China hotpot home dining player Guoquan pursues HK listing

The company has raised more than CNY 2.8bn (USD 407m) across four funding rounds. There are 22 pre-IPO investors that together own approximately 51% of Guoquan. They include Buhuo Ventures, IDG Capital, CMB International, Vision Knight Capital, GenBridge Capital, TPG Capital, Tiantu Capital, Lighthouse Capital, and a fund backed by baijiu maker China Kweichow Moutai.

Most recently, the company received USD 300m in Series D funding led by CMB and Tiantu in early 2021 and a USD 60m Series C led by GenBridge in 2020. The prospectus refers to these as the Series C and Series B rounds, respectively. The second tranche of the Series C, which closed in 2022, coincided with the acquisition of Luyi Chengming Food through the issuance of new stock.

Guoquan was founded in 2015 and opened its first store in Zhengzhou, Henan province, two years later. By 2019, the company had 500 stores and its app launched the following year. As of December 2022, it had 9,221 franchised stores and a product portfolio encompassing hotpot and barbecue ingredients, solo-dining meals, ready-to-cook meal kits, fresh produce, Western cuisines, and snacks.

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

Guoquan was the largest at-home hotpot and barbecue brand in China in 2022 by retail sales value, according to Frost & Sullivan. Over the course of the year, it fulfilled more than 100m orders through online and offline channels. In addition to the Guoquan app, the company has its own WeChat mini-program and distributes through third-party platforms such as Meituan and Ele.me.

China’s dining market grew from CNY 6.57trn in 2017 to CNY 8.91trn in 2021, while the home dining segment alone went from CNY 3.14trn to CNY 5trn. Of that, 5.8% was home meal solutions, 84% was buying fresh groceries and cooking at home, and 9.9% was restaurant delivery. By 2026, home dining is expected to account for CNY 6.46trn out of an overall dining market of CNY 12.45trn.

Hotpot products remain the key business driver, accounting for about three-quarters of revenue in 2022. Barbecue products contributed 10.1%. Revenue rose from CNY 3.9bn in 2021 to CNY 7.2bn last year. Over the same period, a net loss of CNY 460.9m became a net profit of CNY 240.9m and the company’s gross profit margin rose from 9% to 17.4%.

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• Topics
• Greater China
• IPO
• Consumer
• China
• TPG Capital
• Vision Knight Capital
• Tiantu Capital
• GenBridge Capital
• Buhuo VC
• IDG capital
• Lighthouse Capital
• food & beverage