Blue Whale Finance journalist Zhang Jinglun
Recently, "Day Cooking" (hereinafter referred to as "Day Cooking") announced an acquisition agreement with the American Thai food brand Yais Thai, marking the company's second acquisition in the US market.
Norma Chu, founder and CEO of Nippon Cooking, said, "The addition of Yai's Thai is very important for the Nippon Cooking DayDayCook brand family. It has expanded our business in core food retailers and raised awareness among American consumers about Nippon Cooking's DayCook products."
Jiang Han, a senior researcher at Pangu Think Tank, told Blue Whale Finance reporters that the acquisition of American Thai food brand Yai's Thai by RiRiRikuo will help it expand its business in the US market, increase its visibility and market share, and demonstrate the company's emphasis on overseas markets and strategic layout.
It is worth mentioning that Nippon Paint completed a total of 8 acquisitions from 2022 to 2023. From self media startups to food bloggers starting businesses, can RiRiRi Cui, which frequently acquires new brands, successfully tell another myth of traffic monetization?
Seize the market through acquisitions
Daily cooking can be regarded as one of the earliest "food self media" in China.
In 2012, Zhu Jiaying, the founder of RiRizhao Cooking, uploaded his first self food making video on the website. Due to the good quality of the content, it quickly attracted a large number of fans. Subsequently, RiRi Ri Kuo successively opened accounts on YouTube, Facebook, and Instagram platforms, accumulating the first batch of traffic.
In 2015, Ri Ri Cui officially entered the mainland Chinese market and launched content placements on platforms such as Youku, Tencent Video, and Sina Weibo, becoming a well-known KOL in the food industry. In 2017, RiRiRi Cui opened the first offline food experience hall in mainland China at K11 in Shanghai, providing catering education and selling kitchenware, tableware, and semi-finished ingredient packages.
After going through the stage of starting with online communities and combining content e-commerce with offline experience stores, Ri Ri Cui launched its own brand business in 2019. At present, the three major brands of Ri Ri Zhu in China are Ri Ri Zhu, Yu Jia Weng, and Meng Wei. Among them, Ridaiku has developed more than 100 SKUs in total, and the reach channels are online Tiktok, Kwai, Tmall, JD and other platforms; Fisherman Weng specializes in flavored seafood such as scallops and deep-sea fish, as well as instant flavored fish paste snacks; Mengwei specializes in self heating and fast food such as hot pot, self heating rice, and fast food. According to the prospectus data, in 2022 alone, the company has established partnerships with 709 distributors to continue expanding its offline retail sales network.
In order to continue expanding in overseas markets, better expand market channels, and increase revenue sources, Ri Ri Cui completed four acquisitions in 2022, and has completed four more acquisitions since 2023, including the acquisition of all equity in four Pinduoduo online stores, as well as the Asian food brand "Nona Lim" located in San Francisco, USA.
Frequent acquisitions have also led to increasing financial pressure on the company. According to the prospectus, in 2022, the total assets of RiRiRi Cook were 250 million yuan, total liabilities were 374 million yuan, and the asset liability ratio was as high as 146.59%. In the first quarter of 2023, the daily cash and cash equivalents were only about 18.1 million yuan, while short-term bank loans reached 58.299 million yuan, and the asset liability ratio reached 149.70%.
Industry insiders say that acquisitions can quickly grow and improve one's product line, but they cannot fundamentally enhance one's competitiveness.
Chen Xiaolong, an investor in the food and beverage industry, told Blue Whale Finance reporters that the main approach of large enterprises is to accelerate the diversification of income sources through acquisitions. But this approach requires strong and effective management skills.
Insufficient ability to self generate blood
In addition, from the perspective of the overall environment, the competition in the industry where daily cooking is located is very fierce. According to Frost Sullivan data, from 2021 to 2026, the scale of ready to eat food in China will increase from 254.8 billion to 564.5 billion, with a compound annual growth rate of 17.24%.
Although the market size of the entire industry is relatively large, the competition in the domestic prefabricated food industry market is also very fierce. Nowadays, among the players who enter the pre made food market, there are not only veteran players with strong supply chains and food research and development capabilities such as Anjing and Zhengda, but also well-known catering brands such as Haidilao and Xibei. In this context, it is particularly difficult to stand out in daily cooking.
At present, the combination of daily cooking and pre made dishes is not as optimistic as imagined. Although there is a continuous emphasis on building independent brands, from the current situation, the company's own "hematopoietic ability" is worrying, and it is actually making "wedding clothes" for others. According to the prospectus, the company's online product sales revenue in 2022 was only 67 million yuan, compared to 149 million yuan in 2021. Sales revenue directly halved, and in the first quarter of 2023, business revenue dropped to a million yuan level, less than a quarter of the same period in 2022.
