According to the latest news on the website of the Hong Kong Stock Exchange, the well-known catering brand Green Tea Restaurant submitted its prospectus for the fourth time on June 19 to impact the Hong Kong stock IPO! Prior to this, Green Tea Restaurant had failed three times in its Hong Kong stock IPO. Previously, the company submitted listing applications to the Hong Kong Stock Exchange in March 2021, October 2021, and April 2022, but each time, the prospectus was ultimately "invalid".
▲Source: Screenshot of the website of the Hong Kong Stock Exchange.
Green Tea Group's road to listing can be described as twists and turns. As early as March 2021, Green Tea submitted its prospectus, but it was pointed out that there were more than one information errors in the Chinese version of the prospectus, including conflicts between financial units, and the "total current liabilities" were written as "total current assets".
In September 2021, according to the Hong Kong Stock Exchange, the prospectus previously submitted by Green Tea has expired. In October 2021, Green Tea updated its prospectus, which successfully passed the hearing in early March 2022, and on April 7, 2022, its prospectus lapsed again. On April 8, 2022, Green Tea submitted its prospectus for the third time and passed the hearing three days later, but the prospectus was invalidated again.
Green Tea Group said in the prospectus this time that the net proceeds from the IPO will be mainly used to expand the restaurant network; setting up a central food processing facility; upgrading IT systems and related infrastructure; and for working capital and other general corporate purposes.
01
Long after the best days?
According to media reports, the Green Tea Restaurant originated from the Green Tea International Youth Hostel founded by Wang Qinsong Luyan and his wife in 2004. In 2008, the Green Tea Restaurant, which specializes in fusion cuisine and low prices, opened its first store on the banks of West Lake in Hangzhou. Dishes such as green tea roast chicken, bread temptation, and flaming shrimp, with a unit price of 50 yuan per person are the signature features of this "first-generation Internet celebrity restaurant", and diners waiting at their peak need to queue for 2 hours to enter the green tea.
After several years of development, Green Tea Group has become a well-known casual Chinese restaurant operator in China, and has established a national restaurant network. The price is close to the people, the dishes are blended together, and the unique decoration of Chinese style has become the unique style of the green tea restaurant. According to the prospectus, as of the latest practicable date, the company's restaurant network consisted of 382 restaurants covering 21 provinces, 4 municipalities and 2 autonomous regions in China. According to the CIC report, in 2023, among casual Chinese restaurant brands in China, green tea ranked third by number of restaurants and fourth by revenue.
In addition, according to the same data, among the casual Chinese restaurant brands that focus on serving fusion cuisine, green tea is the largest restaurant brand in terms of revenue. According to the CIC report, the casual Chinese restaurant market is highly fragmented with a large number of market players, with green tea accounting for 0.7% of the market share in 2023. In addition, according to the CIC report, the per capita consumption of casual Chinese restaurants ranges from RMB50 to RMB100.
Industry analysis: Ten years ago, the green tea restaurant started just in time for the stage of upgrading the catering industry in Chinese mainland to refined and fashionable consumption, and enjoyed the large-scale growth of shopping malls in Chinese mainland and the dividend of population. But the current trend is that in the context of the influence of social networks and the growing disloyalty of young people to brands, the trend of the food and beverage category is becoming more and more elusive like fast fashion, and the life cycle is also getting shorter.
After losing its aura as an "Internet celebrity restaurant", Green Tea is pinning its hopes on continuing to expand to break through the bottleneck of development. According to the prospectus, the company expects to open 75-100 new green tea restaurants every year from 2022 to 2024, with a total of 275 stores, in other words, the number of green tea restaurants will double in the next three years. Among them, the East China market and the markets outside East China, Guangdong and North China are the focus of the future layout of green tea restaurants, which tend to sink.
Although the financial situation of Green Tea Restaurant has improved in the past three years, in the past few years, the company has fallen into continuous losses due to repeated epidemics and other reasons, and it has only improved in recent years. According to the prospectus, from 2021 to 2023, the revenue of Green Tea Group will be 2.293 billion yuan, 2.375 billion yuan and 3.589 billion yuan respectively, of which the year-on-year increase in 2023 will be 51.1%; Adjusted net profit was $138 million, $25 million and $303 million, respectively, and adjusted net profit margin was 6.0%, 1.1% and 8.5%, respectively.
