China Food

The latest trend of the Chinese business of great John and DQ, Fangyuan capital’s big acquisition of the catering industry, has been hammered

Not surprisingly, the catering group CFB, which operates great John and Dairy Queen (hereinafter referred to as DQ) in China, will usher in a new owner.


Xiaoshidai noted that recently, the official website of the State Administration of Market Supervision announced the case of Fangyuan capital GP3 company acquiring the equity of China food and beverage group. According to the document, Fangyuan capital GP3 company (“Fangyuan capital”) plans to indirectly acquire the equity of China F & B group (“CFB”) held by walnut investment holding II Limited.

After this transaction, the CFB will be separately controlled by the party source capital.



Xiaoshidai learned from CFB today that the Group operates a number of brands. In addition to DQ and stick John’s stores in the south of the Yellow River in China, it also includes Yuepu canteen, Brut eatry and all the businesses of Sandao entering Sichuan, and meets the operation of Xiaomian brands in Shanghai, Jiangsu Province, Zhejiang Province and Anhui Province. At present, CFB has more than 1100 restaurants, and the main brands DQ and stick John have 920 and 160 stores respectively.



Price rumor


Although the transaction price has not been made public, xiaoshidai noted that Bloomberg recently quoted “people familiar with the situation” to say that Fangyuan capital headquartered in Hong Kong, China will purchase the equity of CFB from yintuo and other holders for about US $160 million (about RMB 1.022 billion). At that time, it was reported that the transaction negotiations were still ongoing and it was uncertain whether it could be reached.


The above price is within the previous rumored range. As early as 2019, there was news that Swedish private equity giant EQT AB was considering selling its majority stake in CFB, which was initially estimated to be valued at about US $100-200 million.


For the transaction, xiaoshidai today inquired from Fangyuan capital and CFB. Among them, the relevant person of CFB said that “the current situation is not suitable for answering relevant questions”. In addition, as of the time of publication, xiaoshidai had not received the reply from Fangyuan capital.


According to the official website of yintuo, the company took a stake in CFB in 2013 and described the latter as “the world’s largest DQ franchisee” and “the largest franchisee outside the United States”. In China, DQ and John stick operated by CFB are the largest ice cream chain and the second largest pizza chain respectively.


In that year, Yin Tuo said that the investment in CFB was mainly focused on its industry status and market potential, and pointed out that benefiting from the accelerated urbanization process and other factors, China’s outdoor ice cream market and pizza catering have developed rapidly in recent years, and there is still much room for growth compared with the mature market.


Business progress


However, the later story has a new development.


According to the data, CFB group once fell into an operating dilemma, and by the end of 2016, its single store had fallen by double digits year-on-year for three consecutive years. In order to reverse the decline, CFB group has carried out innovation and Optimization in many aspects, including developing retail products, adjusting store business model, etc.


For example, with home enjoyment becoming one of the main consumption scenarios of pizza, great John changed the store from focusing on Hall food to DWS (delivery with seat) model, that is, it is mainly delivered outside the store with a few Hall Food seats. In addition, DQ stores have also carried out “national tide upgrading” and opened a number of restaurants integrating classic elements of local cities.


In fact, after a period of adjustment, the CFB’s measures also worked.


Statistics show that the year-on-year decline of the company’s single store in 2018 has narrowed to single digits. In the few years since they started to promote recovery, DQ and John stick operated by CFB still ranked first and second in their respective industries, although their share momentum is different.


According to the data obtained by xiaoshidai from Euromonitor International today, in terms of retail value, the share of stick John has decreased from 8.3% in 2015 to 3.1% in 2020. In contrast, DQ’s life is much better, with its share rising from 15.0% in 2015 to 22.2% in 2020.

Thanks to the layout of delivery and digitization in previous years, CFB can also return blood quickly in the post epidemic era.


Xiaoshidai learned from CFB today that all its brands have resumed growth in the second half of 2020, with a year-on-year increase of more than 6%. Since this year, CFB has maintained double-digit year-on-year growth compared with 2019. Among them, in the first quarter of 2021, the single stores of DQ, stick John and Brut eatery increased by nearly 20% year-on-year compared with 2019.


“Although the epidemic situation has been repeated this year, specific cities will be affected in the short term under the control of the epidemic situation. However, we have a clear brand development strategy and an increasingly healthy and stable operation system, and the overall development momentum is good,” CFB said.

Looking to the future,


Buyer background


It is not known for the time being whether the direction of CFB will change if it is successfully acquired by Fangyuan capital. Some insiders believe that considering that the buyer is an investment institution, the focus of CFB in the short term may still be to improve performance, and the possibility of independent listing in the future is not ruled out.


On its official website, Fangyuan capital described itself as one of “Asia’s leading market-oriented and independent private equity investment institutions”. Its key investment areas include consumption, media and technology, health care, industry and financial services. His team has successively invested more than US $7 billion in China.


There are also many well-known enterprises. The snack generation checked its official website and found that the investment cases announced by Fangyuan capital include focus media, meituan comments, Zhilian recruitment, cat’s eye entertainment, people’s pharmacy, Deqi pharmaceutical technology, etc.


Recently, Fangyuan capital is still betting heavily on the Chinese market. According to the above Bloomberg news, in the past nine months, the agency has invested at least US $2 billion in the Asia Pacific region, mainly in China, including obtaining the control of Beijing Zhendong Langdi Pharmaceutical Co., Ltd. for us $900 million. But only from the official website and public reports, it seems that the figure of Fangyuan capital has not yet appeared on the catering track.


As for the reason for choosing CFB, Shen Meng, executive director of Xiangsong capital, said to xiaoshidai today that the business scale of stick John and DQ in China is not very large. For Fangyuan, it can not only obtain a brand with a certain popularity, scale and professional foundation through acquisition, but also won’t take too much risk. In addition, it also helps Fangyuan capital to optimize its operation and diversify its investment layout.


“As an investment institution, Fangyuan capital is unlikely to hold the same catering business for a long time. In the future, it does not rule out the possibility of promoting the independent listing of CFB or selling to a larger catering group. However, the premise is that Fangyuan capital needs to continue to improve the yield of CFB in order to achieve higher investment profits.” Shen Meng said.

Pay attention to “snack generation (wechat: foodinc)” and watch the wonderful news.

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