Little Swan: copy McDonald's real estate model is not easy

Whether the Chinese restaurant industry can replicate the McDonald's real estate model, just as if Chinese food can be used as a fast food chain, is a very interesting issue.

Whoever eats food for the heavens needs to create a McDonald's? Perhaps catering and real estate can allow companies to go faster.

McDonald's became the index stock in the Standard & Poor's 500, not just relying on it to buy hundreds of millions of hamburgers each year. Most of its assets come from its large real estate kingdom. Just like Ray Krock, the founder of McDonald's Kingdom, said, "Actually, I don't do hamburger business. My real business is real estate."

Chongqing Little Swan Investment Holdings (Group) Co., Ltd. (Little Swan), which has already opened more than 300 chain stores across the country, also jumped from the catering industry to the real estate industry. Whether the Chinese restaurant industry can replicate the McDonald's real estate model, just as if Chinese food can be made into a fast food chain, is a very interesting issue.

Swan Transformation

"For Little Swan Group, the hot pot chain industry is always our foundation, but real estate projects can bring us higher profits and bring more solid support for the catering industry." He Yongzhi said.

He Yongzhi, president of Little Swan Group, is the famous “Hotpot Queen” in Chongqing. He Yongzhi and her husband Liao Changguang have already entered the "Forbes" China Rich List.

The Hongyadong Leisure Commercial Real Estate project developed by He Yongzhi is located on the bank of the Jialing River in Chongqing, just a 5-minute drive from Chongqing’s bustling Jiefangbei. It takes the traditional folk houses of Batu as its architectural style, reproduces the old Chongqing Diaojiaolou Group and the courtyard houses, and its functions are mainly featured restaurants and business and leisure.

"My goal is to create 'Chongqing Xintiandi'. I have put my 20-year struggle on this fight." He Yongzhi said that in this project Little Swan invested 300 million yuan, so far has three points. One of the properties sold, with a return on investment of more than 100 million yuan; about one-third of the self-operated portion is also in preparation. It will build a four-star Little Swan Hotel, a new generation of Little Swan Hot Pot, a Dream Theater, and leisure restaurants. Bars, etc.; The remaining one-third of the property's leasing work is in progress.

Emboldened

He Yongzhi moved into real estate from catering because its hot pot industry has formed a reservoir of cash flow.

The Little Swan chain hot pot restaurant has opened more than 300 stores across the country. The average monthly sales of each shop is around 400,000 to 600,000 yuan. Which franchise accounted for about 70% of the total number of stores. In 2005, the total sales of Chongqing Little Swan National Hotpot Chain Store reached 1.5 billion yuan. He Yongzhi took out a net profit of more than 20 million yuan from the hot pot every year, and the franchise profit was not counted.

He Yongzhi said that at present, her hot pot industry has entered a virtuous circle. At present, Little Swan is still continuing the form of franchise stores, of which about 90% of franchise stores have realized profits, each year at a rate of 30 to 60 franchise stores. As the world continues to increase, He Yongzhi predicts that the national Little Swan hot pot chain will expand to around 500 within five years.

Although hotpot companies have fewer annual turnover than specialty restaurants in terms of asset efficiency, the average asset profit margin of specialty restaurant companies is 27.88%, and the average asset profit margin of hotpot companies reaches 54.71%. The return on capital is relatively large. It is the closest Western-style fast food such as McDonald's.

However, He Yongzhi believes that the profitability of the catering industry is stable, but it is always limited by the profit and scale of the catering industry. To make it big, real estate is a shortcut to the current Little Swan. The stable cash flow in the catering industry is now a reservoir for her to enter real estate. She hopes that in the next three years, the Little Swan Group’s listing goals can be achieved. It can be seen that the development of real estate is an important part of the success of the Little Swan who needs to grow.

Real estate ambition

It is not the first time for Little Swan to get the most benefits from real estate.

As early as 1996, Little Swan opened the first private three-star hotel in Chongqing - Little Swan Hotel. Then it happened to catch up with the large amount of business and political activities brought by the municipality of Chongqing in 1997. He Yongzhi recalled that the Little Swan Hotel had realized profits in the year when it was opened, which was equivalent to the sum of profits of the Little Swan pot in the past 10 years.

He Yongzhi said, “Into real estate is also a matter of coincidence, because at first we Little Swan was to open the store to run the store, but the owner often will substantially increase the rent and even recover the store, so we later converted to buy their own store.”

He Yongzhi studied McDonald's and other foreign food and beverage companies and found that its main source of profit was not hamburgers but real estate. McDonald's headquarters did not basically run fast food businesses. The hamburgers selling franchise were included in the McDonald's system. Things. What McDonald's headquarters has done more is to ponder which area is where the city will have the most people in the future.

McDonald's usually buys stores after carefully selecting a site. The hot business will inevitably increase the value of the property, and then sell or lease the property at a suitable time to obtain high profits. Of course, it can also operate on a permanent basis.

For the future profits of Little Swan, He Yongzhi’s greater ambition is in real estate. According to her conservative estimate, the profit time limit for the Hongyadong Folk Culture Street will be three years, and the profit will be more than three times the annual profit of Little Swan.

However, McDonald's brand is still fast food "McDonald's", and did not launch a real estate brand, McDonald's brand and its real estate seamless. Can Little Swan copy McDonald's experience? Can the Little Swan's platform bring its real estate to a new height? At least for the moment, Little Swan's catering and real estate are just parallel to each other.