This article is edited from China Merchants's "leaders of Chinese Restaurant chains, Rapid expansion of Multi-Brand Standardization-International in-depth Analysis report of Nine Maojiu"

1. Ninety-nine: the leader of Chinese fast fashion catering, standardized management and multi-brand

1. Company profile: Chinese fast fashion food and beverage to create diversified brands

With the concept of "delicious but not expensive", Jiumaojiu is committed to fast and fashionable Chinese food and beverage, gradually expanding five self-owned brands involving different catering categories: Jiumaojiu, Taier, 2 egg pancakes, chicken and Uncle Nawei is the chef. At present, 99 Mao has opened 269 direct operation restaurants and 41 franchise restaurants in 31 cities. According to Frost Sullivan's survey, 99 cents has ranked among the top three in China and the first in South China.

2. The course of development: ten years of accumulated strength and gradual layout of multi-brands

The history of Jiumaojiu can be traced back to 1995, when the founder Mr. Guan opened the first noodle restaurant in Haikou, Hainan. In 2005, it officially began to operate the restaurant under the brand name of 99 cents, focusing on northwest cuisine. After ten years of development, we have accumulated a lot of experience and knowledge. In 2015, we began to lay out multi-brands and enter other food and beverage categories to attract different customer groups. In 2015, 2017 and 2019, we founded four brands: "Tai er", "2 egg pancakes", "pussy" and "Uncle Nawei is a chef", and gradually grew into a leading operator and manager of Chinese fast fashion catering brands. Selected as one of the top 100 Chinese catering enterprises in 2017 and 2018.

3. Business model: standardized rapid replication, multi-brand and multi-concept strategy

Ninety-nine northwest cuisine started, and now it has formed two major brands: ninety-nine and Taier.The ninety-nine brand, which focuses on northwest food, is the company's initial business, with the largest volume, but its proportion has gradually declined in recent years, from 93.8% in 2016 to 55.2% of 2019H1. Taier brand revenue has increased significantly, the proportion has risen to 43.5%, gradually on a par with 99 brands.

Multi-means standardized management to promote rapid development.After 23 years of deep ploughing, the company has gradually established a highly standardized and easy-to-copy business model, which includes simplifying food materials, establishing a central kitchen, standardizing procedures, and so on. As a result, the company has rapidly expanded from 142 restaurants at the beginning of 2016 to 269 now.

4. Operating condition: Taier's performance is outstanding, and the scale of income and profit is growing rapidly.

Stores are expanding rapidly, mainly in southern China.The number of stores has been increasing and the layout of restaurants has been encrypted. The number of stores has increased from 141 in 2019 to 297 in the first half of 2019, with a growth rate of 50 per cent in the first half of 2019. From the perspective of geographical layout, stores in South China account for 78.1%, which is the main development area of 99%.

Of the two main brands, Taier has outstanding performance.Ninety-nine and Taier are the two main brands of the company. The resale rate of the ninety-nine brands is between 2 and 2.5 times, and the unit price is about 50 yuan. In comparison, Taier's performance is more eye-catching: the seat turnover rate is higher and has increased significantly, from 3.6 in 2016 to 5.0 in 2018; the passenger unit price is about 70 yuan; and the flat efficiency is about 35,000 yuan / yuan.

Revenue has maintained a high growth rate and profit margins have continued to improve.Thanks to the rapid growth in the number of restaurants, customer unit prices and same-store sales, the company's revenue in 2018/2019H1 was 1.84 billion yuan, up 29% and 42% respectively. In the first half of 2019, 99 Mao realized a net profit of 92.56 million yuan / an increase of 80.9%.

From 2016 to 2019H1, the gross profit margin of the company was 16.8%, 17.1%, 16.8% and 19.5% respectively, steadily rising, but the changes of the gross profit margin of the two major brands were different: 99 brands and the overall gross profit margin were close, in a steady growth trend. The gross profit margin of Taier brand has changed greatly, from 30.1% in 2016 to 16.8% focus 2019H1 in 2018, mainly due to the rapid expansion of Taier brand. While the gross profit margin is stable, due to the remarkable effectiveness of cost control, the net profit margin increased significantly in the first half of 2019 (6.2% in the first half of 2018).

