HONG KONG, Dec. 20, 2024 - On December 20, 2024, Xiaocaiyuan, a portfolio company of Harvest Capital, officially went public on the Main Board of the Hong Kong Stock Exchange (stock code: 00999.HK). As of the first three quarters of 2024, Xiaocaiyuan has a total of 663 restaurants, with operating revenue reaching 3.544 billion yuan and profit reaching 401 million yuan.

This milestone signifies a pivotal step forward in the modernization of the Chinese casual dining industry, with Xiaocaiyuan leading the way. The IPO aims to facilitate the expansion of its store network, enhance brand influence, strengthen its supply chain, and upgrade its intelligent equipment and digital systems, ultimately delivering greater value to consumers.

A Landmark Moment for Xiaocaiyuan

At the listing ceremony, Wang Shugao, Chairman of Xiaocaiyuan, expressed his gratitude and ambition, stating: "Xiaocaiyuan's IPO is not just a significant milestone in our corporate journey but also a solemn commitment to providing high-quality dining services to our customers. We will hold ourselves to even higher standards."

Alan Song (Song Xiangqian), Founding Partner and Chairman of Harvest Capital, shared his vision: "Xiaocaiyuan is a leader in essential and affordable dining. We deeply respect Chairman Wang and his team and are honored to have invested in Xiaocaiyuan.

Together, we are driving the modernization of Chinese dining management. Xiaocaiyuan will steadfastly pursue the path of modernization, keeping consumers at the center of its efforts, continuously delivering affordable yet delicious products, exceptional services, and consistently creating value for a broad base of customers."

Harvest Capital's Strategic Partnership with Xiaocaiyuan

Since 2023, Harvest Capital has supported Xiaocaiyuan with two consecutive investments totaling 500 million yuan, becoming its sole external institutional shareholder before the IPO. Recognizing the structural opportunities in Chinese casual dining, Xiaocaiyuan has captured market share by offering high-quality, affordable meals to meet the everyday needs of its customers. By focusing on standardization and digitization, the company has built a robust supply chain, ensuring sustainable competitive advantages. This investment reflects Harvest Capital's commitment to "essential, high-frequency, and People's livelihood" consumer sectors, encapsulating its philosophy of "Providing better solutions for daily life enrichment."

High-Quality, Affordable Meals at Scale

Founded in 2013, Xiaocaiyuan has grown to operate 663 directly-owned stores across 146 cities in 14 provinces in China, including 658 under the Xiaocaiyuan brand and five under other sub-brands. As of the first three quarters of 2024, Xiaocaiyuan's operating revenue reached 3.544 billion yuan, and its profit reached 401 million yuan.

Positioned as an essential and convenient dining option, Xiaocaiyuan offers homestyle dishes crafted from fresh, high-quality ingredients, providing exceptional value to its customers.

The menu, inspired by Huizhou cuisine, has been modernized to cater to both northern and southern palates. Xiaocaiyuan has redefined this tradition by adopting healthier cooking methods with less oil, salt, and seasonings, creating a "New Huizhou Cuisine" that appeals to a broader audience and fits various dining scenarios.

To ensure consistency and quality, Xiaocaiyuan streamlined its menu from nearly 100 items to 45-50 core dishes, periodically introducing new items to meet consumer demand for variety. Unlike many competitors, Xiaocaiyuan avoids pre-made dishes, relying instead on fresh ingredients prepared on-site. Centralized kitchens process and deliver semi-prepped ingredients to stores, enabling efficient workflows and ensuring that meals are served within 25 minutes of ordering.

With an average per-person spend of RMB 50-70, Xiaocaiyuan offers a compelling value proposition, standing out in a market where dining often costs significantly more. According to Frost & Sullivan, Xiaocaiyuan ranked first in 2023 among Chinese casual dining brands with an average customer spend of RMB 50-100.

Supply Chain Excellence and Efficiency

Xiaocaiyuan's ability to deliver affordable, high-quality meals stems from its robust supply chain. The company adheres to strict procurement standards, carefully selecting suppliers and maintaining long-term partnerships with reputable companies such as Nongfu Spring, Yihai Kerry, and Dahu Aquaculture. Centralized procurement and strategic sourcing enable cost control and economies of scale.

The company operates a central kitchen in Anhui and manages 14 warehouses nationwide, supported by a logistics network of 200 transport vehicles. This self-sufficient logistics system ensures timely and accurate deliveries while maintaining strict quality control and reducing logistics costs.

Concentrating its store footprint in regions like Jiangsu, Shanghai, Anhui, and Zhejiang, Xiaocaiyuan leverages regional logistics hubs to further enhance supply chain efficiency. It has also digitized its supply chain management, with plans to implement an end-to-end traceability system to guarantee food safety and operational excellence.

A Modernized and Digitized Management System

Apart from the standardization of dishes, Xiaocaiyuan has achieved standardized management in all aspects of its operations, such as front-of-house service, online and offline training, food safety and quality control, and store expansion. This is also one of the core reasons for the company's contrarian growth during the past three years of the pandemic.

In addition to standardization, Xiaocaiyuan has invested heavily in digital transformation. It has introduced systems for customer membership, business intelligence (BI), and enterprise resource planning (ERP). These tools enable the company to gather and analyze data, optimize operations, and enhance customer engagement.

The membership program, which grew from 1.5 million members in early 2021 to over 8.3 million today, provides valuable consumer insights that drive loyalty and repeat purchases. The BI system enhances decision-making by analyzing operational and customer data, while AI-powered kitchen surveillance ensures compliance and reduces inefficiencies. Some locations have even adopted robotic cooking systems to improve kitchen efficiency and consistency.

Expanding with a Dual-Brand Strategy

Xiaocaiyuan is also pioneering a dual-brand strategy with the launch of "Caishou Canteen," a community dining model targeting urban neighborhoods and office hubs. Priced between RMB 20-40 per meal, Caishou Canteen offers a more affordable option while maintaining Xiaocaiyuan's commitment to quality. Leveraging smart kitchen equipment and streamlined labor, this new brand aims to redefine community dining as an essential service.

Empowering Employees and Redefining Collaboration

Xiaocaiyuan's success is built on a strong culture of empowerment. Over 90% of its shareholders are former frontline employees, and all store managers and chefs are promoted internally. This approach has created a motivated workforce aligned with the company's mission. Comprehensive training programs, performance incentives, and equity-sharing plans ensure that employees benefit from the company's growth.

A Vision for the Future

As Xiaocaiyuan embarks on its next chapter, it aspires to become a globally recognized leader in Chinese casual dining. With its modern management system and commitment to innovation, Xiaocaiyuan aims to bring its vision to life: "A Xiaocaiyuan wherever there are Chinese people."

Harvest Capital congratulates Xiaocaiyuan on this achievement, proud to stand alongside the company as it continues to transform the Chinese dining landscape and deliver unparalleled value to its customers.

SOURCE Harvest Capital