Jiumaojiu International Holdings Ltd. plans to open around 100 new locations of its Tai Er restaurants in China this year, along with about 20 new locations overseas, a year after the operator opened 134 new Tai Er outlets around the globe.
Tai Er chain, which specializes in pickled fish dishes, operated 450 restaurants as of 31 December 31 2022, but that number jumped to 578 as of 31 December 2023. The primary reason for this year’s further expansion plans, according to the company, is that revenue from Tai Er restaurants jumped 44 percent year over year to CNY 4.47 billion (USD 625 million, EUR 581 million) in 2023. Tai Er's parent company credited the growth to post-pandemic restaurant reopenings. Jiumaojiu's total profit in 2023 soared by 763 percent year over year to CNY 480 million (USD 67.2 million, EUR 62.4 million).
New Tai Er locations are slated for North America, Southeast Asia, Oceania, and other parts of the world with large Chinese communities. It already operates outlets in the U.S., Canada, Malaysia, Singapore, and Thailand.
Some of Tai Er’s growth appears to stem from a strategy of targeting the middle tier of the consumer market. This approach includes targeting younger consumers through such brands as Song Hot Pot and Lai Mei Li Grilled Fish, the latter of which serves grilled fish dishes in sour soup. A new chain Jiumaojiu launched this year, Shandeshanwaimian Suantang Hot Pot, serves Guizhou-style hot pot dishes.
China’s high-end seafood restaurants, on the other hand, have been struggling in a stagnating economy. Commerce International Merchant Bankers Berhad (CIMB), a Kuala Lumpur, Malaysia-based bank, has projected a drop in 2024 earnings for high-end seafood chain JUMBO Group, which recorded a solid 2023 but which recently announced plans to close one of its Chinese restaurants in the central Chinese city of Xi’an.
CIMB blames “consumption softness” in mainland China for a projected 2 percent slide in JUMBO’s revenues in 2024 before the company’s Chinese operations are expected to return to growth in 2025. However, even that 2025 growth projection is tenuous, as JUMBO faces “prolonged consumption weakness in China, outlet closures, and recessionary fears spurring consumer downtrading behavior," CIMB said.
China's economic stagnation has pushed restaurant companies like Jiumaojiu and JUMBO to look abroad when considering expansion, according to CIMB. CIMB projected that revenue growth in Singapore this year will make up for JUMBO’s weaker China sales, predicting a 7 percent year-over-year rise in revenue at the operator’s Singaporean operations due to more Chinese tourists returning post-Covid.
While the middle of the market has been less affected than the higher end, Jiumaojiu is also being forced to cut prices to draw customers. In its 2023 results, the operator said a decrease in average spending per customer at Tai Er and Song Hot Pot in mainland China “was a result of the group’s adjustment to menu offerings and food prices, taking into account both internal and external factors such as the market condition and the competitive landscape in the industry.”
The company has also run into corporate governance issues that have put a speed bump on its path toward further growth. Several revelations of issues, including unapproved loans and investments, caused Jiumaojiu’s stock price to plummet at the end of 2023. As a result, the firm could have issues raising capital to finance its expansion.
