Recently, Green Tea Group Co., Ltd. (hereinafter referred to as Green Tea Group) submitted a prospectus to the Hong Kong Stock Exchange to be listed on the main board, with Citigroup and CMB International as joint sponsors. Previously, Green Tea Group had submitted three returns, two of which passed the hearing but were unsuccessful.
According to the latest prospectus, as a cutting-edge enterprise in the field of casual Chinese catering in China, Green Tea Group has firmly established the position of "the first generation of Internet celebrities" since it successfully opened its first green tea restaurant in Hangzhou in 2008 and has built an extensive and in-depth national restaurant network.
As of June 2024, Green Tea Group has steadily expanded nationwide, with a network of nearly 400 restaurants in 27 provinces, municipalities and autonomous regions in China. According to the data, from 2021 to 2023, the group has achieved a cumulative net profit of more than 400 million yuan, and added 89 new restaurants in 2023, and plans to open 112 new stores this year, showing a positive expansion trend.
However, behind the glamorous performance, Green Tea Group is also facing a severe market test.
On the one hand, more and more emerging competitors have sprung up, the market structure is constantly reconstructed, and the turnover rate and customer flow of restaurants are showing signs of decline. Industry experts pointed out that today's catering market is becoming increasingly segmented, and green tea restaurants, as a representative of fusion cuisine, have lost their competitiveness due to the lack of distinctive features, although their "all-inclusive" menus are widely popular.
On the other hand, in the wave of "fusion cuisine" and "Chinese style", Green Tea Restaurant has encountered direct competition from strong competitors such as Taier Sauerkraut Fish and Small Vegetable Garden, and these brands have quickly occupied market share with their distinctive specialties, further highlighting the ambiguity and weakness of Green Tea Restaurant's positioning in fusion cuisine. Although Green Tea Restaurant emphasized its continuous menu innovation in the prospectus, the joke that "after years of operation, only bread tempts one dish" still reveals its bottleneck in building dish differentiation.
In addition, the lack of social attributes is also a major challenge for green tea restaurants. At a time when consumers are paying more and more attention to the dining experience, restaurants are not only a place to satisfy their appetites, but also an important platform for social interaction and emotional exchange. Therefore, how to skillfully integrate social elements and enhance the interactive experience between customers has become the key to the transformation and upgrading of green tea restaurants and the reshaping of brand charm.
Therefore, green tea restaurants need to deeply reflect on their role in the catering market, focus on creating unique menu features and strengthening social attributes, in order to stand out in the fierce market competition and regain the favor of consumers.
In this IPO, it is not difficult to see the strong determination of Green Tea Group to expand its restaurant network, set up a central food processing facility, upgrade its information technology system and related infrastructure for working capital and other general corporate purposes.
According to the blueprint of the company's prospectus, Green Tea Group plans to open 112, 150, 200 and 213 new restaurants respectively in the next four years, and intends to "go overseas" and open about 30 new restaurants overseas.
Behind the ambition, there is also implied competitive pressure from the rapid expansion of peers. According to statistics, as of January 11, 2024, Xiaocaiyuan has a total of 548 directly-operated stores in China; As of February 1, 2024, Taier Sauerkraut Fish has 568 stores across the country.
Obviously, green tea wants to increase its competitiveness by speeding up, but store expansion itself is a double-edged sword.
While the rapid expansion of stores can significantly increase overall turnover, it is also accompanied by a surge in costs and potential dilution of the profitability of a single store, posing a serious challenge to the brand's cash management and operational strategy.
In addition, as the catering market gradually returns to rationality, the price parity strategy is no longer the unique competitive advantage of green tea, and the price reduction strategy of brands such as Xiabu and Haidilao has further weakened its original market positioning.
The popularity is no longer there, and the reputation of green tea is declining year by year. A number of public health incidents have occurred frequently, and in the face of various doubts, the green tea restaurant has not yet responded.
The lack of new products and the controversy over dishes have reduced the brand influence of green tea to a certain extent. As a consumer-oriented enterprise, green tea has hit Hong Kong stocks for the fourth time, which is bound to be difficult.