Apprenticing under ChaCafe’s Yuan Ji Yun Dumplings, can the ultimate answer to Chinese restaurant chains be found?

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In the circle of restaurant investors, a popular view has emerged in recent years: "The endgame for restaurants is retail."

This argument suggests that instead of refining tedious service in each store and earning hard-earned processing fees, it's better to build a brand and achieve ultimate standardization, collapsing complex cooking processes into replicable industrial products.

Yuanji Yunjiao, which recently submitted a listing application to the Hong Kong Stock Exchange, is a faithful practitioner of this logic.

With its "raw-cooked integrated" retail strategy, Yuanji Yunjiao has paved a path similar to Mixue Bingcheng: self-built factories standardize the production of dumpling wrappers and fillings, with about 97% of its revenue coming from selling ingredients to franchisees.

Relying on the standardization advantage of its own production capacity, combined with precise positioning in community and farmers' market channels, Yuanji has cracked open a scale gap in Chinese fast food within just a few years.

By September 2025, Yuanji Yunjiao's store count had reached 4,266, doubling from the beginning of 2023 and becoming the largest Chinese fast food company by store count in China and even globally.

It also seeks a second growth curve through its sub-brand "Yuanji Weixiang," which focuses on pre-packaged retail and B-end channels.

However, dumplings are ultimately not the same as tea made from powder; with net profit per order long lingering around the one-yuan mark, any cost fluctuation or management redundancy in the supply chain could easily become the straw that breaks the scale-effect camel's back.

Aside from coffee and tea drinks—which are essentially "industrial water products"—can Chinese cuisine with fresh attributes really support an empire of ten thousand stores by selling wrappers and fillings?

This is not only a question Yuanji Food needs to answer, but also a realistic challenge all catering companies attempting to break through via retail must jointly face.

The "King of Snow" in the Dumpling World?

Looking at Yuanji Yunjiao’s financial report, it’s not hard to see this is essentially a "raw material wholesaler" disguised as a dumpling shop.

As early as 2018, when its stores just exceeded 100, Yuanji invested in a factory in Suzhou, with subsequent production capacity rolled out in Guangzhou and Foshan.

Now, it owns five factories and 24 self-operated warehouses, 86% of stores are located within a 200-kilometer radius of the warehouses, achieving “delivery every two days.”

This supply chain supports a "front store, back factory" retail operation: headquarters lock in core steps like seasoning and dough kneading via central factories, then distribute wrappers and fillings via cold chain to pre-positioned warehouses.

Franchisees at the final step no longer need traditional kitchens; stores resemble standardized "assembly workshops," requiring only the zero-threshold actions of "wrapping" and "boiling."

Yuanji specifies that stores must strictly follow the “same day off-shelf” rule for fresh dumplings and wontons to ensure the "freshly wrapped and boiled" promise.

The pursuit of ultimate standardization has brought higher turnover efficiency.

In 2024, Yuanji's inventory turnover days were only 12.1, far lower than the Chinese fast food industry’s average of 25 days. The process from raw materials to income is extremely quick, minimizing capital occupation.

Meanwhile, Yuanji shows strong negotiating power with franchisees.

Its accounts receivable are mainly transportation expenses; core payment for goods is essentially prepaid and settled. In 2023 and 2024, accounts receivable turnover days were only 2.8 and 5.3 days respectively, meaning payments return to headquarters almost instantly when sales happen.

This "B-end supplier + brand exporter" role gives Yuanji a thicker buffer when facing commission fees from delivery platforms and price wars.

In the first three quarters of 2025, Yuanji’s delivery GMV share rose sharply from 32.4% in the same period last year to 44.6%.

Its gross margin curve remains relatively stable: from 2023 to the first three quarters of 2025, the gross margin was 25.9%, 23%, and 24.7% respectively.

Behind steady headquarters margins, the profit per order continues to shrink.

From 2023 to the first three quarters of 2025, Yuanji’s gross profit per order for the company shrank from 2.9 yuan to 2.3 yuan; in terms of net profit, “earning less than one yuan per bowl of dumplings sold” has become the norm.

With per-order profit as thin as a cicada's wing, operating this business machine must rely heavily on scale effect and high turnover to dilute costs.

As profits for existing stores are squeezed, ensuring franchisees don’t drop out, or continuously opening new stores to maintain conveyor belt speed, becomes the key to sustaining the growth curve.

The "Freshly Wrapped" Variable

Yuanji Yunjiao’s establishment did not follow a standard restaurant logic but resembled a retail variant embedded in community capillaries.

In 2012, its first store opened with a take-out raw dumpling model. In 2017, the brand officially changed its name to “Yuanji Yunjiao,” introducing the "raw-cooked integrated" store format.

This "take-out + delivery" combination precisely capitalized on the home consumption boom during the pandemic years.

Yuanji CEO Zheng Boqi once revealed that its delivery business soared from 80 million to nearly 800 million in 2022.

But long-term explosive growth carries a distinct special era attribute, according to Long Zhen, founder of Data Dreamer.

He told Xinfeng that Yuanji’s site selection is precisely positioned within community “delivery business circles”; studies show that about two-thirds of store sales come from delivery, not consumer pick-up.

Consumers’ concerns about pre-made dishes often coexist with the pursuit of convenience. To ease such contradictions, Yuanji showcases scenes of aunties wrapping dumplings by hand in many stores through transparent windows.

"Freshly wrapped" is Yuanji’s moat against frozen dumplings and key to maintaining pricing levels. But from a franchisee’s perspective, this "fresh promise" challenges store profitability.

