This is an English adaptation of a FoodBud historical article originally published on April 6, 2022.
In late March 2022, Chinese bar chain Helen’s released its 2021 financial results. The company had attracted strong attention around its September 2021 listing, when it was described by some commentators as a “night-time Starbucks” and a fast-rising bar-chain contender.
Helen’s listed at HK$19.77 per share in September 2021. Its share price rose as much as 30% on listing day to HK$25.75, but by the time of the article had fallen below the offer price to HK$13.48. Its market capitalization was HK$17.08 billion, equivalent to RMB13.88 billion.
As of December 31, 2021, Helen’s operated 782 stores. It opened 431 stores during the year, expanding its store base by 1.2 times. At peak speed, the company opened 82 stores in a single month. In 2021, it had 228 same-store locations, with same-store sales up 32.7% year on year.
For full-year 2021, Helen’s reported revenue of RMB1.84 billion, operating profit of RMB300 million, and adjusted net profit of RMB100 million.
By March 25, 2022, Helen’s had expanded from 782 stores at the end of 2021 to 854 stores.
From an organizational-capacity perspective, Helen’s believed it had built the ability to open around 1,000 stores per year. In October 2021, the company said it planned to open more than 900 new stores in 2022 and expected to reach 2,200 stores by 2023.
In a March 2022 external communication, Helen’s said its expansion team had already signed 192 stores, including 80 stores that had opened in the first quarter.
Among new stores opened in 2021, 98% saw queues at opening, reinforcing management’s confidence in rapid expansion. The company’s 2022 opening strategy emphasized deeper penetration into lower-tier markets. In provinces where Helen’s was already present, more than 80 prefecture-level cities still had no Helen’s store. Together with provinces not yet entered and top-ranked county-level markets, the company saw substantial remaining store-opening space.
Helen’s also described a “large platform, small front end” organizational model that standardized new-store processes. From site selection to opening, a new store could be completed in two to three months.
The company was also increasing investment in automation and intelligent-store systems, including smart fryers, automated draft-beer machines, and smart restroom lighting. It used algorithms to support store operations, such as identifying whether kitchen staff were following food-safety procedures, flagging long-term kitchen vacancies to reduce fire-safety risk, and recognizing table-clearing efficiency to improve customer experience. The goal was to improve management capability, work efficiency, workload, and dependence on labor.
Because Helen’s added many stores in 2021, it accumulated a larger pool of operating data. By 2022, it had built a scoring model from these samples, with a reported accuracy rate of 78%. The company combined expansion staff’s judgment with the data model to improve new-store decision-making.
Management said new stores had limited diversion impact on older stores. Same-store performance was improving mainly because store traffic was rising and each location was gradually building its own customer base. For example, stores opened in 2020 achieved 10% same-store sales growth in 2021, while stores opened in 2019 achieved 20% same-store sales growth in 2021.
As brand momentum strengthened, Helen’s said its negotiating power with landlords in first-tier cities improved, allowing it to secure better and larger sites. In Shenzhen, for example, store count increased from 16 in 2020 to 36 in 2021, more than doubling density. The company said this increased city-level brand momentum without hurting older stores and improved overall city economics.
Helen’s was also testing a more asset-light model to reach county-level markets and enlarge its addressable market.
Opening stores was only part of the challenge; Helen’s also emphasized post-opening ramp-up. The company described three observation periods for store nurturing:
If a new store was not fully seated during the first seven days, excluding objective factors such as mall renovation or pandemic controls, Helen’s would use both external and internal traffic-driving resources. Externally, this included heavier advertising, visits by media accounts and KOLs, and online traffic-driving package deals.
Internally, Helen’s would mobilize campus ambassadors. At the time, the company said it had more than 2,000 influential ambassadors under deeper operation. It would also use nearby stores for traffic, distribute red packets in communities, encourage existing customers to bring new customers, and build opening momentum.
If order-user numbers were below standard after 12 weeks, Helen’s attributed the issue mainly to insufficient external traffic and would increase acquisition efforts. Measures included promotions, regional activities, advertising, and coupons to encourage repeat purchase and habit formation. It also used special-price purchases, limited to one opportunity per person, to encourage customers at the same table who had not placed orders to convert into ordering users.
After 12 weeks, a decline in traffic was treated as an unexpected condition. Helen’s cited its Caitang Plaza store in Xiamen, where performance weakened after surrounding communities were demolished and 40,000 to 50,000 people were lost from the trade area.
In such cases, Helen’s said it would first judge whether the issue was temporary or long-term. If temporary, such as a campus closure, it might wait. If more long-term, it would take targeted action through internal channels, reactivate old customers, and run campaigns such as rewarding old customers for bringing new ones. For example, three customers might receive a gift, while new customers could be converted through RMB1 purchase offers.
Helen’s gave two examples of store nurturing:
Helen’s argued that small-bar formats recovered better from repeated pandemic disruption than conventional restaurants. Standard restaurants often relied on family meals, colleague gatherings, or, in some older dining formats, business banquets for people born in the 1960s and 1970s. Helen’s customer base was mainly people born after 1995 and after 2000.
From an external-environment perspective, the macroeconomic impact was broadly similar across operators, but brands with average ticket sizes above RMB100 were hit more seriously.
Helen’s view was that China’s most powerful consumer group had shifted toward post-1995 and post-2000 consumers. People born in the 1980s faced mortgage pressure, while those born in the 1970s were more focused on health. The company believed post-1995 and post-2000 consumers still had social and drinking needs regardless of pandemic conditions.
Beyond opening stores quickly, Helen’s was also looking for ways to increase single-store revenue. This included launching new products, expanding snack offerings, and investing in the second-phase development of “Haidai Peng,” an online social mini-program based on store location. The tool was intended to help customers manage waiting, increase table-sharing opportunities, and create more social occasions.
Helen’s said that, based on February 2022 sales, new products including drinks and snacks accounted for around 10% of total revenue. Among users who ordered new products, average daily spending per person had increased by more than RMB10 compared with the three months before the new products were introduced. Around 70% of that increase came from snacks themselves, with snacks also helping drive alcohol sales.
For Helen’s, the primary purpose of adding snacks was to give customers more choice and a richer consumption experience. A secondary benefit was indirect growth in daily sales. Management said the current snack SKUs had limited impact on operating complexity and cost. Some were prepared products that could be opened, lightly processed, heated, and served.
Asked what kind of company Helen’s could become over the next five to 10 years, the company said its long-term goal was to become a platform-enablement company. While continuing to develop its core bar business, each functional department would build capabilities that could eventually move beyond bars and empower a broader range of offline consumer-service businesses.
One example was fit-out and construction. Helen’s said its 3D new-material design had already been modularized and componentized, allowing flexible combinations. Material costs were lower than traditional renovations by small independent merchants. Tables, chairs, benches, and customized services could be exported to small family-run restaurants, food stalls, and similar operators.
Helen’s also said its supply chain, with strong pricing power, could eventually be separated and operated independently. The company envisioned integrating world-class alcoholic beverages and snacks into a platform that could export these capabilities to external businesses.
Note: IPO, share-price, market-cap, store-target, and forward-looking figures are historical figures from the 2022 source article.