New Stock Outlook | Will Bano be able to overcome the hurdle of scale expansion when submitting documents to the Hong Kong Stock Exchange for the third time?

Over the past decade, from HAIDILAO expanding nationwide by establishing a service myth, to Luckin Coffee reshaping the coffee market through digitalization, to a wave of regional restaurant brands accelerating their national expansion in recent years, the focus of the capital market on consumer companies has always revolved around a core question: can a restaurant enterprise truly cross the boundaries of regional branding and grow into a national consumer brand. Now, the Henan-based Banu Hotpot is attempting to answer this question. Recently, Banu International Holdings Limited submitted an application for listing with the Hong Kong Stock Exchange. Compared to HAIDILAO, which built brand awareness through exceptional service, Banu has adhered to a long-term "product-oriented" strategy. Against the backdrop of the Chinese restaurant industry shifting from competition based on traffic to competition based on products, this differentiated positioning has helped Banu transition from a regional brand to a national chain. It is worth noting that this is Banu Hotpot's third attempt at IPO after two previous unsuccessful filings. In the current context of pressures on the consumer market and a rational return, Banu's decision to "battle" for an IPO at this time undoubtedly puts itself under the spotlight, subjecting itself to a comprehensive examination of its profitability, compliance level, and long-term growth resilience by the market. From product orientation to national expansion, how does Banu build its differentiation? Looking at Banu's development trajectory, to some extent, it reflects the changing competition logic of the Chinese hotpot industry. In the early stages of competition in the hotpot industry, it mainly revolved around expanding scale, then entered the era of service competition, and in recent years, with consumers paying more attention to product quality and value for money, the focus of industry competition has returned to ingredients and the products themselves. Banu has risen in this trend. In terms of business model, Banu is a typical direct-operated hotpot enterprise. As of the last practicable date, all 200 of the company's stores are operated under a direct-operated model, with no franchising system. This model sacrifices some speed of expansion but ensures brand standardization and food safety management capability. In fact, this is an important feature that sets Banu apart from many regional hotpot brands. For the restaurant industry, a franchising model can lead to rapid scale-up, but at the same time, it can bring about issues such as unstable product quality and increased brand management difficulty. Particularly in the high-quality hotpot competition track, consumers have higher demands for ingredient sources, product consistency, and service experience. In this scenario, a direct-operated system can effectively safeguard the brand's tone. It is understood that to support the expansion of the direct-operated system, the company has continued to increase investment in the supply chain in recent years. According to the prospectus, as of the last practicable date, Banu had established five central kitchens and one base ingredient processing factory, with business networks covering 14 provincial-level regions nationwide. Among them, the central kitchens handle functions such as ingredient pre-processing, product processing, and logistics distribution, enabling the company to achieve standardized supply nationwide. This system enables Banu to have cross-regional replicability, laying the foundation for national expansion by building the supply chain network in advance. In terms of store structure, the company's focus has not been on first-tier cities but on second-tier and below markets. As of the last practicable date, 160 of the company's stores were located in second-tier and below cities, accounting for 80% of the total number of stores. This layout aligns with the changing trend in the Chinese consumer market in recent years. In the past few years, competition in first-tier city restaurants has become saturated, while the income levels of residents in second-tier and below cities continue to rise, leading to a constant release of consumption upgrade demands. At the same time, the rental and labor costs in these cities are relatively low, allowing restaurants to obtain higher profitability. According to the prospectus data, the operating profit margin in first-tier cities for the company in 2025 is 22.5%, while in second-tier and below cities, it reaches 25.6%. In terms of market space, the high-quality hotpot market is still in the growth stage. According to Frost & Sullivan data, the size of the Chinese high-quality hotpot market has increased from 513 billion yuan in 2020 to 787 billion yuan in 2025, and is expected to maintain a compound annual growth rate of 6.7% from 2025 to 2030. Compared to the overall hotpot market, the high-quality hotpot market has a significantly higher growth rate. At the same time, as of 2025, the market share of the top five enterprises in the Chinese hotpot market is only 7.9%, and the market share of the top five brands in the high-quality hotpot market is only 9.1%. This decentralized structure means that leading enterprises still have a large room for consolidation. In terms of industry development logic, the future competition in the hotpot industry may become more similar to the existing trends in the freshly brewed tea and coffee industries, with continued emphasis on branding, chain operations, and enhanced supply chain integration. In this process, enterprises with brand advantages and supply chain capabilities are expected to gain more market share. For Banu, its current major competitive advantage lies in its leading position in high-quality hotpot and its direct-operated operational system. After breaking the 2.8 billion yuan revenue mark, how can Banu continue to grow? If the brand story determines whether a company can attract