Plunged over 56%! Guoquan, the myth of ten thousand stores is shattered!

When an avalanche occurs, no snowflake is innocent.

In just eight years, from a community store on the streets of Zhengzhou to a "giant with tens of thousands of stores" listed on the Hong Kong Stock Exchange, Guoquan was once a myth in China's catering sector.

However, this myth is now facing severe scrutiny from the capital market. Guoquan's stock price fell from a high of 4.75 HKD in April to as low as 1.65 HKD intraday on June 25, and closed at 2.03 HKD on July 30—in less than four months, it was halved, with its total market value shrinking from about 13 billion HKD in early April 2026 to around 5.5 billion HKD.

More glaringly, this "avalanche" occurred precisely when the company's performance was at its brightest: revenue reached 7.81 billion RMB in 2025, up 20.7% year-on-year; net profit was 454 million RMB, surging 88.2% year-on-year. In the first quarter of 2026, revenue was approximately 2.2 to 2.3 billion RMB, up 31.3% to 37.2% year-on-year; core operating profit was approximately 185 to 205 million RMB, up 45.3% to 61% year-on-year.

The stark contrast between "doubling performance and halving stock price" has laid bare all the hidden worries masked by Guoquan's rapid expansion.

A Share Reduction Triggers Stock Price Collapse

The starting point of the avalanche was Guoquan's announcement on April 15 regarding a major shareholder's share reduction.

According to the announcement, one of Guoquan's controlling shareholders, "Guoxiaoquan Enterprise Management" (an entity associated with Yang Mingchao), sold 124.5 million shares through block trades at a price of 3.8 HKD per share, representing an 11.8% discount to the previous closing price, accounting for 4.74% of the total share capital, cashing out approximately 473 million HKD in one go. After the reduction, the voting rights of the concert parties dropped from 49.39% to 44.66%, but still maintained control. All controlling shareholders simultaneously committed not to reduce their holdings within 180 days.

Subsequently, the market voted with its feet. The day after the announcement (April 16), Guoquan's stock price plummeted by over 19%, and plunged again by over 10% on the 17th; thereafter, it continued to decline, hitting as low as 1.65 HKD on June 25.

The market generally speculated that a large portion of the funds from Yang Mingchao's cash-out would be invested in other business sectors he controls—restructuring Songhe Liquor, promoting the construction of Chengming Food's 10-billion-RMB industrial park, and expanding Huading Cold Chain Network.

If the share reduction was merely the "fuse" for the stock price crash, perhaps the "financial risks" hidden in the financial reports were the root cause of the capital flight.

Financial reports show that in 2025, Guoquan achieved a net profit of 433 million RMB, a significant increase of 87.76% year-on-year; however, cash and bank deposits decreased from 2.125 billion RMB at the beginning of the year to 1.349 billion RMB, a drop of 36.5%.

At the same time, the company's trade receivables surged from 234 million RMB at the end of 2024 to 425 million RMB, an 82% year-on-year increase. The accounts receivable turnover days extended from 8.01 days to 15.18 days, nearly doubling.

For Guoquan's high-turnover ingredient retail business, "slower payment terms" is undoubtedly a dangerous signal—it means the headquarters is pushing inventory onto franchisees, and book revenue does not equal actual cash inflow.

Another overlooked detail is: in the first half of 2025, Guoquan's operating cash flow turned negative, with a net outflow of 29 million RMB; yet management still decided to distribute a 190 million RMB interim dividend, with total shareholder returns reaching 570 million RMB for the year.

The Cost of Crazy Expansion

While the stock price crashed, food safety hazards at Guoquan also became a topic of public concern.

As the number of stores broke through ten thousand, complaints regarding Guoquan's food safety showed a clear upward trend. Data from the Black Cat Complaints platform shows that as of mid-April 2026, there were 617 complaints involving Guoquan Shihui, nearly 70% of which were directly related to food safety.

