Lao Xiang Ji Updates IPO Prospectus With 1,099 Stores and Direct-Store Performance Disclosure

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

FoodBud reported in November 2022 that Chinese fast-food chain Lao Xiang Ji had updated its IPO prospectus. As of the reporting period, the company operated 1,099 stores nationwide: 997 directly operated stores and 102 franchised stores.

In the first half of 2022, Lao Xiang Ji added a net 6 directly operated stores and a net 20 franchised stores.

Franchise Structure

Among the 102 franchised stores:

• There were 91 individual franchisees.
• 78 stores were converted from directly operated stores to franchised stores.
• 24 franchised stores were newly opened.
• 57 franchisees were former employees.
• 34 franchisees were not former employees.

The prospectus also disclosed franchise-fee details, though the original article does not provide the specific fee schedule.

First-Half 2022 Financials

For the first half of 2022, Lao Xiang Ji reported:

• Revenue of RMB 2.0 billion.
• Revenue from directly operated stores of RMB 1.9 billion.
• Franchise-business revenue of RMB 66.09 million.
• Net profit of RMB 75.68 million.

Product Volumes

By product sales volume in the first half of 2022:

• Rice: 58.94 million servings.
• Steamed egg products: 16.44 million servings.
• Chicken soup products: 11.50 million servings.
• Farmhouse-style stir-fried pork: 9.34 million servings.

Cost Structure and Supply Chain

In the first half of 2022, direct materials accounted for 40.7% of Lao Xiang Ji’s main business costs, while direct labor accounted for 30.32%.

For store-level raw-material procurement, Lao Xiang Ji mainly used centralized procurement through the company. Distribution was also mainly handled centrally by the company, with a small portion delivered directly by suppliers and another small portion purchased independently by stores on an ad hoc basis.

Delivery Costs Rising After Covid

FoodBud noted that after the pandemic, Lao Xiang Ji’s delivery-service expense ratio had increased. In the first half of 2022, delivery service fees reached RMB 100 million and accounted for 82% of selling expenses.

IPO Fundraising Plan

For the planned listing, Lao Xiang Ji intended to raise RMB 1.2 billion and issue 63.53 million shares.

FoodBud also noted that the prospectus disclosed detailed first-half performance data for Lao Xiang Ji’s stores, and commented that opening new directly operated stores during a special period was a difficult business.

Note: IPO, fundraising, store-count, and forward-looking figures above are historical disclosures from the 2022 source article.