Life often feels like Sisyphus endlessly pushing a rock uphill, with every great struggle reflecting his indomitable spirit. In the myth, the gods believed there was no punishment more harrowing than ceaseless, hopeless labor. Yet Sisyphus was not broken—instead, his resolve grew stronger. His story reminds us that the antidote to nihilism lies in finding fulfillment through purpose.
Consider Prometheus, who defied Zeus by stealing fire from Mount Olympus to free humanity from darkness and cold. As punishment, he was chained to a cliff in the Caucasus, enduring daily torment. Despite this, Prometheus never surrendered, standing firm until Heracles set him free. His tale underscores a timeless truth: nothing can defeat a person who refuses to give up.
Greek mythology brims with heroic stories that resonate with modern life. These tales remind us that in the monotonous grind of work and routine, finding meaning comes from striving for excellence and injecting vitality into everyday moments. For dining enterprises, this could mean creating meals that not only nourish but also embody love and warmth—values that transcend mere sustenance to offer genuine connection and purpose.
On December 20, Xiaocaiyuan officially debuted on the Hong Kong Stock Exchange, marking a new chapter for China’s dining industry.
The listing reflects the evolution of Chinese dining enterprises through three distinct phases:
- Phase 1: Dominated by time-honored brands tied to regional cuisines and large-scale venues, often catering to tourists. These brands struggled to resonate with younger consumers as preferences shifted.
- Phase 2: Defined by internet-driven popularity, with brands like Haidilao and pickled fish chains gaining traction through trendy, niche offerings. However, limited innovation eventually capped their growth.
- Phase 3: Xiaocaiyuan represents this new phase—affordable Chinese dining brands focused on quality, efficiency, and standardized operations. Known for consistent taste, accessible pricing, and community-friendly spaces, Xiaocaiyuan is driving the modernization of Chinese cuisine.
Xiaocaiyuan’s listing is hailed as a milestone, boosting confidence in the dining sector. According to Frost & Sullivan, the company ranked first in customer spending among affordable Chinese dining brands in 2023, with a per-person ticket price of RMB 50–100 (USD 7–14).
As Xiaocaiyuan’s exclusive external investor, Full Vision Capital sees mass consumption as the cornerstone of China’s future economy. The firm believes Xiaocaiyuan embodies the philosophy of “providing better solutions for daily life enrichment,” as championed by Harvest Capital, another supporter of the brand.
“Hard work in serving Chinese food for the masses is a value deeply deserving of respect,” said Song Xiangqian, founder of Harvest Capital, in a 36Kr interview last year. “From nothing to something, from weak to strong, through numerous cycles and challenges comes a powerful state of flow.”
Xiaocaiyuan’s founder, Wang Shugao, epitomizes this resilience. Born into a farming family in Tongling, Anhui, Wang left school at 18 due to financial hardship. Starting with a modest 90-square-meter restaurant, he expanded to ten hotels by 2012. However, an ill-fated investment outside his hometown led to setbacks.
In 2013, determined to build an affordable dining brand, Wang conducted extensive research across Chengdu, Chongqing, and Hangzhou. His efforts culminated in the founding of Xiaocaiyuan, a company that has since become synonymous with affordable, high-quality Chinese dining.
Over the past decade, Wang and his team have showcased the perseverance and diligence that Anhui entrepreneurs are known for, transforming Xiaocaiyuan into an industry leader.
Making Chinese food accessible to the masses
Xiaocaiyuan’s successful IPO signals a timely response to evolving market trends. While China briefly experienced a surge in consumption upgrades in recent years, that momentum has slowed. The reality remains that although China has crossed into the threshold of high-income nations, individual purchasing power and disposable income are still limited, and effective demand remains constrained.
It is impossible to assess industries or microeconomic activity without considering the broader macroeconomic backdrop.
In interviews, Song, founder of Harvest Capital, observed that consumption upgrades and new consumer products will continue to emerge, but the trajectory will differ from before. The shift from a production-driven to a consumption-driven economy, he noted, will be a prolonged process—potentially taking even longer than Japan’s three-decade transformation.
Harvest Capital views this as the dawn of a new consumption era, where practicality and affordability are reshaping consumer expectations and industries alike. Affordable dining—marked by necessity, frequency, and extreme value for money—has become the focal point of this shift.
Globally, the dining industry thrives on industrialization. The US, for example, boasts over 60 publicly listed dining companies with billion-dollar market capitalizations. Brands like KFC and McDonald’s owe their success not just to taste, but also to their mastery of standardization and operational efficiency. In contrast, while France’s Michelin cuisine and Japan’s generational culinary traditions emphasize artistry, these approaches struggle to scale without modernization.
China’s dining market, valued at RMB 5 trillion (USD 700 billion), is yet to produce a globally recognized dining giant. However, a consensus is emerging: low-efficiency competition, driven by economies of scale and pricing, will gradually give way to productivity-driven growth. Modern, standardized Chinese dining brands are expected to capture greater market share.
According to Frost & Sullivan, Chinese dining represents 55% of China’s dining market, yet few brands have achieved full standardization. Consumer expectations are shifting toward affordable, healthy, fresh, and wok-fired meals, paired with consistent service nationwide. While hotpot remains the most standardized category within Chinese dining, Xiaocaiyuan is tackling these challenges head-on.
Unlike single-category dining brands often confined to malls, Xiaocaiyuan offers a broader range of dishes that cater to everyday meals, family gatherings, and celebratory occasions—all at higher value and greater affordability.
Affordability has been a cornerstone of Xiaocaiyuan’s strategy. From 2021 to the first eight months of 2024, its average in-store per-customer spending dropped from RMB 66.1 (USD 9.3) to RMB 59.5 (USD 8.3), well below Haidilao’s average ticket price of approximately RMB 100 (USD 14).
