We are a leading and fast-growing freshly-made beverage company in China. Our brand, “Good me (古茗),” is China’s largest mid-priced freshly-made tea store brand and the second largest freshly-made tea store brand across all price ranges, in terms of both GMV in 2023 and store count as of December 31, 2023. In 2023, we generated a gross merchandise value, or GMV, of RMB19.2 billion, representing an increase of 37.2% from 2022. In the nine months ended September 30, 2024, we generated a GMV of RMB16.6 billion, representing an increase of 20.4% from the same period in 2023, a growth rate exceeding the majority of the other top ten freshly-made tea store brands. Our store network encompassed 9,001 stores as of December 31, 2023, representing an increase of 35.0% from December 31, 2022, and expanded to 9,778 stores as of September 30, 2024.
We primarily operate under a franchise model under “Good me” brand. The “Good me” stores offer three categories of beverages: (i) fruit tea beverages, (ii) milk tea beverages, and (iii) coffee beverages and others. We focus on the mid-priced segment of China’s freshly-made tea store market, which is the largest segment in terms of GMV in 2023, the fastest-growing segment in terms of expected GMV growth from 2023 to 2028, and a segment with intense competition.
Over a decade ago, Mr. Yun’an Wang, our founder, opened the first “Good me” store in his hometown Daxi, a small town in Zhejiang. There, consumers had limited access to freshly-made tea beverages with fresh fruits and other quality ingredients, largely due to the underdeveloped supply chain infrastructure in these typical lower-tier markets. With a firm belief that the freshly-made beverage industry will evolve towards greater preference for fresh ingredients, Mr. Wang embarked on a journey to serve freshly-made tea beverages made from quality ingredients with short shelf-life distributed through cold-chain delivery. Along our way, the persistent efforts to serve lower-tier markets have given us deep consumer and market insights, which, together with our leading operating efficiency, enabled us to serve quality beverages at affordable prices for the daily consumption of consumers.
We have steadily expanded our store network under what we refer to as the regional densification strategy. We believe that operating a network of at least 500 stores in a province signifies a critical mass. Leveraging our experience and advantage in provinces with a critical mass, we strategically venture into neighboring provinces. We first reached a critical mass in Zhejiang, where we continued to grow and now have over 2,000 stores. We have established provincewide networks with a critical mass in eight provinces, which collectively accounted for 87% of our GMV in 2023, and led us to become one of China’s largest freshly-made tea store brands. In each of Zhejiang, Fujian and Jiangxi where we established store networks with a critical mass the earliest, we achieved the highest market share in terms of GMV in the freshly-made tea store markets across all price ranges. As of September 30, 2024, we had presence in 17 provinces in China where we will continue to increase our store density, which, along with another 17 provinces where we had yet to have presence, provide us with ample room for growth. As we expand our store network, we maintained positive period-over-period same-store GMV growth in these eight provinces with dense store networks and nationwide during each of the three years ended December 31, 2023.
Under our regional densification strategy, we strategically allocate resources towards building store networks with high geographical density across all city tiers in target provinces. As of December 31, 2023, our store count in second-tier and below cities accounted for 79% of our total store count, the highest percentage as compared to those of the other top five mid-priced freshly-made tea store brands in China, and slightly increased to 80% as of September 30, 2024. In addition, as of December 31, 2023, 38% of our stores were located in towns (鎮) and townships (鄉), which are administrative areas typically located away from downtown urban areas of cities. The percentage of our stores in these areas was the highest among the top five mid-priced freshly-made tea store brands in China as of December 31, 2023, and this percentage grew to 40% as of September 30, 2024.
The great density of our stores in a geographical area allows us to benefit from economies of scale. For example, our dense store network significantly enhances our warehousing and logistics efficiency. For the three years ended December 31, 2023, the logistics cost for delivery from our warehouses to stores was less than 1% of our total GMV on average, whereas the industry average was around 2%. The improvements in warehousing and logistics efficiency can also be seen by comparing our own warehouses. In September 2024, we operated one warehouse each in Nanning and Taizhou, both second-tier cities, and the warehouse in Taizhou covered 123% more stores than the warehouse in Nanning. Our warehousing and logistics cost, on a per-store basis, for the stores covered by the Taizhou warehouse was 22% lower than the cost for stores covered by the Nanning warehouse. These cost savings are primarily due to the density of our stores and their proximity to our warehouses. As of September 30, 2024, approximately 76% of our stores are located within 150 kilometers of one of our warehouses. As a result, we can also provide cold-chain supply delivery to approximately 97% of our stores every two days upon request as of September 30, 2024. In comparison, other China’s freshly-made tea store brands generally provide delivery to stores every four days and often without the support of cold-chain supply delivery. Among the top 10 freshly-made tea store brands in China in terms of GMV in 2023, we are the only brand capable of frequent deliveries of short-shelf-life fresh fruits and fresh milk to stores in lower-tier cities. Substantially all beverages on our menu are made from short-shelf-life fresh fruits, tea leaves and/or fresh milk that are stored and distributed through our cold-chain warehousing and logistics infrastructure, which is the largest in the industry as of December 31, 2023.