market attention, then financial performance determines what kind of valuation the capital market is willing to give. It is understood that, from 2023 to 2025, the company's revenues were 21.12 billion yuan, 23.07 billion yuan, and 28.46 billion yuan, with a 23.4% year-on-year revenue growth in 2025; during the same period, the company's net profits reached 102 million yuan, 123 million yuan, and 206 million yuan. Net profit in 2025 increased by about 67% year-on-year. Looking at the changes in profit margins, the net profit margin of the company increased from 4.8% in 2023 to 7.2% in 2025, indicating a continuous improvement in profit quality. This improvement mainly comes from two aspects: Firstly, the improvement in store operational efficiency, from 3.1 turnovers in 2023 to 3.6 turnovers in 2025 for the entire company. For a hotpot enterprise, the turnover rate directly determines the output capacity per unit area. An increase in turnover rate means that the same store area generates more income, while rent and fixed labor costs are further diluted. Secondly, the gradual release of the scale effects of the supply chain, as the number of stores increases, the company's purchasing scale continues to expand, enhancing its negotiating power with upstream suppliers. At the same time, the increased utilization of central kitchens and logistics systems also brings cost optimization effects. However, when further dissecting the revenue structure, the company's revenue growth currently relies to a large extent on store expansion. As of the end of 2023, 2024, and 2025, the company had 111, 144, and 180 stores respectively. With almost 70 new stores added in three years, income growth was about 35% during the same period. In other words, the company's current growth model is primarily driven by store openings. For restaurant enterprises, this is not necessarily a bad thing, but it implies that the sustainability of future growth largely depends on whether the speed of store expansion can be maintained. In terms of same-store sales performance, in 2024, the company experienced a 9.9% year-on-year decrease in same-store sales. Even though it rebounded to a 4.8% growth in 2025, the overall performance still reflects the pressures brought about by changes in the consumption environment. From the data, the average consumer spending level has been continuously declining. During the reporting period, the average consumer spending per customer decreased from 150 yuan to 142 yuan, and further down to 139 yuan, reflecting the trend towards rationalization in the entire restaurant industry. In recent years, consumers have shown a higher sensitivity to prices. Even the middle to high-end consumer groups have started to pay more attention to product value for money. For brands like Banu, although there is brand premium, it is not unlimited. Therefore, the company faces a delicate balance in the future. If prices continue to rise, it may affect customer traffic growth; if prices remain stable, the company will need to rely on turnover rates and store expansion to drive revenue growth. Furthermore, although the direct-operated model ensures quality, it also means higher capital expenditure pressure. Compared to franchising brands, for each direct-operated store opened, the company needs to bear expenses for decoration, equipment, manpower, and operational funding. As the number of stores surpasses 200, the complexity of organizational management will also increase synchronously. In fact, the restaurant industry has seen many excellent brands face challenges during rapid expansion phases. As a company's scale grows from dozens of stores to hundreds of stores, the founder-driven model gradually becomes less effective, and the importance of talent development, regional management, and digital operations quickly rises. If expansion speed exceeds the boundaries of organizational capacity, the risk of declining store operational quality will increase accordingly. At the same time, competition in the industry is becoming increasingly fierce. In the national market, the company needs to face continuous competition from top brands like HAIDILAO; in regional markets, it needs to deal with numerous local hotpot brands vying for consumers. With relatively low barriers to entry in the hotpot industry, new brands continue to emerge, maintaining a high-intensity competitive market environment. It is worth noting that the valuation logic of the capital market for restaurant enterprises has changed in recent years. While the market used to focus more on the growth of the number of stores, it now increasingly emphasizes same-store growth, cash flow quality, and supply chain capabilities. For Banu, its future valuation level not only depends on the speed of store openings but also on its ability to continuously improve the operational efficiency and profitability of each store. Overall, Banu has shown the potential to become a national restaurant brand, with its product-oriented positioning, direct-operated operation system, and supply chain capability forming strong competitive barriers. The continuous expansion of the high-quality hotpot market also provides room for the company's growth. However, on the other hand, the company is still in an expansion cycle, with revenue growth relying largely on store-driven expansion. The decrease in average consumer spending reflects pressures from changes in consumption environment, and the management challenges brought about by the direct-operated model will become increasingly evident as the scale grows. Looking back at the IPO milestone, Banu has completed its transformation from a regional brand to a national chain brand. Standing at a new starting point in the capital market, what truly determines its long-term value may no longer be just the tripe and mushroom soup itself, but whether it can continuously transform its product advantages into organizational capacity and operational efficiency advantages. As the hotpot industry enters an era of quality competition, this balancing test between scale and quality, growth and profitability has just begun.