Second, industry analysis: broad space, multi-brand standardization has become a trend.

1. Market space: high-speed growth and broad space

At present, the scale of the Chinese fast fashion catering industry has maintained rapid growth, from 74.3 billion yuan in 2014 to 181.5 billion yuan in 2018, and is expected to reach 550.2 billion yuan in 2024. The proportion of Chinese fast fashion food in Chinese food and beverage has also increased year by year, from 2.7% in 2014 to 4.2% in 2018. The company's two main brands involved in the catering category of northwest food and Boiled Fish with Pickled Cabbage and Chili market also has a broad space.

2. Competition pattern: low concentration and decentralized industry

Chinese fast fashion catering market concentration is low, the industry is scattered.In the Chinese fast fashion catering industry, the CR5 in 2018 is about 7.5% in terms of business income. Xibei naked noodle village ranks first with a market share of 2.9%, followed by grandmother's (2.0%), Jiumao (1.0%), typhoon shelter (0.8%) and green tea restaurant (0.8%). From the perspective of industry segmentation, the concentration of sauerkraut fish market (CR3 about 11.3%) is slightly higher than that of northwest vegetable market (CR3 4.4%), and 99 Mao ranks first and second respectively.

The public is difficult to adjust, and the multi-brand strategy of Chinese food and beverage focuses on different people.Chinese food and beverage dishes are various and difficult to adjust, so Chinese food chain enterprises generally adopt multi-brand strategy to locate different cuisines and people. For example, in addition to Nine Maojiu northwest cuisine, there are four sub-brands, such as Boiled Fish with Pickled Cabbage and Chili, which specialize in different cuisines. In addition to the naked noodle village, Xibei is also trying different dishes such as seafood, hot pot and Inner Mongolian cuisine, and there are as many as a dozen catering brands under my grandmother's family.

Standardization has become the only way for the development and growth of Chinese catering.Chinese food and beverage is difficult to achieve high standardization of western fast food due to the complexity of raw materials and production technology, and standardization is the key factor affecting the success of restaurant chain expansion. With the increasingly fierce competition in the industry, a certain degree of standardization has gradually become the only way for the development and growth of Chinese catering. At present, the main means of Chinese-style interlock catering standardization are: self-built central kitchen, the use of intelligent cooking machinery and production process control, of which the central kitchen is the majority of enterprises.

Third, competitive advantage: 20 years to precipitate brands, standardization to accumulate strength

1. Brand advantages: 20 years of painstaking accumulation to build a leading Chinese-style fast fashion brand

Jiumaojiu is a leading fast fashion catering brand management and operator in China.According to Frost Sullivan, the company ranks third in Chinese fast fashion restaurants and ranks first in South China. Its two main brands perform well in market segments and are widely welcomed by consumers. The Jiumaojiu brand ranks second in the northwest Chinese restaurant, while the Taier brand is the pioneer and leader in the Boiled Fish with Pickled Cabbage and Chili market.

2. Mode advantage: highly standardized mode, which helps rapid layout.

The highly standardized mode is easy to copy and helps to achieve rapid development.Jiujiao strengthens standardized management by simplifying food materials, establishing a central kitchen, standardizing procedures and staff training, so as to protect the rapid development and layout of the company. The company distributes three central kitchens in Guangdong, Hubei and Hainan respectively. After expanding production capacity, with the development of the company, the number of restaurants has increased, and the utilization rate of the central kitchen has been improved. In the future, the company will further upgrade the existing central kitchen and open a new central kitchen to enhance the supply chain capacity and provide strong support for the company's expansion.

3. Corporate culture: openness, innovation and win-win situation, following the market trend

Jiujiu fosters an open, innovative and win-win corporate culture, encouraging employees to take creative measures in managing and operating brands.Enables the company to respond quickly to changing food and beverage trends and customer preferences. There is a product development department under each brand, which is committed to actively developing and improving menus to meet new market trends, and has set up a laboratory at headquarters for brands to continuously improve and improve dishes.

