In-Depth Analysis of the Reasons for the Decline in Per-Store GMV of Yuanji Yunjiao

Based on data from Yuanji Yunjiao’s IPO prospectus and industry research reports:

Indicator	2023	2024	First Three Quarters of 2025	Trend
Total Number of Stores	1,990 stores	-	4,266 stores	114.4% growth in two and a half years
Store GMV Growth Rate	-	30.9%	6.4%	Plummeted by 24.5 percentage points
Average Daily Per-Store GMV	-	Approximately RMB 4,300	-	Lower than leading industry levels
Revenue Growth Rate	-	26.4%	11.0%	Significantly slowed
Net Profit	RMB 167 million	RMB 142 million	-	Decreased by 15.0%

Yuanji Yunjiao’s store GMV growth rate plummeted from 30.9% to 6.4% in 2025, showing significant diminishing marginal returns [1][2].

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Yuanji Yunjiao adopts a “scale-first” strategy, with the number of stores surging from 1,990 at the beginning of 2023 to 4,266 as of September 2025, representing a 114.4% growth in two and a half years, with a compound annual growth rate of 44.7% [1][3]. However, rapid expansion has led to:

• Dilution Effect
  : New stores divert customer traffic from existing stores, especially as increased store density in the same region intensifies same-store competition
• Diminishing Marginal Returns
  : Early stores were mostly located in core business districts of high-tier cities with high per-store output; later expansion to low-tier cities and secondary business districts naturally reduced per-store GMV
• Expanded Management Radius
  : After the rapid expansion of the store network, the headquarters’ ability to provide operational guidance, supervision, and empowerment to individual stores has relatively weakened

Changes in the city-level layout of stores directly affect per-store GMV performance:

City Tier	2023 Share	2025 Share	Change
First-Tier Cities	58.1%	51.0%	Decreased by 7.1 percentage points
Second-Tier Cities	-	22.4%	-
Third-Tier and Below	19.8%	26.6%	Increased by 6.8 percentage points [1][4]

Low-tier city consumers:

• Relatively lower purchasing power, limiting customer unit price
• Higher price sensitivity, with promotional discounts eroding GMV
• Consumption frequency may be lower than in high-tier cities

In 2025, China’s catering industry revenue reached RMB 5.7 trillion, and industry competition has entered a white-hot stage [5]:

• Crowded Track
  : The dumpling and wonton category has relatively low entry barriers, leading to severe homogeneous competition
• Pressure from Leading Enterprises
  : The average daily per-store GMV of leading Chinese fast food enterprises reaches RMB 6,000-8,000, and Yuanji Yunjiao’s per-store output of approximately RMB 4,300 has an obvious gap [1]
• Price War Pressure
  : Intensified industry competition has forced various brands to maintain customer flow through preferential promotions

Over 95% of Yuanji Yunjiao’s stores are franchise stores, and this model brings multiple problems:

Issue	Specific Performance
Inconsistent service standards	Franchise stores vary in service attitude, product quality, and store maintenance
Differences in operational efficiency	Some franchisees lack operational capabilities, resulting in lower per-store output than direct-operated stores
Brand consistency risks	Under rapid expansion, some stores may damage the brand image and affect consumers’ repurchase willingness
Rising management costs	In 2024, the management expense ratio under the franchise model reached 9.3%, higher than the 5-7% of the direct-operated model [1]

Financial Indicator	2023	2024	Change
Gross Profit Margin	25.9%	23.0%	Decreased by 2.9 percentage points
Raw Material Cost Ratio	86.4%	87.5%	Increased by 1.1 percentage points
Net Profit Margin	8.2%	5.5%	Decreased by 2.7 percentage points

The raw material cost ratio is 85.9%, higher than the industry average of 80-82% [1]:

• Fluctuations in prices of core raw materials such as pork have a significant impact
• Supply chain costs rise with store expansion
• Scale effects have not been effectively transmitted to the cost side

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In terms of the number of stores, Yuanji Yunjiao has become the largest Chinese fast food enterprise in China and even the world, but its profitability lags behind peers:

Comparison Dimension	Yuanji Yunjiao	Leading Industry Enterprises
Average Daily Per-Store GMV	Approximately RMB 4,300	RMB 6,000-8,000
Adjusted Net Profit Margin	7.0%	10-15%
Management Expense Ratio	9.3%	5-7% (direct-operated model)
Raw Material Cost Ratio	85.9%	80-82%

This reflects Yuanji Yunjiao’s awkward situation of “leading in scale but lagging in profitability” [1].

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The decline in Yuanji Yunjiao’s per-store GMV is the result of multiple overlapping factors:

1. Dilution of per-store output from rapid expansion
   : Double-digit growth in the number of stores has intensified competition in the same region
2. Lowered average from sinking market
   : Increased share of low-tier cities affects overall customer unit price
3. Fierce competition
   : The catering industry has entered the stage of stock competition, and price war pressure continues
4. Franchise management challenges
   : The management difficulty of 95% franchise stores leads to uneven operational efficiency of individual stores
5. Cost pressure transmission
   : High raw material cost ratio puts pressure on gross profit margin

• Measures to improve per-store profitability
• Effects of supply chain integration and cost optimization
• Expansion progress of retail business (Yuanji Weixiang)
• Incremental contributions from overseas markets

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[1] Sina Finance - “In-Depth Interpretation of Yuanji Yunjiao’s IPO: Expansion Hidden Worries and Related Transaction Risks Behind the 15% Decline in Net Profit” (https://finance.sina.cn/2026-01-13/detail-inhhchmx6169256.d.html)

[2] Viewpoint Network - “Yuanji Food Group Submits Listing Application to Hong Kong Stock Exchange, Becoming the First Mainland Catering Supply Chain Enterprise in 2025” (http://www.unbank.info/static/pages/2064/413260.html)

[3] 36Kr - “Yuanji Yunjiao Challenges Hong Kong IPO: Over 95% of Stores are Franchise Stores” (https://m.36kr.com/p/3636531115901954)

[4] Guancha.cn - “Turning ‘Hand-Made Fresh Wrapping’ into a RMB 2.5 Billion Business, Yuanji Yunjiao’s Parent Company Plans to List in Hong Kong” (https://www.guancha.cn/economy/2026_01_14_803744.shtml)

[5] iiMedia Research - “Battle in the Trillion-Yuan Catering Red Sea: Yuanji’s Frenzied Rush to IPO, Firing the First Shot of the ‘Efficiency Revolution’ in Chinese Fast Food” (https://www.iimedia.cn/c1086/108811.html)