Can Yuanji Yunjiao, mentored by Chaka, provide the ultimate answer for Chinese restaurant chains?

In the circle of restaurant investors, a popular viewpoint has emerged in the past two years: "The end of dining is retail."

This argument suggests that rather than refining trivial services at each store and earning hard-earned processing fees, it is better to condense the complex cooking process into a replicable industrial product through brand building and extreme standardization.

Recently listed on the Hong Kong Stock Exchange, Yuanji Yunjiao is a loyal practitioner of this logic.

With its "integrated raw and cooked" retail approach, Yuanji Yunjiao has followed a path similar to that of Mixue Ice City: building its own factory to achieve standardized production of dumpling skins and fillings, with approximately 97% of its revenue coming from selling ingredients to franchisees.

Relying on the standardized advantages of its own production capacity and precise positioning in community and agricultural markets, Yuanji has, in just a few years, torn open the scale gap in Chinese fast food.

As of September 2025, the number of Yuanji Yunjiao stores reached 4,266, doubling from the beginning of 2023, making it the largest Chinese fast food enterprise in terms of store count in China and even globally.

It has also laid out pre-packaged retail and B-end channels through its sub-brand "Yuanji Weixiang," seeking a second growth curve.

However, dumplings are not powdered milk tea, and when the average net profit per unit hovers around 1 yuan in a low-profit range for a long time, any cost fluctuations or management redundancies in the supply chain could easily become the last straw that breaks the scale effect.

Outside of categories like coffee and tea, which are almost equivalent to "industrial water products," can Chinese cuisine with fresh attributes really support a ten-thousand-store empire by selling skins and fillings?

This is not only a question that Yuanji Food needs to answer, but also a realistic challenge that all restaurant enterprises attempting to break through through retail paths must face together.

The Snow King of Dumplings?

Flipping through Yuanji Yunjiao's financial report, it is not difficult to find that it is actually a "raw material wholesaler" disguised as a dumpling shop.

As early as 2018, when the number of stores just surpassed 100, Yuanji invested in a factory in Suzhou, and subsequently established its own production capacity in Guangzhou and Foshan.

To date, it has five self-owned factories and 24 self-operated warehouses, with 86% of its stores located within a 200-kilometer radius of the warehouses, achieving "delivery every two days."

This supply chain system supports a "front store and back factory" retail operation: the headquarters locks in core processes such as seasoning and dough kneading through a central factory, and then delivers dumpling skins, fillings, and other items to the front warehouses via cold chain.

Franchisees at the final link no longer need a traditional back kitchen; the stores resemble standardized "assembly workshops," only needing to complete the two low-threshold actions of "wrapping" and "cooking."

Yuanji clearly requires stores to strictly implement the "same-day shelf removal" rule for freshly wrapped dumplings and wontons to ensure that the products sold are "freshly wrapped and freshly cooked."

The extreme pursuit of standardization has resulted in higher turnover efficiency.

In 2024, Yuanji's inventory turnover days were only 12.1 days, far below the average level of 25 days in the Chinese fast food industry. The process from raw material entry to revenue conversion is extremely fast, minimizing capital occupation At the same time, Yuanji has shown strong bargaining power towards its franchisees.

Its accounts receivable mainly consist of transportation expenses, and core payments are basically settled in advance. In 2023 and 2024, its accounts receivable turnover days were only 2.8 days and 5.3 days, respectively, meaning that payments almost flow back to headquarters the moment sales occur.

It is this role of "B-end supplier + brand output" that provides Yuanji with a thicker buffer when facing commission deductions and price wars from delivery platforms.

In the first three quarters of 2025, Yuanji's takeout GMV proportion surged from 32.4% in the same period last year to 44.6%.

Its gross profit performance has maintained a relatively stable curve: from 2023 to the first three quarters of 2025, its gross profit margins were 25.9%, 23%, and 24.7%, respectively.

Behind the stable gross profit at headquarters, the profit margin per order has been continuously narrowing.

