CVC to exit China quick service restaurant chain Da Niang

The transaction was disclosed in a filing with the Ministry of Commerce. No details were given regarding the size of the deal. CVC bought a majority stake in Da Niang in early 2014, looking to capitalize on growth in China’s quick service dining market. Guoqiang Wu, the company founder, retained a minority interest in the business.

The relationship between the two parties does not appear to have been smooth. Last year, Wu said in an open letter posted online that alterations to Da Niang’s recipes had undermined product quality, contributing to a 10% drop in revenue in 2014 and 2015. He added that he had been refused entry to the company’s annual general meeting. The veracity of Wu’s claims was not verified.

Founded in 1996, Da Niang is the third largest Chinese cuisine player in the domestic quick service restaurant market by store count and the number one dumpling chain. As of the end of 2013, it had more than 440 outlets in over 90 cities. It operates an integrated business model with a standardized approach to dumpling production.

GreenTree operates nearly 2,200 hotels, the majority of which are based in mainland China, although it operates some properties in overseas markets including the US, Korea and Vietnam. The company’s five brands are GreenTree Inn, GreenTree Eastern Hotel, GreenTree Alliance Hotel, Vatica Hotel and Shell Hotel.

Da Niang was one of three China control deals completed by CVC in late 2013 and early 2014. One of the others, high-end restaurant chain South Beauty, resulted in a write-off amid accusations that the company’s earnings were artificially inflated ahead of the deal closing. CVC pursued legal action against the founder, Lan Zhang.

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• Topics
• Greater China
• Trade sale
• Consumer
• China
• CVC Capital Partners