Juewei Food's gross margin is always lower than peers competitors since its optimization of management can't keep up with the speed of store expansion.
Performance forecast of Juewei Food (Chinese: 绝味食品, 603517:SH) shows that in the first half of 2022, the company is expected to achieve revenue of CNY 3.2 billion to CNY 3.4 billion, an increase of 1.78% to 8.14% over the same period last year.
The main reason for Juewei's poor performance is that the marinated food business was affected. Due to epidemic prevention and control, some factories and stores suspended business during the reporting period, which had a certain impact on the company's sales and profits. At the same time, the rising cost of raw materials, sales expenses and subsidies given to franchisees led to a year-on-year decrease in profits.
In terms of the macro-environment, the entire food industry has been under pressure since 2021 from the continuous rise in the cost of raw materials, energy, transportation, etc. In 2021, the operating cost of Juewei's main marinated products increased by 16.32% compared to the previous year, and will continue to be under pressure on the cost side in 2022.
At the same time, the company is spending more and more on sales and management in order to obtain more customer traffic. In the first quarter of this year, Juewei's selling expenses increased to CNY 236 million, and its management expenses increased to CNY 110 million.
Although Juewei Food is the leader of the marinated food industry, its gross margin is always lower than that of its peers. Over the years, Juewei has relied on its strategy of winning by volume to achieve rapid growth in performance. Its store scale advantage can cover up the shortage of gross margin and single store revenue . However, when the number of stores reaches a certain scale, store density will inevitably affect single store revenue.
The company's competitors include Zhou Hei Ya (Chinese: 周黑鸭) and Ziyan Food (Chinese: 紫燕食品).