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In the battle of Chinese restaurants, which one wins?

29 Mar 2022

We put Haidilao, Tai Er Sauerkraut Fish and Tamjai Samgor to the battle to see which one stands out - for our next meal and investment idea.

In the battle of Chinese restaurants, which one wins?

TL;DR

  • Haidilao, Tai Er Sauerkraut and TamJai Samgor are popular restaurants for those looking for a hearty Chinese meal.
  • As investors trying to understand their operations, we can look at metrics such as table turns, average customer spending and customer reviews.
  • Haidilao has the highest average customer spending and best customer reviews, but lags the other two in table turnover.
  • The share prices of these restaurant stocks have fallen due to the pandemic, and Beansprout will await a stabilisation of the Covid situation in China and Hong Kong before investing in these names.

What happened?

In recent years, Singapore has seen Chinese cuisine eateries flourishing and gaining popularity among the local consumers. From the fiery spicy hot Sichuan food to the North Eastern food (Dongbei food), Singaporeans have been quick to embrace these restaurants that have emerged on our shores.

Did you know that there are investment insights that can arise as we indulge in the food?

Haidailao (6862 HK)

This hotpot chain needs no introduction and is the most recognizable restaurant brand around. Originating from Sichuan, Haidilao now has 1,597 outlets globally. Who can forget their unparalleled services like manicure services and unlimited free flow of snacks while you queue for hours? Perhaps the go-to place when you have a strong craving for hotpot and do not mind queuing with friends.

HDL.jpgSource: Haidilao

Tai Er Sauerkraut Fish (9922 HK)

The newcomer to the local dining scene has just opened up its 1st outlet in Jewel Changi in 2021. True to its Sichuan origins, it is serving up its signature Sauerkraut Fish (sour vegetable fish) and Poached Sliced Beef in Hot Chilli. Owned by Jiumaojiu International (9922 HK), this chain already has 285 outlets in China since it started in 2015. This is a strong testament of its popularity among the Chinese consumers.

Personal favourite dish? Still the Sauerkraut Fish which goes incredibly well with a bowl of fragrant white rice!

Tai-Er-1920x750-1.jpgSource: Tai Er Sauerkraut Fish

TamJai Samgor (2217 HK)

Fancy something less spicy Chinese food or prefer non Sichuan cuisine? Here comes TamJai Samgor, a quick service restaurant renowned for its Yunnan vermicelli (mixian). Owned by Tam Jai International (2217 HK), this restaurant chain was founded in Hong Kong where it has the bulk of its outlets. It currently has three outlets in Singapore.

Eating in a quick service restaurant means a lot of DIY (yes, you’d have to scan the QR code and order yourself). However, this also means you don’t have to wait too long for your food. The special dish here might be the Mixian in Wu La Soup, which is a tad different from the Mala soup elsewhere. We recommend adding fish balls to your Mixian, and to have it with a glass of HK Style Milk Tea!

Tamjaisamgor_logo_540_360new.jpgSource: Tamjai Samgor

Battle of the three restaurant chains

All 3 restaurants above are owned by publicly listed companies in Hong Kong. Beansprout would look at several things when investing in restaurant chains.

  • Table turnover (or how many parties can a table serve daily)

A must look-at indicator. This simply means how many different parties a table serves on average daily. The more customers the restaurant is able to serve, the more money it will be able to make. There is a reason why restaurants do not want you to hang around too long after you finish your food.

Samgor seems to fare the best in terms of table turns, which is logical given they are more of a quick service restaurant compared to the other two.

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  • Average spending per customer

A customer spending $100 during his visit to the restaurant is definitely more valuable and profitable than a customer spending $10, ordering snacks and a canned drink. After all, they still occupy the seat and the cost of servicing the customers would be pretty similar.

Haidilao scores the highest when it comes to customer average spending. Higher spending per customer can be driven by various reasons such as a more premium positioning to justify higher pricing. Or the food is so yummy that we just order a lot more! In any case, this is a positive for the restaurant operator.

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(c) Review Scoring

Beansprout looks at the review scores and Facebook likes as a gauge of the restaurant’s popularity from the consumers’ viewpoint. Overall, the best (or worst) type of advertisement would be someone recommending or complaining about the restaurants.

Haidilao is a clear winner in terms of customer reviews and followers, as it has a longer presence in Singapore and more outlets than Tai Er and Samgor. I wouldn’t write Tai Er off completely given they are very new to Singapore consumers.

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What would Beansprout do?

  • The share prices of all three restaurant names have fallen as the pandemic dampened consumers’ demand for dining out. Haidilao has seen a plunge in its share price from above HK$80 at its peak in early 2021 to just about HK$14 now.
  • On operational metrics, Haidilao has the highest average customer spending and best customer reviews, but lags the other two in table turnover.
  • The outlook for these restaurant stocks has worsened with the recent spike in Covid-19 cases in China and Hong Kong, where the companies have the bulk of their outlets.
  • Beansprout would await a stabilisation in the Covid-19 situation in China and Hong Kong before thinking about investing in these stocks. In the meantime, we would enjoy a nice meal out at one of these restaurants. Hopefully the queue wouldn’t be too long!

Looking for a restaurant to go to for your post re-opening celebration? Do also check out our article on stocks that could benefit from Singapore’s re-opening.

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