5 Trillion Catering Market Breaks Into "New Species": Baifu Strides Over Investment, Operation And Digitalization

        In 2020, the catering industry, which has been hit hard by the epidemic, is showing a strong recovery. Many food and beverage brands reborn after the epidemic are developing rapidly under the wave of digitalization and chain operation, and they also get more capital's attention and favor.

      According to the statistics of 21st century economic report, since this year, three Lanzhou Ramen brands, namely Ma Jiyong, Chen Xianggui and Zhang Lala, have been invested by Sequoia Capital, source code capital and Jinshajiang venture capital respectively. The estimated value of some projects is as high as 1 billion yuan. At the same time, Xiaomian announced in March this year that it had obtained a new round of financing from country garden venture capital, with a post investment valuation of nearly 1 billion yuan.

There are many wonderful noodles in the world, and the development of other subdivisions of catering industry can also be noted: the chain brand of dried hot brine chrysanthemum Kailu announced the completion of RMB 100 million b round of financing, and the head brand of baozai rice (formerly known as Zihuang pot) has won a new round of financing, and plans to open 500 stores.

China's catering industry, which can attract a lot of capital, is a big river. Statistics show that the overall scale of China's catering industry is 4.6 trillion yuan in 2019, and in 2020, even with the impact of the epidemic, the scale of the catering industry will exceed 4 trillion yuan. It can be predicted that the overall market size will be close to 5 trillion in 2021. But in this huge and seemingly low threshold market, in the past, there were few "big fish" comparable to the market value of 100 billion yuan such as McDonald's and Starbucks.

With insight into the industry phenomenon of great potential and decentralized market, Hony's Baifu holdings began to carry out systematic investment layout in catering industry five years ago, enabling its brands to operate and manage, and accelerating digital construction.

At present, the 4 holding brands and 8 equity participating brands invested and acquired by Hony and Baifu have maintained a certain expansion speed. Among them, a new round of financing has been completed for several brands, such as Xiaomian, seesaw coffee, baozai Huang, and lecherous pie salad. Some brands are expected to complete two or three rounds of financing within this year.

There are few benchmarking enterprises to refer to this model of Baifu in the Chinese market. According to Wang Xiaolong, managing director of Hony investment and CEO of Baifu holding, Baifu's goal is to create a "new species" of catering platform, which is not only to invest or operate catering, but also to become a platform enterprise, enabling 14 brands of Baifu family and ultimately driving the development of the whole industry.

"For Baifu, capital capability is the skeleton, operational capability is flesh and blood, and digital capability is soul. After the superposition of the three capabilities, the value of Baifu will increase exponentially. " Wang Xiaolong said. In June 2021, when he was interviewed by the 21st century economic reporter, he described how Baifu holdings crossed the triple gates of investment, operation and digitization.

"Before making investment, I was engaged in military technology research and development. My old classmates would joke: how can you sell tea eggs, a missile maker? But our catering is not a whim, but a long-term thinking and preparation. " Wang Xiaolong said.

Wang Xiaolong worked in the second Research Institute of China Aerospace Industry Corporation earlier. In 2004, he joined Hony investment, focusing on investment in the consumer retail industry.

After more than ten years of hard work in the industry, and with the support of Hony, he has transformed from an investor in suits and suits to an "entrepreneur" in the catering industry, and has done many dirty, hard and hard work that many financial practitioners are unwilling to do.

Wang Xiaolong told reporters that his decision to transform was initially inspired by 3G capital. In this regard, Wang Xiaolong said: "if I can combine my cognitive and investment experience accumulated in retail, FMCG, catering and fast food chain fields in the past, and deepen the industry and actively manage the project, the probability of success will be greater."

From the perspective of the industry, the catering industry in 2016 is in the window period of industrial transformation. For a long time, China's catering industry is a traditional but immature industry, with low industry concentration and low degree of enterprise capitalization. A large number of catering enterprises are husband and wife shops, and there are not many chain brands. But in the last decade, with the development of cold chain logistics and the growth of talent echelon, the opportunity of chain brand began to appear. Under the wave of digitization and Internet, the catering industry has a great space for transformation, and new catering brands for new consumer groups begin to rise.

Wang Xiaolong's idea of joining the catering industry was supported by Zhao Linghuan, chairman of Hony investment. Hony investment has always emphasized the combination of industry and finance, and recognized the long-term value of catering investment. Liu Chuanzhi, the founder of Lenovo Group, also encouraged Wang Xiaolong to jump out of the investor's mind and boldly take himself as the leader of the enterprise.

In 2016, Hony invested in the acquisition of Li Wen handbag, a Hong Kong listed company. At the end of that year, the platform of the listed company was officially renamed "Baifu holding", and began to carry out systematic investment layout and operation management in the catering field. Wang Xiaolong became the CEO of Baifu holdings in the second half of 2019. Under the promotion of favorable weather, favorable location and people, Wang Xiaolong led Baifu to continue to explore the importance and depth of catering industry.

At the beginning, Baifu opened up the situation by paying equal attention to holding investment and equity investment. Specifically, Baifu, on the one hand, carries out holding investment in catering brands that have developed to a certain volume, and then integrates the financial statements into the platform of listed companies. As a result, Baifu holdings acquired classic brands such as Hehegu and xinladao.

On the other hand, Baifu has chosen to invest in the new catering brand which is rising with the trend of Internet. Representative brands of this category include met noodle, seesaw coffee, etc. In addition to the previous Hongyi catering investment project, Baifu family has 14 catering brands. These items include fast food, dinner, drinks and other categories. They seem complex, but in fact they have obvious commonalities: they are all categories that can be scaled, standardized and replicated in a short period of time, and are generally accepted by all parts of the country.

In the face of the track, meet a small face, especially a typical case worthy of attention.

In November 2016, Baifu invested 25 million yuan in Xiaomian with a valuation of 100 million yuan. At that time, it only opened eight direct stores in Guangzhou. In March this year, Xiaomian got a new round of financing from country garden venture capital, with a valuation of nearly 1 billion and more than 100 stores. Some people familiar with the matter disclosed that less than two months after the financing, some investors were willing to participate in the investment with a valuation of billions of yuan, meeting a small area. According to this estimate, Baifu will get dozens of times of return in this investment.

At present, there are 14 brands of Hongyi and Baifu family, and the total number of stores in China is more than 750. It is not known how many "small faces" can be converted from these assets. However, what is more noteworthy is that Baifuhe and meimian have already established a close relationship far beyond ordinary investors and invested institutions. Wang Xiaolong believes that the value of Baifu has never been just investment, but the ability to build a platform based enterprise, enabling the brand of Baifu family such as Xiaomian and the whole industry.