Food & DrinkChina
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JOURNEY · DETAIL
Guoquan Food: Bringing Hot Pot Ingredients into Closed-Shelf Supermarkets, a Ten-Thousand-Store Cold Chain Supporting the Hong Kong-Listed Prepared Dishes Business
Founded: Yang Mingchao · Guoquan Food (Shanghai) Co., Ltd.
JOURNEY
Key Fields
FIELD STAMPSIndustryFood & Drink
RegionChina
ScaleGiant
ChannelOther
Origin
Yang Mingchao engaged in the hot pot chain and ingredient supply chain in Henan in his early years. Starting from frozen product wholesale in 2015, he found that the upstream distribution efficiency of hot pot restaurants was extremely low, and the repeated procurement costs of families eating hot pot at home were high with uneven quality. According to the prospectus, Guoquan's revenue from 2020 to 2022 increased from 2.965 billion yuan to 7.173 billion yuan, with franchise store revenue accounting for over 90%. He split the supply chain into the home scenario, using franchise chains plus cold chain direct supply to achieve scale.
Milestones
2017
Initial Exploration Period Failure
When Yang Mingchao opened the first batch of Guoquan Food stores in Zhengzhou, Henan, hot pot ingredients were initially displayed on open shelves, but customer traffic was sparse and losses were severe. It was later changed to a closed-shelf supermarket store structure, focusing on pre-packaged frozen ingredients. The single-store model gradually contracted SKUs from an annual loss of hundreds of thousands of yuan to hot pot and barbecue categories. Throughout 2017, only dozens of stores were opened, mostly trial and error locally in Henan.
2019
Category Focus and Franchise Explosion PMF
After focusing on the two major scenarios of hot pot and barbecue, Guoquan's franchise model ran smoothly in the lower-tier markets of Henan. In 2019, the number of stores exceeded 800, and annual revenue was about 2 billion yuan. Yang Mingchao introduced institutional financing of over 100 million yuan from Banyan Capital and Sanquan Food. The family of Sanquan founder Chen Nan invested as industrial capital, marking a crucial step for Guoquan's subsequent cold chain and factory resource binding.
2020
Epidemic Dividend and Cold Chain Expansion Growth
In 2020, home hot pot demand exploded. Guoquan added more than 2,000 new stores that year, and by the end of 2021, the total number of stores exceeded 8,000 with revenue of about 7 billion yuan. At the same time, the company self-built a cold chain network with a warehousing area of more than 300,000 square meters, covering all provinces across the country except Tibet. After completing Series D financing in 2021, the valuation was about 13 billion yuan, with institutions such as IDG Capital and Trustbridge Partners following suit. This stage lasted from 2020 to 2021.
2022
Cost Pressure and First Profitability Turning Point
In 2022, rising raw material costs compounded by repeated epidemic lockdowns caused Guoquan's regional franchisee closure rate to climb to about 10%. The company achieved its first turnaround with an adjusted net profit of about 260 million yuan that year, but the gross profit margin dropped from about 25% in 2021 to about 22%. Yang Mingchao was forced to cut low-margin fresh food categories, cut hundreds of SKUs to control losses, and restart subsidy policies for franchisees.
2023
Hong Kong Stock Listing Transition
Guoquan Food was listed on the Main Board of the Hong Kong Stock Exchange on November 2, 2023, with an issuance price of HKD 5.98 and net proceeds of about HKD 476 million. On its first day of listing, it broke the issue price and closed down about 2%. By the end of 2023, the number of national stores was about 9,233, with 2023 revenue of about 6.09 billion yuan and adjusted net profit of about 320 million yuan, becoming the first listed company in China's hot pot ingredient track.
2025
High Net Profit Growth and Quality Control Controversy Growth
The 2025 financial report showed that Guoquan's net profit surged by about 88% year-on-year, with about 10,188 stores, but a wave of franchisee closures appeared in some regions. Consumers repeatedly exposed odor and packaging labeling irregularities in frozen meat products in Henan, Shandong, and other places, underlining the tension between the company's rapid expansion in lower-tier markets and its quality control system. Management publicly admitted at the earnings conference that the supply chain random inspection coverage rate was insufficient and needed to be made up in 2026.
Turning Points
- In 2017, transforming from open-shelf supermarkets to closed-shelf pre-packaged stores laid the foundation for a low-loss single-store model.
