In recent two years, there are not many restaurant companies that have officially listed on the Hong Kong stock market, but there are outstanding newcomers such as Dashifu Corporation and Tehe International, which have performed well since their listing. Considering the background of the "discount" in liquidity of Hong Kong stocks, it is not easy for these companies to achieve such results, which shows a high market recognition.

This also suggests that the dining industry is still one of the areas that incubate quality targets and should not be underestimated. Perhaps by deeply exploring it, we can identify and capture some market opportunities.

Looking at the core trends since this year: 1) Due to intensified competition, the overall performance of dining companies is under pressure, especially on the profit side. Nevertheless, the dining industry still maintains a relatively positive level of prosperity; 2) The concept of rational consumerism is becoming more prevalent, and the pursuit of quality and price ratio is sweeping the entire dining industry, giving rise to "internal competition" and "reshuffling". Enterprises with stronger market adaptability are expected to usher in a new growth cycle.

Recently, the well-known representative company of Huai-style cuisine, Xiaocaiyuan, completed the listing application on the Hong Kong stock market, bringing new expectations.

Perhaps in the near future, there will be another dining IPO on the Hong Kong stock market. Moreover, one of the major driving forces behind the continuous development of Xiaocaiyuan is the pursuit of quality and price ratio, which aligns with the current industry trend. With leading market share, noticeable growth rate, and obvious competitive advantages, it demonstrates high intrinsic value.

Selecting the best in the track and providing a fertile ground for growth.

Overall, Xiaocaiyuan is dedicated to building a chain of restaurants that serve as the "family kitchen" for Chinese people, targeting the mass convenience Chinese dining market. The foundation of its track includes the pursuit of quality and price ratio, which provides a fertile ground for its growth.

Firstly, the popular convenient Chinese dining market caters to the increasing demand of the public for affordable and delicious meals, which also determines its leading scale and growth rate.

According to Frost Sullivan's data, the Chinese dining market can be divided into two segments: popular convenient Chinese dining and mid-high-end Chinese dining, based on the average customer spending. The average customer spending for popular convenient Chinese dining is below 100 yuan. It is estimated that the compound annual growth rate of this market from 2023 to 2028 will be 9.1%, and the market size in 2028 will reach 5.59 trillion yuan, accounting for over 90% of the Chinese dining market.

Source: Frost Sullivan

Popular convenient Chinese dining can also be further divided into two segments based on the average customer spending: between 50 yuan to 100 yuan, and below 50 yuan. The former has a higher market share, and it is projected that the market size in 2028 will reach 3.45 trillion yuan.

Based on the 2023 store revenue, Xiaocaiyuan ranks first among all brands in the popular convenient Chinese dining market, with an average customer spending ranging from 50 yuan to 100 yuan, occupying a favorable position in the market.

Secondly, chain restaurants often have more stable and high-quality product quality, service experience, and stronger bargaining power with upstream suppliers, which enables them to better meet the demand for affordable and delicious meals. Furthermore, they also have the opportunity to tap into the market dividends and create sustainable profits.

At the same time, China's dining market still has great untapped potential in terms of chain development. There is a lot of room for current market participants to strengthen their chain development strategy and enhance market competitiveness. According to Frost Sullivan's data, it is estimated that the compound annual growth rate of the chain restaurant market from 2023 to 2028 will be 15.5%, more than twice that of the non-chain restaurant market. By 2028, it is expected to account for approximately 25.5% of China's popular convenient Chinese dining market.

This further presents the characteristics of the small vegetable garden track excelling in the best of the best, and it can even be said to have accurately positioned itself in the most promising subdivision market in the Chinese dining industry.

Matching higher requirements and resonating with multiple advantages.

Of course, the development of the small vegetable garden is also inseparable from precise market strategies and efficient operational capabilities.

In fact, both cost-effectiveness and the trend of chain development place high demands on dining brands. For example, achieving high cost-effectiveness essentially requires dining brands to provide high-quality products and services, as well as efficiently manage high costs, and actually promote business development. Chain development, on the other hand, requires dining brands to achieve standardization and professional management.

For the small vegetable garden, it specifically focuses on creating a Chinese people's "home kitchen" with home-style flavors that are healthy, fresh, and offer thoughtful service at affordable prices. This has created a super high cost-effectiveness and high standards to meet consumer demands.

For example, the small vegetable garden advocates "the taste of mother" by emphasizing health and nutrition while inheriting Anhui cuisine. It continuously explores innovative dishes and insists on on-site cooking. At the same time, it has been building a large network of stores, achieving full-scene coverage of "dining in-store + delivery to home." It proposes commitments such as "if the ordered dish is delayed, it will be given for free" and "unconditional exchange or return if unsatisfied with the dish," providing consumers with efficient and diverse dining choices and reducing decision-making risks.

That’s why the small vegetable garden can reach and attract a large consumer base, achieving leading market share and growth rate.

Furthermore, behind this, the small vegetable garden has a strong supply chain and digital capabilities as support for development, as well as the establishment of an efficient and replicable standardized operating model, which drives rapid expansion and cost reduction while increasing efficiency. Similarly, the construction of such a mature system cannot be achieved overnight, it is also its strong moat that brings more development certainty.

For example, Xiaocaiyuan has built a complete cold chain warehousing and logistics supply chain system, realizing a standardized centralized procurement mechanism for high-quality ingredients, efficient processing, and precise daily distribution to all stores, thereby ensuring quality control and forming a strong cost control, etc.

At the same time, Xiaocaiyuan leverages digital empowerment to achieve a high degree of standardization in various aspects such as dishes, services, and store expansion, and has found a comprehensive solution that integrates standardization, quality, and freshness. For example, gradually promoting the use of cooking robots, achieving programmatic unified settings and management through the headquarters' SaaS platform, and continuing on-site cooking.

It is also worth noting that Xiaocaiyuan is building a digital business management platform and upgrading the overall digital business ecosystem by leveraging the established membership system, Business Intelligence (BI) system, business middle platform system, intelligent camera system, and other smart devices. With the completion of this business ecosystem, Xiaocaiyuan will be more capable of driving cost reduction, increasing efficiency, unleashing the potential on the revenue and profit side. This is also the foundation for its sustainable development.

Conclusion

Overall, the current dining industry may seem challenging, but it may not necessarily be a bad thing. Internal competition and reshuffling will also drive the industry towards high-quality development. In this wave, there will always be someone who stands out and becomes the beneficiary of the new growth cycle. Xiaocaiyuan has the potential to be such a player, making its IPO more noteworthy. It is worth keeping an eye on.