. The company described itself as China’s largest seafood restaurant chain and the country’s third-largest hotpot chain.
Qixintian held a 1.2% share of China’s highly fragmented seafood restaurant market. Its signature format is “one pot, two ways”: since 2009, the brand has combined stir-fried crab seafood with hotpot, two distinct but popular dine-out occasions.
At the time of the filing, Qixintian operated 256 restaurants across 48 cities in nine provinces and one municipality. Its store count had grown from 115 on January 1, 2019 to 256, an increase of 122.6%.
According to Frost & Sullivan data cited in the filing, China’s seafood restaurant market grew from RMB105.7 billion in 2016 to RMB121.5 billion in 2020, a CAGR of 3.5%. It was projected to grow from RMB121.5 billion in 2020 to RMB246.3 billion in 2025, a CAGR of 15.2%.
China’s hotpot restaurant market revenue grew from RMB395.5 billion in 2016 to RMB438.0 billion in 2020, a CAGR of 2.6%, and was projected to reach RMB850.1 billion by 2025, a CAGR of about 14.2%.
By 2020 revenue, the top five operators in China’s hotpot market accounted for about 7.9% of the market. Qixintian generated RMB1.4 billion in 2020 revenue, ranking third by revenue in China’s hotpot restaurant market with a 0.3% share.
The top five cited operators were:
In seafood restaurant chains, Hunan-based Xuji Seafood ranked second, with RMB1.0 billion in 2020 revenue.
Qixintian’s key operating figures included:
Qixintian defined same-store restaurants as those open for at least 300 days in 2019 and 2020, and at least 225 days for the nine months ended September 30 in 2020 and 2021. As of September 30, 2021, it had 162 same-store restaurants, with same-store average daily sales of RMB27,000 and table turnover of 2.2.
Delivery commissions ranged from 5% to 18%. Delivery accounted for 11.2% of revenue in 2019, 15.5% in 2020, and 16.4% in the first three quarters of 2021.
Qixintian had 91 authorized suppliers in 2019, 154 in 2020, and 176 for the nine months ended September 30, 2021. As of September 30, 2021, its top five suppliers represented 18.2% of procurement.
The company had 4,707 staff at the end of 2019, 4,279 at the end of 2020, and 5,269 as of September 30, 2021. These totals included 4,707, 1,713, and 1,834 direct employees respectively, with the remainder outsourced staff.
Based on prior records, Qixintian’s live-crab loss rate during warehouse-to-restaurant transportation was below 5%, compared with an industry average above 10% for seafood, according to Frost & Sullivan. Live crabs were generally sold within 48 hours of arriving at restaurants.
Qixintian began R&D on low-temperature seafood preservation technology in 2016. The company said the technology extended seafood storage time while preserving quality, flavor, and texture, and reducing off-odors. It also allowed Qixintian to stock seafood when prices were lower, reducing the impact of seasonal supply and price volatility on raw-material costs. While applying for a patent, Qixintian began offering seafood preserved with this technology in restaurants from September 2020. As of September 30, 2021, more than 200 restaurants offered such seafood, though volumes remained limited.
Founder Mr. Ruan held 62.8% of the company.
For Qixintian, the main restaurant cost lines were ingredients, labor, and rent.
Raw materials and consumables, excluding non-deductible input VAT, accounted for 45.7% of revenue in 2019, 43.7% in 2020, 44.5% for the nine months ended September 30, 2020, and 41.4% for the nine months ended September 30, 2021.
Staff costs were RMB300 million in 2019, RMB260 million in 2020, RMB180 million for the nine months ended September 30, 2020, and RMB260 million for the nine months ended September 30, 2021. These represented 23.9%, 18.3%, 18.6%, and 17.2% of revenue respectively.
Although the restaurant network expanded, staffing demand per restaurant fell. The overall table-to-employee ratio rose from 0.99 in 2019 to 1.25 in 2020, and remained stable at 1.2 as of September 30, 2021.
Lease-related expenses were RMB94.3 million in 2019, RMB110 million in 2020, RMB84.0 million for the nine months ended September 30, 2020, and RMB110 million for the nine months ended September 30, 2021. These represented 7.3%, 8.0%, 8.5%, and 7.2% of revenue respectively.
Qixintian attributed its expansion capability to a standardized supply chain, restaurant operating system, and organizational model.
Its Suzhou headquarters included a central factory focused on producing patented mixed seasonings and sauces, premium seafood products, and crab stored through low-temperature preservation technology. Chefs followed standard formulas and cooking orders, with cooking times specified to the second. The company emphasized crab-led seafood products while controlling menu breadth to simplify procurement and logistics.
The Suzhou central factory, with total floor area of 5,659 square meters, began operations in May 2019 and supplied ingredients and other materials to Qixintian restaurants.
Qixintian also operated three warehouses in Shanghai, Nanjing, and Jinjiang. It leased a 1,799-square-meter warehouse in Hangzhou, expected to begin operations in the first half of 2022.
Restaurant standardization covered store decoration, menu items, pricing policy, receipt of food and other supplies, food preparation and processing, service process, equipment and facility maintenance, front- and back-of-house hygiene, and employee conduct. Operating procedures were divided into five steps: inspection and receipt of ingredients and supplies, cleaning and sterilization, food processing, food preparation, and dish presentation and garnish.
The company also used a 21-level career and compensation structure built around systematic training, encouragement of innovation, and clear incentives and promotion paths.
Qixintian used an apprenticeship system similar in concept to Haidilao’s mentor model. Store managers could share not only in profits from their own restaurants but also from apprentice-managed restaurants. The company said this encouraged existing managers to train future managers internally. As of the latest practicable date cited in the filing, Qixintian had more than 200 reserve store managers ready for deployment to new restaurants.
As of the latest practicable date, Qixintian operated more than 100 restaurants across city tiers in Jiangsu province and more than 140 restaurants outside Jiangsu.
Site selection focused on shopping malls, commercial districts, and neighborhood street-front locations. Qixintian maintained relationships with more than 180 shopping malls and commercial districts, of which more than 80 had worked with the company for over three years. It also had a dedicated site-selection team using standardized selection and review procedures to manage and supervise expansion plans.
Qixintian planned to increase restaurant density in existing markets, especially East China, to deepen penetration and strengthen market share.
It also planned to expand into selected new regions. In 2023 and 2024, the company planned to focus network expansion on South China, Central China, and North China, especially areas with resident populations above 100,000.
The company estimated it would open about 70 new restaurants in 2022. As of the latest practicable date, 30 restaurants had signed leases but had not yet opened, and seven restaurants had signed letters of intent with landlords. Qixintian also planned to open about 100 restaurants in 2023 and about 130 restaurants in 2024.
Note: IPO-related information and forward expansion and market-size figures are historical, based on the January 2022 source article and filing context.