▲Source: Screenshot of the prospectus of Green Tea Group.
According to public information, in the three financial years of 2018, 2019 and 2020, the operating income of green tea catering was 1.312 billion yuan, 1.736 billion yuan and 1.570 billion yuan respectively, and the net cash from operating activities was 209 million yuan, 386 million yuan and 272 million yuan respectively, and the net profit for the year was 44.401 million yuan, 106 million yuan and loss of 55.262 million yuan respectively.
02
The once high turnover rate is no longer beautiful
A high turnover rate is a key indicator that green tea used to be proud of.
In terms of turnover rate, the prospectus shows that the turnover rate of green tea restaurants will only recover the downward trend in 2023. In 2022, due to the impact of the new crown epidemic, the overall turnover rate of restaurants decreased from 3.23 times in 2021 to 2.81 times in 2022, and only rebounded to 3.30 times in 2023. In the three years before that, from 2018 to 2021, the turnover rate of green tea restaurants decreased significantly. The turnover rate dropped from 3.48 times per day in 2018 to 2.62 times per day in 2020.
▲Source: Screenshot of the prospectus of Green Tea Group.
In 2014, the highest average daily turnover rate of green tea could reach 6-8 times. According to public reports, Wang Qinsong, the founder of Green Tea Restaurant, publicly said in 2014, "We are 50 yuan per capita, but we spend 5 million yuan on decoration." Unlike other catering companies, people may make money when the restaurant is full, but they start to make money after the green tea is full. Wang Qinsong said, "We are exchanging low prices that are close to cost for customer flow, so restaurants like ours must pay attention to the turnover rate." Wang Qinsong once said that the turnover rate of green tea restaurants is 4 times a day is the lower limit, and 7 times is the upper limit. In his opinion, 4 times is a threshold for mass catering. However, the current green tea obviously can't pass this threshold.
Industry insiders pointed out that this is actually related to the poor performance of new green tea innovation and limited brand marketing.
Although there are 4 R&D cycles within the Green Tea Restaurant every year, updating nearly 20% of the dishes, in 2020, the Green Tea Restaurant launched a total of 147 dishes. But the well-known dishes are still just green tea roast chicken, bread temptation, and stone pot tofu. At the same time, in terms of marketing, green tea has frequently slowed down, and it was not until the end of 2019 that the official Weibo was opened, and the official Douyin account was opened in 2021, so far, the official Weibo fans are 28,000, and the Douyin account fans are 103,000. The Weibo fans and Douyin fans of Lao Xiang Chicken are 753,000 and 424,000 respectively.
03
Food safety issues should not be underestimated
Green Tea Restaurant has also had food safety issues on several occasions.
Among them, on August 7, 2020, a news report alleged that a green tea restaurant in Shijiazhuang had multiple food safety issues. According to the report, the green tea restaurant has problems such as employees tasting dishes in an inappropriate way, unhygienic food storage, unsterilized restaurant utensils, and employees without health certificates.
In addition, the Hangzhou Qingchun store of the green tea restaurant Intime Department Store was notified by the Zhejiang Provincial Administration for Market Regulation in December 2021 for processing homemade sour and hot sauce stingers (production date/batch number: 2021/9/13), and the residual amount of aluminum (calculated as Al in ready-to-eat jellyfish) was 724mg/kg, and the standard was no more than 500mg/kg.
In September 2020, the Anhui Provincial Administration for Market Regulation issued a notice on the unqualified situation of 6 batches of food (Issue 35 of 2020), which showed that the test value of perch (freshwater fish) sold at the Hefei Binhu Yintai Store of Green Tea Restaurant was 273 μg/kg (calculated by the sum of enrofloxacin and ciprofloxacin), and the standard was no more than 100 μg/kg.
Although Green Tea Group has taken a number of measures to deal with food safety issues, the occurrence of such situations will inevitably have an adverse impact on the company's image, and whether it is a prospectus error or a food safety risk, it is to a certain extent a reflection of the company's internal management problems. This is also a potential risk for the listing of Green Tea Group.
Source: Read Chuang