GenBridge leads round for Chinese hot pot ingredients supplier

While HaiDiLao is China’s leading hotpot restaurant chain, Guoquan aims to become the dominant force in the “hotpot at home” market. Founded in 2017, it initially provided hot pot ingredients to small and medium-sized restaurants. It then moved into the consumer market and started selling directly to households.

The company now operates an online platform and has an offline network of 4,000 stores across 327 cities. It claims the goal of reaching 5,000 stores this year will be achieved ahead of schedule. The next step is to have 10,000 stores by 2022.

Guoquan provides more than 400 kinds of self-developed hot pot ingredients, mostly frozen products. Finished and half-finished dishes are available as well.

Consumer-end sales data are used to guide hundreds of upstream factories, with a view to improving product quality and supply chain efficiency. Guoquan has been profitable for the last two years. Revenue grew fivefold in 2019, and despite COVID-19 disruption, an increase of 400% expected this year.

Mingchao Yang, founder and president of Guoquan, said that prices in its stores haven't changed in three years, even though the cost of ingredients and raw materials have risen every year. Nevertheless, the company remains profitable thanks to its supply chain efficiency, which has become a key barrier to entry.

Buhuo Ventures committed RMB45 million ($6.4 million) Series A funding to Guoquan last August. This was followed by an extended Series A of RMB50 million in October from Shenzhen-listed Sanquan Food. Five months ago, IDG Capital led a $50 million Series B round. Total funding amounts to nearly RMB1 billion across four rounds.

“Since the last round of investment in Guoquan, we have witnessed a growth rate exceeding our original expectations,” said Haitao Zhang, a managing director at IDG Capital.

Although hot pot is a niche market, many Chinese start-ups are fresh produce suppliers. Among them, Shihuituan, a community group buying platform also known as Nice Tuan, recently raised $80 million in the second tranche of a Series C round. Before that, online grocer Miss Fresh raised $495 million. It is said to be the largest private round ever seen in the fresh produce segment.

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• Topics
• Greater China
• Expansion
• Consumer
• China
• IDG capital
• Vision Knight Capital
• GenBridge Capital