Store Network Continues to Expand, with Lower-Tier Markets Still the Core Base

As of the first quarter of 2026, Guoquan had 11,758 stores nationwide, a net increase of 1,637 from a year earlier. Among them, 3,123 stores were located in township-level markets. In terms of network structure, lower-tier markets remain an important part of Guoquan’s store base and a foundation for its supply chain, fulfillment capabilities and member reach.

Market participants noted that Guoquan’s offline stores do more than sell products. To some extent, they also function as community service nodes, front-end fulfillment points for instant delivery and local traffic gateways. The model allows the Company to stay close to household consumption scenarios through its store network, while integrating offline foot traffic, member relationships and online orders.

From Site Selection to Foundation Building: A Natural Extension of a Decade of Industrial Development

Unlike some retailers that first scale through online traffic before building offline channels, Guoquan began with physical stores and supply chain development. After building a nationwide store network, a cold-chain warehousing and distribution system, and a household member base, the Company has in recent years stepped up investment in online channels, instant retail and digital operations.

Under this model, Guoquan has developed six structural barriers: store reach, supply chain integration, cold-chain logistics, digital capabilities, member data and community-based brand recognition.

10,000-store reach and instant fulfillment: With 11,758 stores across China, each store can serve as a front-end fulfillment point. Online ordering, in-store redemption and delivery within around half an hour give Guoquan a last-mile response capability based on physical stores, differentiating it from pure e-commerce models.

Deep industrial supply chain: Guoquan controls or holds stakes in a number of production plants, enabling it to manage the quality and cost of core categories at the source and support a model of production driven by sales and direct sourcing from origins.

Lower-tier logistics and full-chain delivery: A network of 20 digital central warehouses supports cold-chain distribution and enables next-day delivery from provincial capitals to administrative villages, extending logistics coverage into lower-tier markets.

Data-driven digital decision-making: Real-time sales data from the store network feeds back into product selection, inventory planning and regional pricing, helping improve inventory turnover and loss control.

Member ecosystem and repurchase engine: A base of nearly 80 million members provides insight into household consumption patterns, while repeat purchases from existing users are becoming an increasingly important contributor to profit growth.

Community brand mindshare: The brand association of "Guoquan for home dining" has taken root in communities. As a result, new businesses such as stir-fry, instant commerce and Guoquan Farm do not need to educate the market from scratch, helping keep customer acquisition costs relatively low.

Store reach supports the efficiency of instant commerce; supply chain depth underpins pricing advantages; member data improves product selection accuracy; and brand mindshare reduces the marginal cost of expansion. Market participants believe that, if these capabilities continue to reinforce one another, they should help improve the Company’s store operating efficiency.

Growth Quality Improves as Large-Store Upgrades Release Operating Leverage

In terms of financial performance, Guoquan’s revenue increased by 31.3% to 37.2% year on year in the first quarter of 2026. Core operating profit is expected to reach RMB185 million to RMB205 million, representing year-on-year growth of 45.3% to 61.0%. Profit growth outpaced revenue growth, suggesting possible improvement in product mix, cost control and store operating efficiency.

Since the second half of 2025, Guoquan has been advancing its store-format upgrade strategy, converting smaller standard stores into larger “community central kitchen” formats of around 80 to 100 square meters. Its product categories have expanded from hotpot and barbecue to breakfast, ready-to-eat meals, light meals, alcoholic beverages and other daypart-driven offerings, while 24-hour unmanned stores add round-the-clock service capability. The broader range of consumption scenarios, together with regionalized refined operations through the "Store Manager Home" mechanism, has supported improvements in both same-store sales and staff efficiency.

Continued Share Repurchases and Stable Dividends Signal Commitment to Shareholder Returns

On shareholder returns, Guoquan has taken clear and consistent steps. The final dividend for 2025 of RMB0.0381 per share, equivalent to approximately HK$0.0435, has been approved at the annual general meeting and will be paid on 18 June 2026. In terms of share repurchases, Guoquan announced in April 2026 that it planned to use up to HK$200 million of internal funds to repurchase H shares, with the repurchase price capped at no more than a 5% premium to the average closing price over the five trading days preceding each repurchase. The Company previously stated in its announcement that the repurchase reflected the Board’s confidence in the Company’s long-term development.

Multiple New Initiatives Build an Efficiency Flywheel

Beyond its core hotpot and barbecue business, Guoquan has this year expanded into stir-fry, camping, instant retail and directly sourced agricultural products. These initiatives are all centered on household meals and community consumption scenarios, and are being developed on the back of the Company’s existing store network, supply chain and membership system.

Guoquan Stir-fry uses an innovative business model to address demand between takeout and home cooking, while Guoquan Camping extends the "home dining" scenario into outdoor settings. In essence, both reflect an upgrade of the community central kitchen capability from selling ingredients to providing solutions. Supporting the rollout of these scenarios are Guoquan Instant Commerce and Guoquan Farm. Guoquan Instant Commerce turns each store into a front-end fulfillment point for online orders and instant delivery, while Guoquan Farm links the front, middle and back ends of the supply chain, using popular products such as durian to drive store traffic and test a traffic loop in which high-frequency items support repeat purchases.

From a business logic perspective, these new initiatives are not operating as standalone businesses. They share the same store network, supply chain and member data. Built on its physical infrastructure, Guoquan is evolving from a single-category retail outlet into a broader consumption platform covering "five meals a day" and a wider range of daily consumption scenarios.