This is an English adaptation of a FoodBud historical article originally published on February 23, 2022.
On February 22, 2022, Yang Guofu Malatang submitted a prospectus to the Hong Kong Stock Exchange for a planned Hong Kong listing. According to the filing, the company did not introduce cornerstone investors before the IPO, but had carried out equity incentives for employees and partners.
The ownership structure disclosed in the prospectus showed Yang Guofu, executive director and chairman, owning and controlling about 41.82% of voting rights. Zhu Dongbo, executive director and Yang Guofu’s spouse, held 38.79% as beneficial owner. Yang Xingyu, executive director and the son of Yang Guofu and Zhu Dongbo, directly held 19.39% as beneficial owner.
The prospectus positioned Yang Guofu Malatang as the top player in China’s Chinese fast-food market by store scale and transaction value, ahead of brands such as Laoxiangji and Country Style Cooking.
Using 2020 data, the filing ranked leading Chinese fast-food chains by transaction value:
Within the malatang category, Yang Guofu and Zhangliang ranked first and second in 2020. Mijie Malatang ranked third with RMB 1.0 billion in transaction value, followed by Xiaogu Jiejie at RMB 900 million and Diao Si Malatang at RMB 200 million.
Yang Guofu generated revenue mainly through its restaurant operations segment. Franchise restaurants were the core revenue source, with income from franchise fees, system maintenance fees, and goods sold to franchisees. The company also operated self-owned restaurants and other businesses. Starting in 2021, it began operating a retail business segment.
Total revenue was:
In the first three quarters of 2021, sales of the company’s own goods accounted for 29.6% of total revenue, while sales of third-party procured ingredients, seasonings, and related products accounted for 54.0%. Together, these supply-chain-related sales represented 83.6% of total revenue.
Profit for the period was RMB 181 million in 2019, RMB 169 million in 2020, and RMB 202 million in the first nine months of 2021. Net cash used in operating activities was RMB 240 million in 2019, RMB 260 million in 2020, and RMB 200 million for the first nine months ended September 30, 2021.
Total liabilities were RMB 404 million in 2019, RMB 460 million in 2020, and RMB 469 million in the first nine months of 2021. Net assets were RMB 360 million, RMB 528 million, and RMB 710 million for the same periods.
As of September 30, 2021, the Yang Guofu brand had 5,783 restaurants: 3 self-operated restaurants in Shanghai, 5,759 franchised restaurants across 31 provinces and municipalities in China, and 21 overseas franchised restaurants in Australia, Canada, South Korea, the United States, Japan, and Singapore.
By December 31, 2021, the domestic store count had declined to 5,607, while overseas stores fell to 20. That implies a net closure of 152 domestic stores and 1 overseas store in the fourth quarter of 2021.
For self-operated stores, average annual revenue per store was RMB 2.82 million in 2019, RMB 2.07 million in 2020, and RMB 1.94 million in the first three quarters of 2021. Average transaction value at self-operated stores was RMB 34.3 in 2019, RMB 32.3 in 2020, and RMB 29.3 in the first three quarters of 2021. Average order volume per self-operated store was 82,000, 64,000, and 66,000 over the same periods.
For franchise oversight, Yang Guofu divided franchisee management areas into “cooperative control regions” and “direct control regions.” As of December 31, 2021, the franchisee management department had 32 internal staff. Of these, 9 managed directly controlled regions, 15 worked with third-party management partners to supervise cooperative control regions, and 8 handled consumer complaints and maintained the YGF store inspection online platform.
The prospectus stated that IPO proceeds would be used to expand and optimize the restaurant network, strengthen supply-chain capabilities, improve technology and information systems, broaden the brand portfolio, capture emerging-market opportunities, expand product categories, widen sales channels, and further develop the retail business.
Subject to market conditions, Yang Guofu planned to open at least 1,000 franchised restaurants per year in China from 2022 to 2024.
The company also planned further international expansion. Its stated strategy was to start with Asia and then reach other overseas regions. In each overseas market, Yang Guofu planned to begin in areas with concentrated Chinese communities before expanding outward.
The company said it would assess local market potential based on overseas franchise restaurant performance and adapt growth strategies accordingly. To support long-term overseas growth, it planned to adjust soup bases and ingredient formulas to match local consumer tastes and preferences.
Retail was another focus. Based on the concepts of ready-to-eat, ready-to-heat, and ready-to-cook products, Yang Guofu launched its first retail products in January 2021. As of September 30, 2021, more than 3,900 Yang Guofu Malatang restaurants sold its retail products.
Its listed retail products at that time included:
As of December 31, 2021, the retail team had 26 members: 13 managing offline retail and 13 managing online retail channels. The company planned to launch about 20 to 25 retail products in each of 2022 and 2023.
Note: IPO, ownership, expansion targets, and forward-looking figures are historical disclosures from the 2022 prospectus/article.