Mixue Expands in Singapore and Malaysia; Yum China Winds Down Dongfang Jibai

This is an English adaptation of a FoodBud historical article originally published on March 4, 2022.

Mixue Bingcheng Pushes Further Into Southeast Asia

Mixue Bingcheng recently opened stores in Singapore and Malaysia. In Singapore, local observers reported long queues, and a second Singapore store was already in preparation.

The new Malaysia store was in Johor Bahru, close to Singapore. On pricing, local feedback cited RM1 ice cream as common in the market, while Mixue's pearl milk tea at RM5.5 was about RM0.5-1 below comparable market products.

Mixue entered China's southwest market in 2016, using that region as a base to radiate into Southeast Asia. Its largest Southeast Asian market at the time appeared to be Vietnam: in December 2021, Mixue's Vietnam store count officially exceeded 200.

Yum China: Dongfang Jibai to Close

By 2021 system sales, Yum China had become China's largest restaurant company. As of December 31, 2021, it operated 11,788 restaurants across more than 1,600 Chinese cities. About 85% of restaurants were owned and operated by Yum China. At year-end 2021, Yum China had 10,051 company-operated stores, including 9,999 leased properties and 52 owned properties.

Brand-level details:

• KFC was founded in 1939 by Colonel Harland D. Sanders in Corbin, Kentucky, and opened its first China restaurant in Beijing in 1987. As of December 31, 2021, KFC had more than 8,100 restaurants across more than 1,600 Chinese cities. It competed mainly with Western QSR brands in China such as McDonald's, Dicos, and Burger King; by store count, KFC was about twice the size of its closest competitor in China.
• In 2021, average capital expenditure for each new KFC and Pizza Hut restaurant was about RMB1.5 million to RMB2.5 million.
• Pizza Hut opened its first China restaurant in Beijing in 1990. By the end of 2021, it had more than 2,500 restaurants across more than 600 Chinese cities. Its restaurant count was about six times that of its closest Western casual-dining competitor in China.
• Little Sheep originated in Inner Mongolia and specializes in hot pot, especially popular in winter. As of December 31, 2021, it had more than 240 stores in China and international markets, including 220 franchised stores.
• Huang Ji Huang: Yum China completed the acquisition of a controlling interest in April 2020. Founded in 2004, Huang Ji Huang had more than 650 stores in China and overseas as of December 31, 2021.
• Lavazza: In April 2020, Yum China partnered with Italian family-owned coffee company Luigi S.p.A. / Lavazza Group and formed a joint venture to explore and develop Lavazza coffee shops in China. In September 2021, Yum China and Lavazza Group agreed to accelerate expansion. As of December 31, 2021, China had 58 Lavazza stores, with a target of 1,000 stores by 2025.
• COFFii & JOY, a specialty coffee brand developed by Yum China in 2018, had 36 China stores as of December 31, 2021.
• Taco Bell, the Mexican-inspired global QSR brand, opened its first China restaurant in Shanghai in December 2016. As of December 31, 2021, it had 37 China stores.
• Dongfang Jibai was a Chinese fast-food brand mainly located in transportation hubs. The brand was severely affected by COVID-19, and Yum China decided to terminate operations. As of December 31, 2021, China had five Dongfang Jibai stores, all planned for permanent closure in 2022.

Dutch Bros Planned at Least 125 New Stores in 2022

Coffee chain Dutch Bros generated USD498 million in 2021 revenue, up 52.1% year over year. It had 538 stores: 271 company-operated and 267 franchised. During 2021, it opened 98 new stores, including 82 company-operated stores.

Average annual unit volume in 2021 was USD1.8 million for company-operated stores and USD1.9 million systemwide.

Its 2022 outlook called for at least 125 new stores, including at least 105 company-operated stores.

Sweetgreen: 31 Net New Stores and Heavy Digital Mix

Publicly listed salad and healthy-food chain Sweetgreen generated USD340 million in 2021 revenue, up 54% year over year. Same-store sales rose 25%. Digital channels represented 67% of revenue, while owned digital channels accounted for 46%. The company reported an operating loss of USD130 million and a net loss of USD150 million. It added 31 net new stores, reaching an average annual unit volume of USD2.62 million in 2021.

In Q4 2021, revenue was USD96.4 million, up 63% year over year. Same-store sales increased 36%, mainly due to 32% transaction growth and a 4% menu price increase.

Its 2022 outlook called for at least 35 new stores and revenue of USD515 million to USD535 million.

Sweetgreen's IPO price was USD28. After listing, the stock opened sharply higher and at one point exceeded USD60. At the time of the article, it had fallen to USD21.35, implying an overall market capitalization of USD2.28 billion.

One operating point from the company's earnings call was especially relevant for chain operators: Sweetgreen used physical stores to acquire customers, then shifted them into digital channels. Repeat purchase rates in digital channels were 1.5 times those of stores, and spend per transaction was 20% higher. Sweetgreen also used exclusive menu items on owned channels to keep users within its own ecosystem.

In January 2022, Sweetgreen chose DoorDash for delivery of its own delivery orders. The logic was that specialized delivery could perform better and help expand the delivery radius.

Note: forward-looking store targets, IPO pricing, market capitalization, and 2022 outlook figures are historical as of the original March 4, 2022 article.