There are seven functional departments in the headquarters, which are responsible for brand development and expansion, engineering, procurement, central kitchen and production, information technology and finance to support the different brands that the company manages and operates. With the assistance of functional departments, the brand team can focus on identifying the needs of target customers to further develop and improve dishes in line with changing market trends.

4. Food safety: strict management and perfect quality control system

Jiumaojiu pays attention to the enterprise value of "conscientious enterprise, health quality" and is committed to choosing healthy foods. The company implements a set of strict food safety and quality control standards and measures, covering all aspects of operation, including procurement, food processing, warehousing, logistics and restaurant operation.

5. Management team: rich experience and complementary expertise

Jiumaojiu has an experienced, professional and excellent management team.Mr. Guan, the founder and CEO of the company, opened the first restaurant in Haikou, Hainan in 1995 and has more than 23 years of experience in the catering industry. Mr. Guan's accumulated experience in operating 99 cents over the years has consolidated the company's successful development as a leading manager and operator of many different styles of catering brands.

The management team of 99 Mao includes industry experts who have worked and accumulated rich experience in multinational companies in the catering industry, as well as loyal employees who have been following since its inception. Most of the members of the company's senior management team have more than ten years of experience in the catering industry and have different expertise and background, which is conducive to the realization of complementary advantages.

Fourth, future prospects: accelerating the opening of stores and developing brands at the same time.

1. Acceleration of store opening: model replication and continuous expansion of mature brands

By continuing to accelerate expansion, copy the business model, and strengthen the restaurant network layout.Jiumaojiu brand restaurant network has covered Haikou, Guangzhou, Shenzhen, Beijing, Tianjin, Wuhan and Nanjing and other cities. Taier brand restaurant network has covered Guangzhou, Haikou, Shenzhen, Shanghai, Tianjin, Wuhan, Hangzhou, Beijing, Xiamen, Shijiazhuang and Xi'an and other cities.

In the next few years, the company will continue to accelerate the pace of store opening. The company expects to open 18 99 restaurants, 80 Tai er restaurants and 24 other brand restaurants in 2020, and 20 99 restaurants, 100 Tai er restaurants and 36 other brand restaurants in 2021 to achieve rapid development.

2. Brand development: promote multi-brand strategy and cover more market segments

Expand more market segments through multi-brand strategy, broaden customer base and ultimately increase market share.Thanks to the fact that each brand has its own characteristics and brand positioning, with differentiated customer groups, the multi-brand and multi-concept strategy of 99% can effectively disperse the business risk and reduce the competition risk between restaurants. In addition, each brand team can focus on developing the brands they are most familiar with, thus promoting the rapid development of brands.

Jiumaojiu features northwest Chinese cuisine and is positioned as the dining choice for families and diners, while "Tai er" featuring Boiled Fish with Pickled Cabbage and Chili and "pussy" featuring cold pot strings focus on young consumers; on the other hand, "Uncle Nawei is the Chef", which is characterized by boutique Cantonese cuisine, focuses on middle-and high-end customers with low price sensitivity. "2 eggs" pancakes, as a modern fast food brand, its mission is to provide fast, convenient and affordable food service.

Fifth, valuation analysis: the valuation of the industry is stable, and Haidilao International Holding's premium is obvious.

The valuation of the catering industry is 20-30 times, Haidilao International Holding outshines others. From 2019 to 2020, the average valuation of food and beverage leaders at home and abroad is 31 times and 26 times respectively. Haidilao International Holding is much higher than the average valuation, while Jiafu is slightly lower than the industry valuation, mainly because of the differences in catering brands and the speed of expansion.

Since its listing, Haidilao International Holding's performance has been stable, and its valuation has been rising all the way, from 40 times to 80 times PE;. In the early days of the market, the valuation fell in the second half of PE,2015 due to the influence of the Hong Kong stock market. From 2015 to 2016, the company's performance continued to grow high, driving the company's valuation up to 35 times.

The domestic catering industry is still in the stage of development, and there is still more room for improvement for residents to eat out than overseas. the chain rate and industry concentration have spawned large companies. 99 Maojiu has two major catering brands, Tai er and 99 Maojiu. The highly standardized model will help the company to expand rapidly, and will further expand market segments in the future, which is expected to benefit from catering chain dividends.