Image credit: Visual China
Recently, DayDayCook, a gourmet lifestyle brand specializing in fast food, quick cooking food, and healthy lifestyles, announced the acquisition of Omsom, an Asian food brand in the United States. The transaction will be conducted in cash and stock and paid over the next four years.
In the past two years, DayDayCook has been continuously acquiring Asian food brands. After acquiring Omsom, DayDayCook further expanded its brand portfolio in the Asian food market in the United States. After the announcement, DayDayCook's stock price rose nearly 200% in a single day. As of the Friday, June 14th, the stock price of DayDayCook was $1.2, with a market value of approximately $27 million.
Seizing the market through acquisitions
DayDayCook was founded in 2012 and initially entered the market with short cooking videos. It posted self-made cooking teaching videos on various social media platforms. Later, DayDayCook tried content e-commerce and offline experience store modes, transformed into a gourmet lifestyle brand of fast food and quick cooking food, and listed on the NYSE on November 17, 2023.
According to the prospectus, as of the end of March 2023, DayDayCook's main products include ready-to-eat convenience food, quick cooking, and trendy healthy series, covering consumption scenarios such as offices, travel, and home cooking.
In China, DayDayCook owns three brands: "DAYDAYCOOK", "Yujaweng", and "Mengwei". DAYDAYCOOK, as the flagship brand, has developed more than 100 SKUs; Yujaweng specializes in scallops and deep-sea fish such as flavored aquatic products and instant flavored fish floss snacks; and "Mengwei" specializes in ready-to-eat hot pot, self-heating rice, and fast-food rice.
According to Analysys, the size of China's pre-cooked food market was 419.6 billion yuan in 2022, a year-on-year increase of 21.3%. It is expected that China's pre-cooked food market will maintain a high growth rate in the future, and the market size will reach 1,072 billion yuan in 2026.
Although the industry appears to have enormous potential, the pre-cooked food industry for consumers is already a red ocean. Players who have entered the pre-cooked food market include old players such as Anjing and Zhengda, who have strong supply chain and food R&D capabilities, as well as well-known dining brands such as Haidilao and XiBei. Under this background, it is particularly difficult for DayDayCook to stand out.
Zhu Jiaying, the founder of DayDayCook, also admits that in today's Chinese market, pre-cooked food is a highly competitive area. However, a mature food industry system has created efficient, developed, and cost-effective supply chains, making it relatively easy to hatch a new brand.
So, DayDayCook found an opportunity for differentiated competition, which is to fully utilize the developed supply chain in mainland China to manufacture attractive products and then use international brand capabilities to market products overseas.
In July 2022, DayDayCook entered the US market by selling products on North American Asian commodity shopping platforms. The first step is to sell products, but to achieve sustained growth and channel expansion overseas, and enhance overseas consumers' impression of DayDayCook's brand, the core strategy is to acquire.
Currently, the brands acquired by DayDayCook mainly focus on instant food with Asian flavors. In addition to the self-heating and fast food brand "Mengwei" and instant flavored fish floss snack "Yujaweng" acquired earlier, in recent years, it has also successively acquired Nona Lim, Yuli, a gift box sales company for instant cooking and ready-to-eat products, Yai's Thai Thai food brand, and Italy's G.L. Industry S.p.A ("GLI") 51% stake in the Asian instant food manufacturer.
The Omsom acquired by DayDayCook this time is an Asian food brand founded by first-generation Vietnamese-American sisters Vanessa and Kim Pham in 2020, dedicated to revitalizing Asian flavors and cultural stories that are often overlooked in mainstream supermarkets.
"Chinese cuisine, Indian cuisine, Thai cuisine, and Korean cuisine are all popular in the United States. An opportunity to launch such pre-cooked food with Asian flavors is that the process is very complex if family kitchens want to make these authentic flavors," Zhu Jiaying said. This is also a key factor in DayDayCook focusing on Asian food categories.
DayDayCook emphasizes in its prospectus that its M&A strategy will still be a growth path it will continue to execute in the future. Moreover, there are three clear goals for future development: actively implementing a multi-brand strategy, continuously expanding overseas markets, and controlling costs and expanding profits.
Multiple businesses are showing red lights
Recently, DayDayCook, a gourmet lifestyle brand specializing in fast food, quick cooking food, and healthy lifestyles, announced the acquisition of Omsom, an Asian food brand in the United States. The transaction will be conducted in cash and stock and paid over the next four years.
According to financial report data, Ririshu achieved revenue of 169 million, 205 million, 180 million and 167 million respectively in 2020-2022 and the first three quarters of 2023. During the same period, net losses continued, with losses of -114 million, -459 million, -122 million and -15.77 million, respectively.
The narrowing of losses mainly comes from cost reduction. In the first three quarters of 2023, Ririshu's sales expenses, management expenses and performance expenses shrank by 6.5%, 35.2% and 46.5% compared with the same period in 2022.
From the revenue structure, Ririshu divides its revenue into five major sectors: online sales, offline sales, cooperation income, advertising, and experience stores. Nowadays, four of them have shrunk.
During the reporting period, advertising revenue generated by content marketing and distribution channels was reduced from 111 million yuan in 2020 to 298,700 yuan in the first three quarters of 2023.
The depression of advertising revenue reflects the loss of traffic. Blue Whale Finance reporters noticed that Ririshu currently has 87,000 fans on Bilibili platform, and most of the single content readings are less than 1,000, which is far from the same level of self-media such as "Rishiji" with similar positioning.
In addition, the revenue from online product sales has decreased from nearly 150 million yuan in 2021 to 37,227,900 yuan in the first three quarters of 2023. Blue Whale Finance reporters noticed that Ririshu products have not been sold on platforms such as Tmall, JD, and Pinduoduo, and the products in the official store of Douyin have also been cleared.
Brand cooperation and offline experience store revenue was directly cleared. Thus, online sales have become the only pillar of Ririshu's revenue.
In addition, frequent acquisitions have also increased the company's financial pressure, and the asset-liability ratio has continued to rise. As of the end of September 2023, Ririshu's cash and cash equivalents were less than 7.5 million yuan, a sharp decrease of 72.0% year-on-year. The company's short-term bank loans and shareholder loans totaled as high as 157 million yuan, an increase of 1.7% over the same period in 2022. The asset-liability ratio has exceeded 155%, an increase of more than 8 percentage points from the end of 2022.
On the one hand, there is a precarious performance, on the other hand, a dilemma of high debt, in addition to the crisis of being on the verge of delisting.
On April 30th and May 21st, Ririshu successively issued two announcements stating that the 2023 performance report will not be disclosed within the specified deadline and the additional 15 days, claiming that the reason is that the company lacks accounting personnel with GAAP knowledge in accordance with US GAAP to prepare financial statements in accordance with the specifications.
Therefore, Ririshu has directly triggered the SEC's regulatory procedures and the delisting process of the NYSE, which means that the company's annual report will not be disclosed within the specified deadline, and needs to be submitted within 6 months at the latest. If it violates again, the exchange can decide to grant a maximum grace period of 6 months or directly put the company into the delisting process. This is just six months away from Ririshu's listing.
The stock price has also performed poorly. As of the close of June 14, Ririshu's stock price has fallen more than 85% from the issue price.