Aug. 21 (NBD) -- Quanjude, one of China's most renowned Peking duck restaurant chains and once a catering service provider during the 2008 Beijing Olympics, seems to have its glory fading away in recent years. 

From the interim results for H1 2019 released late Monday, National Business Daily (NBD) noticed China Quanjude (Group) Co., Ltd (Quanjude, 002186.SZ), the first listed roast duck company, has lost nearly 6.6 billion yuan (924 million U.S. dollars) in its market capitalization from the peak in mid 2015, based on the closing price of 10.58 yuan per share.

Photo/Shetuwang

Net profit plunged by 58.51 pct YOY

In the latest financial report, Quanjude's revenue plunged by 13.43 percent to 758 million yuan from the year-ago period while the company's net profit attributable to shareholders saw a sharper decline of 58.51 percent to 32.28 million yuan, representing the weakest performance in all its interim results since 2008. 

Once the synonym of roast duck in China, Quanjude almost has not seen any growth in its revenue and net profit in recent 5 years, according to financial data collector Wind.

In the annual financial report for 2018, the company reported the revenue of 1.78 billion yuan, representing a decline of 4.48 percent from the previous year and net profit attributable to shareholders decreased by 46.29 percent to 73.04 million yuan.

NBD also found that the number of chain restaurants of the 155-year-old brand reduced by five during the reporting period from last 2018. 

Moreover, institutional investors started to unload stakes in the Peking duck company. According to data compiled by Wind, 5 fund management firms and 2 Qualified Foreign Institutional Investors (QFII) held stakes in Quanjude at the end of 2018, but only the two QFIIs retain holdings with one from Quanjude's second largest shareholder IDG Capital.  

Operating model faces challenges

Quanjude attributed the steep fall in net profits for both H1 2019 and 2018 to the decrease in the number of customers caused by intensifying competition in the catering industry.

However, escalating competition may not be the sole explanation for the legendary food brand's falling financial earnings.

"The nature of Quanjude brand has transformed from a China time-honored brand to the representative of Beijing travel and most of its customers are tour groups now, thus decreasing the average transaction," noted industry insider Zhu Danpeng to media outlet Caijing, "The key reason for its business predicament is its operating model which is losing its appeal to the youngsters."

Speaking of the operating model, Zhu was pointing at the high price and services without improved consumption scenario.

"In Beijing, Quanjude is not the only choice to have roast duck. There are many restaurants that serve cheaper food and better service," said a 25-year-old Beijinger to NBD.

As the North China region including Beijing contributed 99.31 percent to the total revenue of Quanjude for H1 2019, it's important for the company to compete in the roast dust market in the capital.

The company once seek the Internet solutions for its operation via the establishment of its online ordering platform Xiaoyage with another two internet companies in 2015. However, Xiaoyage reported its loss of 13.44 million yuan in 2016 and 2.44 million yuan in early 2017 before it ceased operation in April 2017.

 

Email: gaohan@nbd.com.cn

Editor: Yu Peiying