From 2023 to the first three quarters of 2025, the gross profit contributed by each order to the company shrank from 2.9 yuan to 2.3 yuan; converted to net profit, "earning less than 1 yuan for each bowl of dumplings sold" has become the norm.

The profit per order is as thin as a cicada's wing, and the operation of this business machine must highly rely on economies of scale and high turnover to dilute costs.

The profits of existing stores are being continuously compressed, and how to ensure that franchisees do not fall behind or continue to open new stores to maintain the speed of the conveyor belt has become key to maintaining its growth curve.

Variables of "Freshly Wrapped"

Yuanji's cloud dumplings did not follow the standard restaurant logic but resembled a retail variant embedded in the capillaries of the community.

In 2012, the first store opened with a raw dumpling takeout model. In 2017, the brand was officially renamed "Yuanji Cloud Dumplings," launching the "raw and cooked integrated" store format.

This combination of "takeout + delivery" precisely captured the benefits of home consumption during the pandemic years.

Yuanji CEO Zheng Boqi disclosed that in 2022, its takeout business scale surged from 80 million to nearly 800 million.

However, in the view of Long Zhen, founder of Jiameng Data, this explosive growth has distinct attributes of a special period.

He analyzed that Yuanji's site selection is precisely positioned within the "takeout business circle" community, with research showing that about two-thirds of the store's sales come from takeout rather than consumers picking up in-store.

Consumers' concerns about pre-packaged meals often coexist with their pursuit of convenience. To resolve this contradictory mindset, Yuanji chooses to publicly display scenes of grandmas hand-wrapping dumplings through transparent windows in many stores.

"Freshly wrapped" is Yuanji's moat that distinguishes it from frozen dumplings and is key to maintaining its pricing level. However, from the perspective of franchisees, this "freshness promise" poses a challenge to store profitability.

Long Zhen stated: "In scenarios with limited daily cash flow at the entrance of the vegetable market, maintaining the freshly wrapped persona requires dedicated manpower, leading to model efficiency that may even be lower than that of more standardized braised food stores. This phenomenon is particularly prominent in raw food takeout store types." In recent years, Yuanji's site selection has begun to shift from vegetable markets to high-traffic locations such as shopping malls and subway stations. Although the investment costs for these types of stores are higher, for the headquarters, the increase in foot traffic and consumption scenarios brings more stable brand revenue and store survival rates.

From the end of 2023 to the third quarter of 2025, Yuanji's raw food takeout stores closed net over 30 locations, while the number of dine-in stores increased by over 50% year-on-year, reaching 3,333 stores.

The downward penetration of market levels is also progressing simultaneously. Currently, more than half of Yuanji's stores are located in first-tier cities, but the growth rate in third-tier cities and below has significantly accelerated—store numbers increased by over 80% year-on-year, with the proportion rising from 19.8% to 26.6%.

This makes the difference between Yuanji and the "Mixue Bingcheng" model increasingly prominent.

"Rather than saying Yuanji is like Mixue Bingcheng, it is more akin to Hu Shang Ayi or Cha Baidao," Long Zhen pointed out. Mixue Bingcheng occupies the extreme low-price segment, and under its cost structure, it leaves almost no room for survival for fresh competitors.

"Currently, the cost of frozen dumplings is only 3.5 yuan per pound, and Yuanji's pricing level actually leaves room for profit competition, which means that if someone is willing to burn money to imitate this model, the probability of success is not low," Long Zhen said.

Entering 2024, Yuanji's terminal data began to release complex signals.

From 2023 to the end of the first three quarters of 2025, the number of Yuanji's franchisees was 1,656, 1,956, and 2,065, respectively. The total number is still growing, but the speed of net increase in franchisees has clearly slowed down.

In the first three quarters of 2025, Yuanji's GMV year-on-year growth rate was 6.4%, while revenue growth reached 11%.

This "inverted" growth rate may indicate that terminal stores are maintaining foot traffic through price promotions, or that the pressure on franchisees to procure goods has outpaced the consumption side's digestion speed.