What dissatisfied consumers even more was Guoquan's attitude towards handling food safety issues. Regarding the previous incident of spoiled tofu in Hangzhou, Guoquan's PR department responded that the involved tofu belonged to "product categories authorized for stores to purchase and sell independently." According to the contract agreement, all responsibilities for self-purchased products are borne solely by the franchise stores.

This "cut-off response" exposed the biggest pain point of Guoquan's franchise model: 99.9% of the stores are franchises, with only 12 self-operated stores. Guoquan's revenue mainly comes from selling ingredients to franchisees. The brand makes money from franchise fees and supply sales, but when problems arise, it pushes all responsibility onto the franchisees.

Guoquan was not unaware of quality control risks. In previously released annual reports, Guoquan explicitly listed "failure to maintain effective product quality monitoring systems" as one of the primary risks.

Currently, the proportion of self-produced products from Guoquan's own factories is only about 20%-25%. The vast majority of products rely on external procurement, limiting upstream bargaining power, and quality control difficulties are far beyond imagination.

Guoquan was able to open over ten thousand stores in less than ten years, mainly relying on the "asset-light franchise" model.

From store data, Guoquan added a net 1,416 stores in full-year 2025, with 805 new stores added in the fourth quarter alone. As of Q1 2026, Guoquan's total number of stores reached 11,758, a net increase of 1,637 compared to the same period in 2025.

Guoquan's aggressive goal for 2026 is to add a net of over 2,900 stores throughout the year, aiming for a scale of 14,500 stores.

Meanwhile, Guoquan plans to advance the "Four Stores Simultaneous Launch (Community Large Store, Township Large Store, Small Stir-fry Store, Camping Store)" strategy in 2026, attempting to extend from hot pot and barbecue to all-day community catering retail, and boldly claiming: "We have the ability to expand stores to 20,000."

However, the faster the expansion, the fiercer the store closures.

Data from Zhaomen Canyan shows that in Q1 2025 alone, Guoquan closed over 1,600 stores. With initial investments per store ranging from 200,000 to 300,000 RMB, daily customer traffic was diverted by new stores, leaving most stores with revenues under 3,000 RMB, unable to cover rent and labor costs. A large number of small and medium franchisees fell into continuous losses. Meanwhile, the platform's 9.9 RMB and 19.9 RMB low-price traffic-driving packages were entirely borne by the stores as losses, further compressing the meager profits of franchisees.

Guoquan also admitted in its annual report risk warnings: "The performance of franchise stores has a significant impact on the company's operating performance. The company cannot control and may not be able to effectively monitor the operations of franchise stores or maintain existing relationships with franchisees. Moreover, the company's past revenue growth relied heavily on the rapid expansion of the store network. The company cannot guarantee maintaining the store network or successfully implementing expansion plans in the future."

Conclusion

Looking back from the point where the stock price was halved, the essence of Guoquan's problem is the final reckoning of the "aftermath of high-speed expansion."

To scale up and seize the market, Guoquan relied on the franchise model to rapidly encircle land, achieving a scale of tens of thousands of stores and harvesting the highlight moments of capital. However, during the process of rapid expansion, basic issues such as quality control, balancing franchisee interests, and cash flow quality were not resolved synchronously.

When the major shareholder's massive share reduction became the fuse, all contradictions erupted centrally, leading to a stock price avalanche.

Capital markets are ultimately rational. Stock prices reflect not only past performance but also future expectations. Whether Guoquan can truly get out of the predicament and regain market trust lies not in the 3,000 new stores to be opened in 2026, but in whether it can answer one fundamental question: After having tens of thousands of stores, is Guoquan actually a catering retail company, or is it a supply chain intermediary relying on franchisees for blood transfusion?

The answer to this question will determine whether, in the next decade, Guoquan becomes China's "community catering retail infrastructure" or degenerates into another franchise chain specimen devoured by its own scale.