Wallace Founder’s Bakery Startup Kissbaby Raises Series B Funding

This is an English adaptation of a FoodBud historical article originally published on September 1, 2022.

According to Investment Community, community bakery chain Kissbaby completed a Series B financing round on August 31, 2022. The investor was Jinbang Capital, a fund under K-Boxing Menswear, with Mingyue Capital serving as long-term financial adviser. Kissbaby had previously received Series A financing from Eastern Bell Capital at an early stage.

Funding and ownership

At the time of the Series A round, Eastern Bell Capital held a 25% stake in Kissbaby. After the new round, Jinbang Capital’s stake was 2.2%, implying an estimated investment of about RMB15 million.

Jinbang Capital had also invested in Chinese fast-food chain Laoniangjiu, which had disclosed its prospectus and was in the IPO process at the time.

Founder and store model

Kissbaby is the second startup by Hua Huaiqing, founder of Wallace. Hua previously scaled Wallace to 20,000 stores, and with Kissbaby he targeted China’s large bakery market.

Kissbaby’s positioning was value-for-money, focused on lower-tier cities and community locations. It used a Wallace-style franchise model and had about 200 stores across Fujian, Guangdong, Zhejiang, and Jiangsu.

After the financing, Kissbaby planned to expand to 300 stores by the end of 2022 and to 1,000 stores within three years.

Customer and product mix

Kissbaby’s core customer profile was household consumption led by women aged 25-45. The company found that community-store customers placed high importance on freshness, so it adjusted its Western-style bakery product structure.

At the time, about 50% of revenue came from in-store freshly baked products, while 20% came from localized food items. For freshly baked products, Kissbaby used a “front store, back factory” model: pre-made frozen dough was produced in a central kitchen, shipped to stores, then baked and sold on site.

Supply chain approach

On the supply chain side, Kissbaby centralized purchasing across local store networks and worked with local manufacturers or brands to integrate bakery production capacity. The article noted that traditional bakery chains typically needed one central kitchen for every 6-8 stores, while many central-kitchen factories still had spare capacity.

Ling Hang, Kissbaby’s financing lead, said many Western-style bakery brands relied on signature products and self-built factories, making cross-province expansion or outside cooperation difficult. Kissbaby aimed to use store scale to place orders with third-party factories, working with 3-5 factories in a city to produce products suited to local store customers.

The article described China’s bakery sector as still highly fragmented, with an existing base of 400,000 stores. Holiland, cited as the category leader, had only around 1,000 stores. Kissbaby’s stated goal was to build the bakery market’s second “Wallace” model: a brand spanning 100 cities and 10,000 stores.

Management structure

Kissbaby also introduced Wallace’s “Fuzhou model,” described as a 4-3-3 equity structure:

• 40% funded by the operations team
• 30% held by external store-development teams
• 30% allocated to company support teams and other store stakeholders, including upstream suppliers, delivery, warehousing, and renovation partners

Ling Hang said Kissbaby reached 50 stores by the end of 2020 and 160 stores by the end of 2021, with a target of about 300 stores in 2022. Compared with traditional bakery brands that might open about 10 stores per year, Kissbaby’s expansion pace was relatively fast.

Note: financing, IPO-process references, and expansion targets are historical figures and plans from the 2022 source article.