Industrialization Boundaries

Even if the model's efficiency still needs to be refined, the high growth rate and replicability of Yuanji stores may prove that, from a standardization perspective, dumplings represent a track that combines both breadth and certainty.

"Big water brings big fish. For a category like dumplings, which has a very high national recognition, brands do not need to bear additional market education costs," Jing Wen, head of the supply chain market at Youge, told Xinfeng, stating that compared to niche categories that satisfy trial demand, the "necessity" attribute of dumplings ensures their repurchase willingness.

As of the third quarter of 2025, the membership scale of Yuanji Cloud Dumplings has exceeded 35 million, with a quarterly average repurchase rate of 32.3%.

The wave of Chinese cuisine chain development over the past fifteen years has largely benefited from the popularization of cold chains, the maturity of central kitchens, and the explosion of takeaway platforms. However, for Yuanji, its narrative of "dumpling industrialization" supports rapid expansion while also facing stability challenges.

From 2023 to the first three quarters of 2025, the proportion of material costs in Yuanji's total sales costs has long hovered above 85%, with pork procurement accounting for as much as 35%, making its profit performance susceptible to fluctuations in the "pig cycle." By the end of 2024, in order to alleviate the survival pressure on franchisees, Yuanji took the initiative to offer discounts, reducing product sales prices below the cost line.

In addition, there are still blind spots in the precision of the supply chain.

Although the fillings and dough have achieved unified distribution, vegetables still rely on store procurement. This disconnection in the management chain not only led to a food safety crisis in 2024 but also reflected its limitations in terminal control.

In the tug-of-war between product specialization and segmented demand, Yuanji is also trying to break the deadlock.

As stores expand nationwide and even overseas, the regional differences of "difficult to please everyone" begin to test the quality of standardization. For example, the East China region has a strong preference for fish and crab roe fillings, while the Northwest region favors beef and scallions.

"While large products are universally accepted, dietary habits in different regions still have their uniqueness." Jing Wen pointed out that this forces the central kitchen model to change, shifting from a national large central kitchen to a regionalized and customized small central kitchen that matches segmented demands.

Yuanji is trying to strengthen certainty through capacity expansion. Currently, the Chengdu Yuantuo factory and the Foshan Yuanshun automation production center are under construction, with plans to establish intensive factories in North China and East China in the future.

As of September 2025, Yuanji Cloud Dumplings has launched over 350 SKUs, with about 200 regularly available.

Although the new product launch rate is far less than that of new tea drinks, Yuanji seems to have regarded tea drinks as a management reference.

Zhang Jun, the operations head who took office in 2025, previously built the core operational system of Heytea.

In July of the same year, Yuanji launched the innovative large product "Kale Fresh Shrimp and Chicken Dumpling," which sold over 5 million pieces nationwide within just two weeks of its launch, along with a co-branding marketing campaign with Coca-Cola. This approach has been interpreted by the market as an attempt with obvious "tea drink-style R&D" characteristics.

Yuanji's ambitions extend beyond domestic markets. If dumplings are viewed as a more universal food expression of "dough wrapping fillings," there are many similar products globally. Yuanji is trying to leverage category recognition to drive supply chain and standardized operational capabilities overseas.

In 2024, Yuanji's first overseas store opened in Singapore. As of January 2026, it has established multiple stores in Singapore and Thailand and plans to use IPO funds to strengthen its overseas supply chain.

However, overseas, labor presents another invisible barrier.

In China, hand-wrapping dumplings is a widely practiced social skill; however, in overseas markets, efficiently recruiting and training a large workforce to produce dumplings that meet standards has become the first test after the "freshly wrapped model" goes abroad.

How to achieve extreme efficiency in the operational quagmire of Chinese cuisine, which is "labor-intensive, short shelf-life, and has strong regional differences," remains a deep challenge facing Yuanji and all Chinese restaurant chain brands.

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