Reasons for the absence of large-cap companies

After studying and summarizing many cases, the Research Center for Consumption Upgrade and Entertainment of Guojin Securities Research Institute believes that there are four main reasons for the absence of large-cap companies from the 4 trillion catering market for a long time:

1) The average quality of employees is not high. In the traditional concept, catering is only a profitable business, with low entry threshold and low social status. Therefore, for a long time, highly educated and high-quality personnel will not take the initiative to enter the catering industry, and it has only gradually changed in recent years.

the ability of employees, especially business leaders, is insufficient. There are two concrete manifestations:

First, the overall situation is not enough. It is easy to be rich and secure, and lacks the boldness of vision to become bigger and stronger.

second, the management level is limited. Restaurant founders may be good at product development or consumer experience optimization, but they lack ideas and experience in refined operation, brand building and promotion, and supply chain management. So that it is difficult to step on the road of large-scale operation.

2) The industry standardization level is low. The difference between Chinese food and western food lies in standardization. The standardization of product quality, service, supply chain and chain operation is the most important prerequisite for the development of consumer service industry, and it is also a major difficulty for Chinese catering compared with western catering.

3) Consumers' tastes and preferences change rapidly. The self-iterative ability of catering enterprises is not as fast as that of diners. With the post-85/91 s becoming the main force of catering consumption, the younger catering consumption shortens the average life cycle of catering brands.

4) The financing capacity is seriously insufficient.

the speed of opening a store is related to the expansion of catering enterprises, and its own cash flow accumulation is unsustainable. Financing ability is a long-term bottleneck for catering enterprises in China.

in terms of direct financing, IPO (especially A-share) of catering enterprises is difficult to raise funds, and venture capital such as VC and PE have only paid attention to catering track in recent years. Indirect financing: The mortgage resources of catering enterprises are limited, and bank lending is easy to hit a wall.

Analysis of the Purple Sea

(1) Demand side: Prosperity and continuous growth

Food is the most important thing for people, and 4 trillion catering is one of the largest industries in our life.

The huge catering market has maintained a rapid growth rate. According to market consulting firm Frost &; According to Sullivan's statistics, the average annual compound growth rate (CAGR) of China catering market reached 11.7% from 2113 to 2117, while the CAGR of domestic clothing market was 6.3%, that of household appliances market was 5.9%, and that of mobile phone shipments was only 2.2%.

Looking ahead, the growth momentum of the catering market in China is clearly visible: the driving force mainly comes from the evolution of the demand side, specifically in three aspects:

1) the continuous urbanization process greatly improves the convenience of eating out;

2) Speed up the pace of work and life to increase the demand for eating out and taking out;

3) After 85/91, they become the main consumers, and their dining needs are diversified and personalized, which promotes the continuous iterative innovation of the catering industry.

　Frost & Sullivan predicted that the compound annual growth rate of the catering industry in China will reach 9.6% from 2118 to 2122, which we think is very likely to be realized.

(2) supply side: highly dispersed and fierce competition

"scattered, chaotic and weak" is a typical feature of the supply side of China catering industry.

industry trend: the competition among catering enterprises in China is on the road to incandescence. According to a report of catering industry in 2117, the number of closed stores in the catering industry last year was 91.6% of the number of opened stores, and the monthly closing rate of some first-tier cities even reached 11%.

in terms of competition pattern, there are 8.8 million catering enterprises in * * * in China, and the market share of the first one is only 1.3%, while the total market share of the top five enterprises is only 1.8%.

capitalization process: a difficult capitalization process of catering industry in China. So far, there are only more than 31 China catering enterprises listed around the world, and most of them are local catering companies.

(3) The purple sea market needs to be broken

When red meets blue, it is a mysterious purple. The analytical framework and investment logic of Zihai market are completely different from those of ordinary Red Sea and Blue Ocean markets.

China's catering market is a very typical purple sea market: on the demand side, it is a blue ocean with huge volume and continuous growth; On the supply side, it is the ebb and flow of the Red Sea.

From the investment point of view, the Zihai market is a market structure worthy of high attention. Although the market structure is extremely scattered and unstable, the huge demand provides sufficient room for growth. Once a company can understand the pain points of the industry and come up with effective solutions, it is easy to grow into a large-scale company. For example, if an enterprise can occupy 5% of the catering market in China, it means a valuation of $61-71 billion in the secondary market.

Looking to the future: the dawn is dawning

The diversified catering culture in China determines that even when it reaches a relatively mature stage of development, there will not be enterprises with a market share of 17% in China's catering market as in the US market. However, the positive signals of catering industry in recent three years indicate that the catering market pattern in China is expected to enter a new development stage.

First of all, the great attraction of the catering market is attracting more and more talents to join, and a group of capable entrepreneurs are gradually growing up. Although most of them don't have glamorous backgrounds, they are tough in heart, ambitious and have a strong learning spirit. In the process of continuous further study, they gradually found a way to integrate theory and practice and finally stood out.

Secondly, after learning from a large number of western catering enterprises and successful Chinese catering enterprises like Ding Taifeng, many enterprises represented by Haidilao have made progress in SOP(Standard Operating Procedure), and more and more enterprises can successfully exhibit 211-311 restaurants at home and abroad. More importantly, the experience of these domestic leading enterprises is being further optimized by more peers, and the average level of operation in the industry has been continuously improved.

furthermore, the strategy of single product and catering platform has become popular, and catering practitioners have begun to understand how to set up product lines with different positioning and reduce the fashion risk of consumers' tastes by means of multi-brands. In addition, with the gradual gathering of catering to large shopping centers, theme pedestrian streets and other formats, large-scale and branded catering enterprises are gaining greater voice in store location and rent negotiations. The leading enterprises in the industry have developed rapidly in the past three years, and the industry concentration has increased.