Zhou Hei Ya Revenue Rose 31.6% in 2021 as Franchising Expanded

This is an English adaptation of a FoodBud historical article originally published on March 30, 2022.

On March 31, Zhou Hei Ya released its 2021 financial results. Full-year revenue reached RMB 2.87 billion, up 31.6% year over year. Gross profit was RMB 1.66 billion, up 37%, while net profit reached RMB 340 million, up 126.4%.

Revenue Mix

By product category, duck and duck by-products remained the core business, contributing 84.2% of 2021 revenue. Other products, including marinated red meat and vegetables, contributed 14.9%. Franchise fees accounted for 0.9%.

By channel, company-operated stores contributed 57.3% of revenue in 2021, down from 2020. The main shift came from franchising: revenue from franchised operations, including product sales, franchise fees and management fees, rose from 6.4% of revenue in 2020 to 20.6% in 2021. Online channels accounted for 19.1%.

Delivery revenue from company-operated stores represented 22.6% of those stores' revenue in 2021, up from 19.4% in 2020. Full-year delivery revenue was RMB 370 million.

By the end of 2021, Zhou Hei Ya's internet O2O business, including online channels and self-operated delivery, accounted for about 32% of total group revenue. Its community fresh-food channel covered more than 80 cities and over 3,000 front warehouses.

Store Network

At the end of 2021, Zhou Hei Ya had 2,781 retail stores: 1,246 company-operated stores and 1,535 franchised stores. The company added a net 1,026 stores during the year.

Franchise demand was significant: Zhou Hei Ya received 16,000 new franchise applications in 2021, and the number of franchisees reached 400.

Average transaction value declined from RMB 60.1 in 2020 to RMB 57.8 in 2021.

The store base remained concentrated in Central China, which also drove the largest share of revenue. The region accounted for 55.6% of 2021 revenue.

Inventory Efficiency

Average inventory turnover days improved from 114.1 days in 2020 to 86.9 days in 2021.