In addition, in 2022, the total revenue of the company's instant heating (RTH) products decreased significantly year-on-year, from 56.8 million yuan in 2021 to 16.4 million yuan (approximately 2.3 million US dollars), a decrease of over 70%. In addition, the first quarter of 2023 saw a cliff like decline, with a magnitude of 93%. In response to this, the company explained in its prospectus that the main reason for the decrease is the management's decision to abandon products that are over packaged in the instant heating (RTH) category in order to reduce the use of disposable plastic in product packaging.
Our own products have not caused a splash, resulting in the company's current high dependence on third-party brand products for sales. The prospectus shows that in 2021 and 2022, the sales of third-party brand products accounted for 39% and 67% of the company's total sales, and the proportion continued to expand. However, this situation has not improved this year. Data shows that in the first quarter of 2023, the sales of third-party brand products still accounted for 65% of the total revenue.
Industry insiders told Blue Whale Finance reporters that in the past few years, multiple leading companies in the industry have entered the market to promote new products, and the pre made food market has developed rapidly. However, with changes in consumer scenarios, the demand for pre made food, self heating food, and other hoarding products has also weakened. With the continuous increase of capital in the convenience and fast food industry, only by leveraging the characteristics of products and continuously launching innovative products can we continue to attract consumers and have a place in the industry.
Jiang Han believes that RiRiRi Cooking can enhance its content creation ability, launch more high-quality and distinctive short video content, and attract more users to pay attention and share. In addition, one can enhance their brand awareness and reputation by improving product quality and optimizing user experience, thereby attracting more users and merchants.
Weak revenue and high debt to asset ratio
At the same time, the current performance of RiRiRi Cui is also not satisfactory. According to the prospectus, from 2019 to 2022, the net losses of daily cooking were 158 million yuan, 114 million yuan, 459 million yuan, and 122 million yuan, respectively, with a cumulative loss of 853 million yuan over the past four years. The net loss of daily cooking in the first half of 2023 was approximately RMB 09 million, although it narrowed year-on-year, it has not completely overcome the shadow of losses.
The continuous losses of daily cooking may be related to its high costs. According to the prospectus, the company's marketing expenses, general and administrative expenses in 2021 were 59.2398 million yuan and 66.6364 million yuan respectively, while its gross profit in 2021 was only 36.4576 million yuan. Afterwards, or due to cost control considerations, daily marketing expenses and general and administrative expenses have decreased in 2022 and the first half of 2023, while the company's R&D investment has directly decreased to zero in 2022 and the first half of 2023.
In addition to losses, RiRiRi Kuo also has a high debt situation. According to the prospectus, in 2022, the total assets of RiRiRi Cook were 250 million yuan, total liabilities were 374 million yuan, and the asset liability ratio was as high as 146.59%. A higher debt to asset ratio also implies greater financial risk.
Looking at the fundamentals of the business, RiRi Ri Kuo depicts the company as an ecosystem that encompasses content marketing, advertising channels, products, and brands. Nowadays, many businesses are experiencing shrinkage.
Firstly, there has been a significant decline in advertising revenue. The prospectus shows that this revenue has decreased from RMB 11.0766 million in 2020 to RMB 870600 in 2022. In the first half of 2023, advertising revenue was only 298700 yuan.
In the field of content, a large number of food related content creators have emerged on domestic short or medium video platforms; From data from various platforms, it can be seen that the influence of daily cooking content is continuously declining, and more and more new KOLs in the food category are emerging as competitors for daily cooking. Blue Whale Finance reporter noticed that the daily cooking on various social media platforms does not have many followers on the account, and the playback volume of the content is not high. Taking Bilibili as an example, the current number of fans is 88000, and the content reading volume is basically only a few hundred to a few thousand, which is far from the same level as food self media platforms like "Eclipse Chronicles" with similar positioning.
The lack of attractiveness in online content makes it difficult to take on the responsibility of attracting traffic offline. The prospectus shows that the revenue of the offline experience store of RiRiRi Cooking has sharply decreased from 3.2345 million yuan in 2020 to 428100 yuan in 2022, and this business has been cleared to zero in the first quarter of 2023. According to public reports, in 2017, Nippon Fried Chicken spent nearly a million yuan to open its first food experience restaurant at K11 in Shanghai, and quickly entered cities such as Wuhan and Guangzhou. However, heavy asset investment has always had little effect, and coupled with adverse factors such as the resurgence of the epidemic, the company announced the permanent closure of all experience stores in 2022.
From the current business situation of RiRiRi Cooking, its content, traffic, channels, and products are not superior, and its overall self generating ability is worrying. For the future development direction of daily cooking, Chen Xiaolong suggests concentrating on categories and creating large single products.
In Jiang Han's view, the future development direction of RiRiRi Cooking should continue to expand overseas markets, strengthen brand building and product innovation, and improve brand awareness and market share. At the same time, it is also necessary to strengthen cost control and management, optimize product structure and sales channels, and improve profitability.