Harvest Capital has been instrumental in Xiaocaiyuan’s strategic growth. In 2022, a team of more than ten members stationed themselves in Tongling to help refine the company’s long-term strategy. Together, they identified key goals: focus on affordable Chinese dining and adapt to demographic trends such as family downsizing and an aging population.
Xiaocaiyuan’s mission is clear—to empower family kitchens by meeting high-frequency, essential dining needs. By offering value-driven meals that align with daily routines, the company is creating a sustainable business model anchored in strong repeat purchases.
Standardization is key
Xiaocaiyuan is carving a niche in the dining industry with its focus on “new Huizhou cuisine.” Guided by a founding team with deep culinary expertise, the brand prioritizes three pillars in its product innovation: a stable raw material supply, food safety, and standardized food preparation.
To ensure quality, Xiaocaiyuan sources raw materials directly from producers through standardized, large-scale procurement. For example, its rice comes from Wuchang in Liaoning, chicken from free-range farms in southern Anhui, water from Nongfu Spring, and non-GMO soybean oil from the Jinlongyu brand. Signature dishes such as Huizhou stinky mandarin fish are supplied directly from Anhui, with recipes refined through six months of testing. Another standout dish, country-style braised pork, features freshly sourced pork belly with a signature five-layer composition.
Xiaocaiyuan adapts its recipes regionally, adjusting fermentation times and seasoning to fit local palates. The menu changes quarterly to incorporate seasonal offerings, while staple dishes like Huizhou stinky mandarin fish maintain broad appeal through subtle regional variations.
In response to health-conscious dining trends, Xiaocaiyuan employs low-oil, low-salt cooking methods, limiting seasoning while delivering flavorful homestyle dishes. This approach has driven strong performance in markets across eastern China, with significant growth potential identified in northern regions. A Beijing-based dining consultant highlighted the brand’s widely accepted taste profile as a key factor in its expansion prospects.
Over time, Xiaocaiyuan refined its menu, narrowing it from nearly 100 items to about 60. This streamlining ensures that every dish aligns with the brand’s identity and meets market demand.
Xiaocaiyuan’s store design reinforces its brand identity. Standard outlets, typically 300 square meters, feature wood furniture and traditional Chinese architectural elements, creating a warm, welcoming atmosphere for diners.
While many brands are now targeting smaller cities, Xiaocaiyuan has already established a strong presence in these markets. Over half (53%) of its stores are located in second- and third-tier cities, where lower operating costs have translated into profitability. Between 2021 and the first eight months of 2024, profit margins ranged from 14.2% to 19.7%.
Xiaocaiyuan is also expanding into first-tier cities, with plans to operate over 1,000 stores by 2026. Its success in shopping malls has made it a popular choice for family gatherings, while its new community-oriented format, Caishou Canteen, addresses daily dining needs. Piloted in cities like Nanjing and Shanghai, the Caishou concept has been well received.
Xiaocaiyuan’s financial performance underscores its success. From 2021 to 2023, revenues grew from RMB 26.46 billion (USD 3.7 billion) to RMB 45.49 billion (USD 6.4 billion), marking a 41.6% year-over-year increase in 2023. Despite a slow recovery in China’s consumer market, revenue for the first eight months of 2024 rose by 15.44%, reaching RMB 35.44 billion (USD 5 billion).
With its focus on standardization, regional adaptability, and health-conscious innovation, Xiaocaiyuan is well-positioned to redefine the dining experience for China’s evolving consumer market.
Digitalizing supply chains, modernizing operations
In an economy increasingly shaped by competition for existing customers, only companies with efficient operations can thrive. Xiaocaiyuan, benchmarking against global leaders like Haidilao, McDonald’s, and Starbucks, has embraced standardization and scientific management as cornerstones of its high-quality growth strategy.
Xiaocaiyuan has developed a self-built supply chain network to ensure operational reliability and efficiency. This network includes a central factory, 14 warehouses nationwide, and a fleet of over 200 vehicles for logistics. The company is also incorporating automation, such as cooking robots, to streamline processes and cut costs.
In line with April 2024 guidelines from China’s Ministry of Commerce promoting digitalization in the dining industry, Xiaocaiyuan is leveraging IPO proceeds to enhance its digital infrastructure. These upgrades include a business intelligence and data analysis system, member management tools, and supply chain digitization. Harvest Capital played a role in developing these systems and Xiaocaiyuan’s five-year growth plan.
Xiaocaiyuan places a strong emphasis on talent development. Its internal promotion system has enabled regional managers, store managers, and head chefs to rise through the ranks, with grassroots employees comprising over 90% of the company’s shareholders. Founder Wang and other executives frequently work onsite, fostering a culture of humility and dedication.
The company’s mentor-apprentice program strengthens relationships among employees, pairing experienced workers with new hires to instill a sense of belonging and shared purpose. This approach has been integral to Xiaocaiyuan’s long-term stability and employee retention.
In addition to its focus on operational efficiency, Xiaocaiyuan is expanding into new areas, including delivery and retail. By 2024, delivery accounted for 37% of the company’s revenue, up significantly from 15.5% in 2021. Xiaocaiyuan is also exploring growth opportunities in selling premium food ingredients, further diversifying its revenue streams and broadening its market reach.
Xiaocaiyuan’s success lies in its ability to balance passion with method. Unlike earlier Chinese dining IPOs, which often faltered due to insufficient modernization, Xiaocaiyuan has embraced standardization, technological innovation, and a people-centric approach. The result is a blueprint for future Chinese dining enterprises.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by 36Kr VClub.