This is an English adaptation of a FoodBud historical article originally published on January 29, 2022.
On January 27, 2022, the China Securities Regulatory Commission disclosed Yang Guofu Malatang's application materials for an overseas initial public offering of shares, including ordinary shares, preferred shares and related equity instruments.
Multiple media outlets reported that Yang Guofu Malatang could submit its prospectus to the Hong Kong Stock Exchange as soon as February 2022, with plans to apply for a Main Board listing.
Yang Guofu's connection with Sichuan-style malatang began in 2000 after a chance encounter with the format on the street. He started the business from a small rented basement space in Harbin.
In 2003, the brand's first directly operated store, Yangji Malatang, opened on Yonghe Street in Harbin. This became the prototype for Yang Guofu Malatang.
Yang later told media that at the time, rent was around RMB 1,000, ingredients were inexpensive, and labor cost about RMB 300 per month. Relatives and friends saw the low cost and quick payback of the business and joined the format. Around Harbin's surrounding counties alone, Yang Guofu Malatang opened dozens of stores.
The rapid expansion also created operational problems. According to Yang, the brand lacked unified planning, store consistency and brand recognition. To franchisees, the system looked fragmented rather than standardized.
Around 2009-2010, Yang Guofu Malatang stopped franchising and began a rectification process. It redesigned its visual identity, introduced the concept of fast-food-style malatang, and was among the first in the sector to promote a pay-by-weight, self-selection operating model.
From 2012, Yang Guofu Malatang began expanding beyond China's three northeastern provinces into Central and North China, after its original regional market had become highly saturated.
Beijing became an important market. After establishing a presence there, the company moved into Shanghai. In 2015, it set up a Shanghai global center and continued expanding into East and South China.
In 2016, the company established Sichuan Yang Guofu Food Co., Ltd. In September 2018, its R&D base officially entered production. Investment in the base rose from an initial RMB 120 million to RMB 400 million, with a total construction area of 57,000 square meters. Much of the equipment and many senior technical managers came from Germany, Switzerland and the Netherlands.
On September 6, 2020, during the brand's 20th anniversary, Yang Guofu Malatang said its store count had exceeded 5,500.
When Yang Guofu Malatang surpassed 3,000 stores in 2014, founder Yang Guofu began planning a more advanced front-end standardization system. During the factory construction process that began in September 2015, the company focused heavily on its R&D base.
The food R&D and production base was designed with enough capacity to supply 20,000 stores. Its annual capacity includes:
The base also includes two R&D kitchens at different levels and one large laboratory.
According to Yang Guofu Malatang's official website at the time, the brand had reached 6,000 stores. Data from Zhaimen Canyan showed 5,471 operating stores in China, with 1,168 new stores opened in 2020 and 1,033 new stores opened in 2021.
Beyond the food R&D and production base, Yang Guofu Malatang also built nine regional warehouses across China to support store-level material distribution and supply.
In a 2019 media interview, Yang Guofu said the company's 2019 revenue was expected to reach RMB 1.3 billion. Franchise fees accounted for only about 20% of that. Most revenue came from trading activities, including sales of seasonings, ingredients, kitchen equipment and restaurant furniture to franchisees.
The article noted that compound-seasoning supply-chain businesses generally reserve gross margins of around 15%-35% for themselves.
According to a previous 2020 second-half sharing by Yang Guofu Malatang vice president Xu Mingzhe, annual revenue from franchise fees was more than RMB 100 million. The larger revenue contributor was trading services related to production, processing and consumer retail, with annual revenue of about RMB 1.5 billion.
Yang Guofu Malatang stores ranged from 80 to 350 square meters. Based on new-store data from the first half of 2020, most new units were concentrated in the 60-100 square meter range.
In terms of site selection, the brand focused mainly on commercial-center locations and store-in-store formats.
Yang Guofu Malatang's previous plan was to reach 1,000 overseas stores and 9,000 domestic stores within five years, while increasing group-wide revenue to RMB 10 billion.
The planned Hong Kong listing was positioned as a way to use capital-market leverage to accelerate growth.
Zhang Liang Malatang, a closely related competitor, had already exceeded 5,800 stores. Earlier media reports said founder Zhang Liang is Yang Guofu's nephew. Before starting his own company, Zhang Liang reportedly worked for Yang Guofu for more than three years, where he was responsible for frying malatang seasoning.
In 2021, Zhang Liang Malatang established a new company, Shengshi Qianqiu, as part of a renaming effort. At the end of 2021, it also established a brand-management company in Shanghai, with the aim of placing its management center there and using Shanghai as a base to reach global markets.
Zhang Liang Malatang has long used a lighter-asset model. Its income mainly comes from franchise fees, while its core supply to stores is seasoning and stores procure dishes themselves. This differs from Yang Guofu Malatang's deeper back-end supply-chain model, which the article described as stronger in supply-chain control and quality control.
Zhang Liang Malatang co-founder Jiang Baidong previously told media that the company would continue focusing on store franchising and restaurant management, with no short-term listing plan. He said he had not yet decided whether to bring in capital.
The article speculated that Yang Guofu Malatang's listing process could influence whether Zhang Liang Malatang reconsidered its own capital-market stance.
Note: IPO plans, revenue expectations, store targets and forward-looking figures above are historical references from the 2022 source article.