Source | Harvest Capital

On December 19, 2023, Chinese catering chain leader Xiaocaiyuan announced the completion of a new round of financing, with Harvest Capital, a leading institution in the Chinese consumer industry, as the investor. This marks Harvest Capital's second investment in Xiaocaiyuan after the initial financing in March of the same year. As the exclusive investor in Xiaocaiyuan, Harvest Capital has cumulatively invested 500 million RMB. This also represents the largest financing in the mass catering market in recent years.

Xiaocaiyuan is the absolute leader in the rapidly growing mass-convenient Chinese catering sector, with a network of over 500 stores. Its business scale, growth rate, and store profitability are industry-leading. Since its establishment in 2013, Xiaocaiyuan has adhered to a consumer-centric approach, standardization as a premise, digitalization as a driving force, intelligence as a means, and industrialization as a direction. The company is dedicated to serving the rapid and growing demand for mass-convenient catering, aiming to establish Xiaocaiyuan as a widely recognized "family kitchen" for the Chinese people.

In an environment where the Chinese consumption market is recovering slowly, and the overall growth of the catering industry is weak, Xiaocaiyuan has continued to optimize economic indicators such as store quantity, same-store sales, labor efficiency, and store efficiency in the first three quarters of 2023. The company's counter-trend growth fully validates the effectiveness of its long-term strategy focusing on mass-convenient catering and ultimate cost-effectiveness. The profound understanding of modernization and standardization in catering by Xiaocaiyuan's management, coupled with strong execution, serves as an effective guarantee for this core strategy, enabling the company to continuously provide consumers with "delicious and affordable" dishes and high-quality services.

China is undergoing complex and profound historical changes in its economic and social spheres, and there is a high likelihood of entering a low-desire society with insufficient effective demand and declining per capita purchasing power in the future. The transition from the third consumption to the fourth consumption era is evident in Chinese consumption, where the awareness of simplicity and practicality is profoundly influencing the development trends of the catering industry. Mass-convenient catering services, characterized by essential needs, high frequency, and ultimate cost-effectiveness, represent the direction of the "high-quality and affordable" quality revolution, perfectly aligning with the future development trends of the Chinese catering industry and the overall consumption sector.

As the exclusive external investor in Xiaocaiyuan, Harvest Capital is confident in the long-term value and inherent potential of the Chinese consumption sector. Harvest believes that mass, essential, high-frequency, and ultimate cost-effectiveness in mass living consumption will constitute the mainstream and cornerstone of China's future society, representing a large and enduring market. Mass living consumption meets the needs of the times, and the healthy development and efficiency improvement of the mass living consumption industry and leading companies have the potential to better meet the intrinsic upgrading needs of the people and continuously create consumer benefits, possessing strong social value.

The recently held Central Economic Work Conference pointed out that China's current economic difficulties and challenges include insufficient effective demand and weak social expectations. Harvest Capital's large-scale and multi-round investment in Xiaocaiyuan reflects its firm confidence in China's long-term economic potential and resilience. It also demonstrates Harvest's long-term commitment to the consumption of Chinese mass living, believing that it can greatly boost society's confidence in catering and overall consumption.

Amid the "technology hot, consumption cold" atmosphere in the capital market, many consumer investment institutions choose to move away from consumption and chase new industry trends. Harvest Capital, however, steadfastly chooses to stay. Song Xiangqian, Chairman of Harvest Capital, pointed out that consumption and technology are two sides of the same coin in the development of the economy and society. They are also the two most important elements in the national economy: technological progress and consumption support. Consumption creates application scenarios for technology, and the two are not mutually exclusive.

Xiaocaiyuan is an excellent example of effectively combining technology and consumption. The company attaches great importance to digitalization and intelligence, actively perfecting a business intelligence insight system centered on data assets. It is actively building an integrated online and offline business intelligence operation platform and smart stores. In recent years, the company has successively launched SAP systems, CRM membership systems, BI systems, business-finance integrated systems, supply chain SCM systems, and online business travel systems. These initiatives, focusing on online business, user digitization, operation digitization, and supply chain digitization, serve as the core strategies to support the company's development.

Song Xiangqian, Chairman of Harvest Capital, stated, "The essence of today's business competition is fundamentally the competition of entrepreneurs' cognition, and even more, the competition of entrepreneurs' mentality and altruistic spirit. To become a long-term winner in business, it requires entrepreneurs to address weaknesses and cultivate internal skills driven by an altruistic spirit. This reflexive nature may significantly impede short-term business development but is a strategically intelligent move in the long run. We see this wisdom in the team led by Chairman Wang Shu at Xiaocaiyuan."

This high-dimensional wisdom propels Xiaocaiyuan beyond its current achievements. The company, based on its advantages in the supply chain, product strength, and digitalization, will intensify its exploration of community convenience catering formats. It aims to achieve a more extensive and profound impact on the convenience and well-being of the masses. The company aspires to make mass-convenient catering accessible to thousands of households and expand to thousands of cities. Xiaocaiyuan aims to become a community catering provider at the level of basic infrastructure, becoming a way of life for the Chinese people.

The 1.2 trillion RMB scale of the mass-convenient Chinese catering market is the largest segment in the Chinese catering market, and it is rapidly rising with huge dividends and broad prospects. Xiaocaiyuan will continue to firmly grasp the development trend of mass-convenient Chinese catering and cultivate it deeply. With a core focus on a modern scientific management system that is continuously improved, the company aims to upgrade the core driving force of its value development to "relying on modern scientific management." This will further enhance overall management capabilities and efficiency, consistently create consumer benefits, and achieve a "ubiquitous" and "heaven-reaching" presence with robust vitality through economic cycles.

Xiaocaiyuan perfectly matches Harvest Capital's investment standards of "good industry, good company, good people." As a "champion trainer" and business partner, Harvest Capital will accompany Xiaocaiyuan in the long run, providing strong support for the improvement of Xiaocaiyuan's capabilities and system refinement. Harvest Capital aims to help Xiaocaiyuan achieve its business goals at an early date: "Where there are Chinese people, there is Xiaocaiyuan!"