Long Zhen said: “In locations like market entrances where daily turnover is limited, maintaining the freshly wrapped image requires dedicated labor, making the efficiency of this model not even as good as more standardized braised food shops. This phenomenon is particularly pronounced in raw-food takeaway stores.”

In recent years, Yuanji’s site selection has started migrating from markets to high-traffic areas such as malls and subway stations. Although investment costs for such stores are higher, for headquarters, the expansion of traffic and consumption scenarios brings more stable brand returns and store survival rates.

From the end of 2023 to the third quarter of 2025, Yuanji closed more than 30 net raw-takeaway stores, while the number of dine-in stores increased more than 50%, reaching 3,333.

Market tier sinking is also progressing simultaneously. Yuanji still has over half its stores in first-tier cities, but third-tier cities and below are growing significantly faster—store count increased more than 80%, with the proportion rising from 19.8% to 26.6%.

This makes Yuanji’s difference from the "Mixue Bingcheng" model more and more apparent.

“Rather than saying Yuanji is like Mixue Bingcheng, it’s more like Auntie Shanghai or Tea Baidao,” Long Zhen pointed out, Mixue Bingcheng relies on extreme low price, and under its cost structure, there’s almost no room for freshly made competitors to survive.

“Now frozen dumplings cost 3.5 yuan per pound, Yuanji's pricing actually leaves room for profit competition, meaning if someone is willing to spend money to copy this model, the likelihood of success is not low.” Long Zhen said.

After entering 2024, Yuanji's end data began to emit complex signals.

By the end of Q3 2025, Yuanji’s franchisee numbers were 1,656, 1,956, and 2,065 respectively. While the total is still rising, net franchisee increase is slowing.

In Q3 2025, Yuanji’s GMV annual growth was 6.4%, while revenue growth reached 11%.

This “inverted” growth may mean that terminal stores are maintaining traffic through price promotions, or that franchisees’ purchasing pressure is already ahead of consumption digestion speed.

Industrialization Boundary

Even though model efficiency still needs tuning, the rapid growth and replicability of Yuanji stores may prove that, from a standardization perspective, dumplings are a track that balances both breadth and certainty.

“Big water breeds big fish. For dumplings with extremely high national recognition, brands needn't bear extra market education costs.” Jing Wen, head of supply chain market at Youge, told Xinfeng. Compared to segmented categories for novelty, dumplings’ “just-needed” attribute ensures repurchase intention.

By Q3 2025, Yuanji Yunjiao's membership base had topped 35 million, with a quarterly average repurchase rate of 32.3%.

The chainization wave of Chinese food over the past fifteen years has largely benefitted from cold chain popularity, mature central kitchens, and delivery platform boom. But for Yuanji, its “dumpling industrialization” narrative, supporting rapid expansion, also faces stability challenges.

From 2023 to Q3 2025, Yuanji’s material costs accounted for more than 85% of total sales cost, with pork purchase taking up 35%, making its profit performance vulnerable to "the pig cycle."

At the end of 2024, to relieve franchisee survival pressure, Yuanji actively offered concessions, lowering product sales prices below the cost line.

Additionally, supply chain precision still has blind spots.

Though fillings and dough are delivered uniformly, vegetables are still store-purchased. This management chain disconnect not only led to food safety issues in 2024 but also reflects its limited terminal control.

Amid the tension between single products and segmented demand, Yuanji is also attempting a breakthrough.

As stores expand nationwide and abroad, “different tastes” across regions test the level of standardization. For example, East China prefers fish and crab fillings, while Northwest favors beef and scallion.

“A single product can achieve universal acceptance, but regional dietary habits remain unique,” Jing Wen noted. This forces the central kitchen model to shift, moving from nationwide central kitchens to regional and customized small central kitchens for segmented needs.

Yuanji is trying to reinforce certainty via capacity expansion. Currently, Chengdu Yuantuo Factory and Foshan Yuanshun Automated Production Center are under construction, with plans for intensive new factories in North and East China.

By September 2025, Yuanji Yunjiao had launched over 350 SKUs, with about 200 regulars.

Though its rate of new launches is far below new tea drinks, Yuanji internally seems to have used tea drinks as a management reference.

In 2025, operations leader Zhang Jun, who previously built HeyTea’s core operational system, took office.

In July that year, Yuanji launched an innovative big product “kale, shrimp, and chicken dumplings,” with sales exceeding 5 million nationwide within just two weeks, accompanied by a co-branded campaign with Coca-Cola. This was interpreted by the market as an attempt with obvious “tea drink-style R&D” features.

Yuanji’s ambition is not limited to China. If dumplings are understood as a more universal food concept of “dough wrapping fillings,” there is a huge range of similar products worldwide. Yuanji seeks to leverage category recognition to tap supply chain and standardized operation strengths overseas.

In 2024, Yuanji’s first overseas store opened in Singapore. By January 2026, it had branches in Singapore and Thailand, with plans to use IPO funds to strengthen overseas supply chains.

But overseas, labor is another invisible hurdle.

In China, handmade dumplings are a widely mastered social skill; overseas, recruiting and training large numbers of workers to make standard-compliant dumplings is the first challenge after exporting the “fresh-wrapped” model.

How to achieve extreme efficiency in the labor-intensive, short shelf-life, highly regionalized world of Chinese cuisine remains a deep challenge facing Yuanji and all Chinese chain brands.

Risk Warning and DisclaimerThe market has risks; investment must be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ special investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this article is at your own risk. ```