Capital Today leads round for Chinese convenience store chain
China-based convenience store chain operator Linji has raised $30 million in Series B funding led by Capital Today China Group, with participation from existing investor Source Code Capital.
The company claims that it has now completed three rounds of funding totaling RMB300 million ($44 million) since its inception in 2017. Source Code backed the company’s Series A round.
Most of Linji’s stores are in the eastern province of Anhui. While the penetration rate of convenience stores in neighboring Jiangsu and Zhejiang provinces is high, the company notes that - prior to its launch - Anhui had only about 200 standard convenience stores for a population of 62 million. The market is dominated by mom-and-pop operators.
Linji now has over 200 outlets located in cities such as Hefei, Wuhu and Maanshan. It claims to be the largest convenience store operator in the province. The company counts millennials as the main customer group and has tailored its offering accordingly with 24-hour services and large leisure areas equipped with tables. Most stores are located next to residential and office buildings or large transportation hubs.
Average single store sales revenue has reached RMB6,000, helping more than half of Linji's outlets break even. The company claims that its gross profit margin per store is now on par with that of China's largest convenience store chains.
“The company has set its focus on second-tier cities. It is able to expand rapidly by opening new stores and acquiring existing chains, which we believe will help build strong brand awareness among customers. We believe Linji can compete with Japanese convenience store chains going forward,” said Kathy Xu, the founder and a managing partner at Capital Today.
The number of convenience store chains in China reached 100,000 in 2017, with cumulative sales revenue of RMB190 billion. The industry is expected to maintain rapid growth this year, which will lead to more investment in the space, according to the China Chain-Store & Franchise Association.
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