We believe that the shared success of our franchisees is crucial for our business. In 2023, our franchisees’ per-store operating profit reached RMB376 thousand and franchisees’ per-store operating profit margin reached 20.2%, whereas the estimated per-store operating profit margin is generally in the low teens in the mid-priced freshly-made tea store market in China during the same period. The strong performance of our stores leads to franchisees’ strong willingness to open more “Good me” stores. As of September 30, 2024, among the franchisees that had operated “Good me” stores for over two years, each on average operated 2.9 stores and 71% operated two or more franchised stores. Sharing the perspective of longtermism, we have built close and enduring franchisee relationships. These relationships enable effective and efficient store operations and consistent high-quality product and service offerings, which further enhance consumer experience and improve store-level performance, thereby attracting more franchisees and solidifying franchisee relationships, forming a virtuous cycle.
Consistent with our slogan, “one cup a day, always enjoy it (每天一杯喝不膩),” we provide our consumers with a variety of product offerings of consistent quality. Leveraging our strong product development capabilities, we regularly launch new beverages to keep our offerings appealing. In 2023 and for the nine months ended September 30, 2024, we launched 130 and 85 beverages. While we frequently update our menu, we are capable of having tens of thousands of stores serve product offerings of consistent quality and taste, enabling “Good me” to become a popular brand among consumers. We have accumulated a loyal member base, including approximately 94 million and 135 million registered members on our mini programs as of December 31, 2023 and September 30, 2024, respectively, with over 36 million and over 43 million quarterly active members in the three months ended December 31, 2023 and September 30, 2024, respectively. In 2023, our average quarterly repurchase rate reached 53%, far exceeding the average of below 30% among mid-priced freshly-made tea store brands in China.
Our adaptive platform capabilities can empower tens of thousands of stores. In particular, we built the largest information technology team in China’s freshly-made tea beverage industry as of December 31, 2023. Empowered by our platform capabilities, we have concurrently expanded our extensive store network, achieved a track record of franchisee profitability, and provided diverse product offerings with consistently high quality. Moreover, our powerful platform capabilities, the enduring franchisee relationships and elevated consumer satisfaction reinforce each other. The diagram below illustrates the positive feedback loop.
Adaptive Platform
‧ More data feedback
‧ More talents
‧ More investments enabled by
larger scale
Enduring Franchisee Relationships
‧ Solid store network expansion
‧ Track record of franchisee profitability
‧ Consistently high-quality product offering
Excellent Consumer Satisfaction
‧ Better brand reputation
‧ Higher consumer repurchase rate
‧ Expanding consumer base
We generate revenue mainly from the sales of goods and equipment and the provision of services to our franchisees. We have experienced substantial growth during the Track Record Period. Our revenue increased by 26.8% from RMB4,383.9 million in 2021 to RMB5,559.2 million in 2022, and further increased by 38.1% to RMB7,675.7 million in 2023. Our revenue increased by 15.6% from RMB5,570.9 million in the nine months ended September 30, 2023 to RMB6,441.3 million in the same period in 2024. Our profit for the year was RMB24.0 million, RMB372.0 million and RMB1,096.4 million in 2021, 2022 and 2023, respectively. Our profit for the period was RMB1,002.0 million and RMB1,119.8 million in the nine months ended September 30, 2023 and 2024, respectively. Our adjusted profit (non-IFRS measure) was RMB769.6 million, RMB788.1 million and RMB1,459.0 million in 2021, 2022 and 2023, respectively, and was RMB1,044.5 million and RMB1,148.7 million in the nine months ended September 30, 2023 and 2024, respectively.
Source: Guming (01364) Prospectus (IPO Date : 2025/02/04) |