"We believe Chinese cuisine will always have opportunities. In the next decade, XIAOCAIYUAN will exceed 3,000 stores. We expect to reach 800 stores by year-end, covering over 150 cities nationwide, with store count projected to reach 1,000 next year. This goal will be built on the foundation of supply chain, talent system, and intelligent layout," XIAOCAIYUAN management stated during recent media communications.

XIAOCAIYUAN was established in 2013, originating from a small partnership restaurant in Tongling, Anhui. After transforming from business dining, it gradually developed into a national Chinese restaurant chain brand and went public on the Hong Kong Stock Exchange on December 20, 2024.

Recently, XIAOCAIYUAN (0999.HK) disclosed its first semi-annual report since listing. In the first half, the company achieved revenue of 2.714 billion yuan, up 6.5% year-on-year. Profit attributable to shareholders reached 382 million yuan, up 35.7% year-on-year. Basic earnings per share were 0.33 yuan, up over 20% year-on-year.

Regarding the faster net profit growth compared to revenue growth in the first half, XIAOCAIYUAN Chief Financial Officer Zhu Zhenghui explained that the improved profitability mainly came from procurement and supply chain optimization, achieving enhanced store personnel efficiency. Additionally, the company gained greater advantages in investment attraction and achieved good results in mall "negotiations." "Enterprise revenue generation and cost control are equally important, and cost control effects are reflected in the data. With a large store base, cost management optimization makes profitability improvements quite noticeable."

The interim report also mentioned that XIAOCAIYUAN's raw materials and consumables in the first half totaled 892 million yuan, down 2.2% year-on-year, mainly due to centralized procurement reducing unit prices of major ingredients. Regarding staff costs, the first half totaled 666.4 million yuan, down 8.2% year-on-year, mainly due to improved store management efficiency and personnel efficiency. Staff costs as a percentage of revenue were 24.6%, compared to 28.5% in the same period last year.

Discussing the reasons for decreased labor costs in the first half, XIAOCAIYUAN founder and chairman Wang Shugao stated that the company did not reduce employee salaries, but rather improved store efficiency by slightly reducing single-store area and staff ratios, further enhancing store personnel efficiency. This was mainly due to adjustments made from late 2023 to 2024 due to reduced mall foot traffic and declining store performance. "When store efficiency improves and personnel efficiency is optimized, costs naturally present a healthier state, which is particularly evident with a large-scale store base."

Regarding specific business indicators, XIAOCAIYUAN's dine-in customer average spend decreased from 60.4 yuan in the first half of last year to 57.1 yuan in the first half of this year. The company's overall table turnover rate was 3.1 times per day, flat compared to the same period last year. Table turnover rates in second-tier cities increased slightly year-on-year, mainly due to improved store efficiency from store format optimization.

Under consumption stratification trends, balancing "value for money" with "profitability" is a core challenge for mass dining brands.

XIAOCAIYUAN management indicated during this communication that XIAOCAIYUAN positions itself as mass-market convenient Chinese dining, with current customer spend at 57 yuan, expected to stabilize in the 55-60 yuan range in the future.

How does the company view same-store declines and the bottom space for customer spend decreases? Wang Shugao responded, "The current market looks relatively optimistic and is at normal levels. We are very confident that our current store model is still very good, and this decline does not affect enterprise development. We proactively reduced prices slightly at the end of 2023, and customer spend varies by city. We still want to benefit customers."

Notably, in the first half, XIAOCAIYUAN's dine-in business revenue was 1.647 billion yuan, up 2.2%, mainly benefiting from increased operating store numbers. Delivery business revenue was 1.057 billion yuan, up 13.7%, with revenue proportion rising to nearly 40%.

Wang Shugao stated that XIAOCAIYUAN previously did not do delivery, but delivery proportion gradually increased during the pandemic. "Currently, we believe the optimal ratio between delivery and dine-in is 30% to 70%, with delivery not exceeding 35% at most."

Regarding store count, XIAOCAIYUAN increased from 617 stores as of June 30, 2024, to 672 stores as of June 30, 2025. Among these, 291 stores are in third-tier and below cities, accounting for over 40% and contributing over 40% of revenue. New first-tier cities have 176 stores, accounting for nearly 30%, with revenue contribution of 29.5%.

Regarding slower store opening growth in the first half, Wang Shugao responded during communications that generally, more stores open in the second half. September will set the 2026 store opening plan based on market environment and different enterprise development stages.

XIAOCAIYUAN also made preliminary plans to maintain direct operation for the 3,000 stores to be opened in the next 5-7 years. "XIAOCAIYUAN's biggest core is the partnership system. Each person on our team can manage 500 stores." The supply chain manager further pointed out that current supply chain can guarantee 800 stores without problems. The Ma'anshan factory is designed to support around 3,000 stores, with no production capacity bottlenecks in the short term. The new factory is expected to start production by year-end or early next year, with investment reaching 450 million yuan, further enhancing production capacity and quality control capabilities.

Discussing succession plans, Wang Shugao stated, "Regional general managers are future successors. There may be a rotation system in the future, learning from Huawei, rather than any specific individual."

Wang Shugao introduced that XIAOCAIYUAN currently has over 100 operational management personnel, mostly former store managers and head chefs who gradually became company shareholders. "We insist on internal promotion model. Currently, we have 5 major regions gradually expanding to 10 major regions, with each regional manager potentially managing 10-20 stores. This talent pool is the foundation for XIAOCAIYUAN's continued expansion."

Regarding overseas expansion plans, Wang Shugao indicated that going overseas is planned but not currently a priority, as China's dining market is large enough, with main energy still focused domestically. "The dining market is huge. In the company's overseas market deployment, the brand direction currently focuses on the XIAOCAIYUAN brand."