- In 2019, introducing Sanquan Food and IDG Capital bound cold chain factory resources and industrial capital endorsement.
- In 2020, the home quarantine scenario exploded, with the number of stores tripling in a year to exceed 8,000, rising to the top of the industry.
- In 2022, turning a profit for the first time but with a declining gross margin, it was forced to cut SKUs and shrink fresh food categories to stop bleeding.
- In 2023, the stock broke its issue price on the first day of its Hong Kong listing, and valuation shrank from the primary market peak of 13 billion to about 8 billion Hong Kong dollars post-listing.
Failures & Pitfalls
- In 2017, the first batch of open-shelf stores suffered massive losses due to sparse customer traffic and high attrition, causing Yang Mingchao to close half of the stores and rebuild the closed-shelf model.
- In 2022, the franchisee closure rate in some provinces rose to about 10%, forcing the company to restart subsidy policies that consumed cash reserves.
- In 2023, the stock price broke its issue price on the first day of listing and closed down, leaving primary market last-round investors with a book loss of about 30%.
- In 2025, frozen meat products were repeatedly exposed by consumers for quality control issues, damaging the brand's reputation on social media and resulting in interviews by market regulatory authorities.
关键成功要素
- Franchise density in lower-tier markets is the core of the moat, and logistics marginal costs drop significantly after the number of stores exceeds 10,000.
- The self-built cold chain covers all provinces across the country except Tibet, serving as the infrastructure supporting the high-frequency, low-margin model of pre-packaged ingredients.
- Focusing categories on the two major scenarios of hot pot and barbecue avoids direct competition with comprehensive supermarkets.
- Industrial capital Sanquan Food's equity participation brings factory and cold chain resource synergy rather than pure financial investment.
- Franchisee closure rates and quality control coverage are two key indicators to judge the sustainability of the model in 2026.
Lessons
- Do not accelerate franchise expansion before the single-store model is proven; Guoquan only exploded in 2019 after trial and error in 2017.
- The prepared dishes track has thin gross margins, and supply chain self-construction and SKU streamlining determine life or death more than front-end marketing.
- Listing does not equal model validation; breaking the issue price and shrinking valuation force management to mend quality control and close inefficient stores.
- Consumers in lower-tier markets are price-sensitive but have lower tolerance for quality control. Once a food safety incident occurs, the cost of recovery is much higher than the cost of customer acquisition.
Core Data
- Number of stores at the end of 2023：About 9,233 (public data basis, independent review not verified)
- Number of stores at the end of 2025：About 10,188 (public data basis, independent review not verified)
- 2023 Revenue：About 6.09 billion yuan (public data basis, independent review not verified)
- 2022 Adjusted Net Profit：About 260 million RMB (public data basis, independent review not verified)
- 2023 Adjusted Net Profit：About 320 million yuan (public data basis, independent review not verified)
- 2025 Net Profit YoY Growth：About 88% (public data basis, independent review not verified)
- 2021 Revenue：About 7 billion yuan (public data basis, independent review not verified)
- 2021 Valuation：About 13 billion yuan (public data basis, independent review not verified)
- Net proceeds from listing：About HKD 476 million (public data basis, independent review not verified)
- Cold chain storage area：More than 300,000 square meters (public data basis, independent review not verified)
Competitors / Peers
Guoquan Food's main competitors in the hot pot and barbecue ingredient track include Zhaiihuo representing lazy hot pot and Shuhai Supply Chain under Haidilao. The former focuses on online retail, while the latter focuses on B-end catering supply. Lower-tier markets also face category extension pressure from community fresh food chains like Yipin Fresh and Qianmama. At the same time, comprehensive supermarkets such as Yonghui Superstores and Hema also increased their investment in private-label prepared dishes after 2024, directly cutting into the home hot pot scenario. In contrast, Guoquan's store density and cold chain coverage lead, but its quality control system and SKU richness are still squeezed by comprehensive supermarkets.
Sources
- https://36kr.com/p/2211871481311876
- https://news.qq.com/rain/a/20230405A05UUZ00
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- https://www.growthhk.cn/cgo/model/156982.html
- https://news.qq.com/rain/a/20260317A02QW700
- https://www.36kr.com/p/3944456947472006
- https://udn.com/news/story/7240/9337794
- https://www.36kr.com/p/3808999318003456
- https://zh.wikipedia.org/zh-cn/Foxconn
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