---
title: "Helen's Bar: When Will Its Wine 'Wake Up' After Losing 1.6 Billion in a Year and Closing a Hundred Stores?"
description: "Helen's, the first listed mini-bar chain, reported a net loss of 1.601 billion yuan in 2022, its first year after listing, with revenue down 15.05% to 1.559 billion yuan. The company's strategies of further market下沉 and franchising have yet to show significant results, as competition intensifies."
author: "开菠萝财经团队"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-04-01"
language: "en"
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# Helen's Bar: When Will Its Wine 'Wake Up' After Losing 1.6 Billion in a Year and Closing a Hundred Stores?

> Helen's, the first listed mini-bar chain, reported a net loss of 1.601 billion yuan in 2022, its first year after listing, with revenue down 15.05% to 1.559 billion yuan. The company's strategies of further market下沉 and franchising have yet to show significant results, as competition intensifies.

Trainee Author | Ji Xiaoling
Jin Yufan, though late, finally arrived. On the evening of March 24, the bar chain brand Helen's (Helen’s) finally released its 2022 performance report in the last hour of the scheduled date: the "first stock of mini-bars" suffered huge losses in its first year of listing.
According to the financial report, in 2022, Helen's revenue was 1.559 billion yuan, a year-on-year decrease of 15.05%; the annual loss was as high as 1.601 billion yuan, compared with 230 million yuan in the same period last year. The company explained that if the impact of equity-settled share-based payments and changes in fair value of convertible preferred shares were excluded, its adjusted net loss in 2022 was 245 million yuan, while in the same period last year, it had a profit of 111 million yuan.
Image source / Helen's financial report
Riding the wave of young people's consumption and under the support of capital, Helen's rushed to list, with its valuation once soaring to HK$30 billion. But no one expected that the pandemic came, and offline catering, which was the first to be affected, fell into a wail. Helen's also tried its best to find new ways out. In the past year, Helen's turned from profit to loss, but it gave high praise to its 2022 adjustment strategy of "continuing to go down-market and opening franchising," emphasizing the important role of the new strategy multiple times in the performance report. In the past, Helen's could earn money from young people with its high cost-performance ratio and strong sociality, but now, with the entry of new brands and cross-border brands, the world of young people is already full of bars. How long can the new "franchise" model and the vast down-market, which are highly anticipated, wait for Helen's?
**Closing Over a Hundred Stores in a Year**
**Helen's Failed to Stop Losses** Founded in 2009, Helen's established a foothold among young people with its high cost-performance characteristic route. Then it gradually built its own products, channels, and brands, strengthened its supply chain capabilities, and attracted a large number of young consumers. Before listing, its prospectus showed that from 2018 to 2021, Helen's revenue increased for four consecutive years, growing nearly 16 times. After listing, Helen's market value exceeded HK$30 billion on the same day. Then it began to continuously expand and open stores with capital. According to the financial report, as of the end of 2021, the number of Helen's stores increased to 782, with 431 stores opened in one year. Helen's "glory" seemed to gradually extinguish from the moment of listing. The pandemic outbreak brought huge cost pressure to its "scale" goal. In 2021, Helen's revenue was 1.836 billion yuan, with an annual loss of 230 million yuan and adjusted net profit of about 100 million yuan. **2022 was the year Helen's completely turned to losses.** According to the financial report, revenue decreased by 15.05% year-on-year to 1.559 billion yuan, with an annual loss of 1.601 billion yuan. Moreover, the adjusted net profit directly changed from 111 million yuan in 2021 to a net loss of 245 million yuan. Helen's emphasized that the main reason for the loss was the closure of stores due to the pandemic, including impairment losses on plant and equipment and right-of-use assets, losses on disposal of plant and equipment, and expected credit losses on rental deposits, with loss amounts of approximately 713 million yuan, 142 million yuan, and 17 million yuan, respectively. Helen's, which relied on volume, had to close stores frantically in the past year. As of March 19, 2023, Helen's had 749 bars, a decrease of 105 compared with the scale in March 2021, of which 98 stores were closed in second-tier cities.
In terms of per-store revenue, in 2022, Helen's average daily sales per store decreased from 9,200 yuan to 7,000 yuan. Specifically, the average daily sales per bar in first-tier cities, second-tier cities, and third-tier and below cities decreased to 7,600 yuan, 6,600 yuan, and 7,300 yuan, respectively.
Image source / Helen's financial report
The main reason for the "turn from profit to loss" was the pandemic. Like the entire offline catering industry, Helen's was "defeated" in the wave of store closures during the pandemic. The capital market also found it hard to be optimistic about Helen's. Its market value nearly halved from the peak of HK$30 billion at listing to the current HK$18.927 billion. As of the close on March 24, the stock price closed at HK$14.94. A new consumer investor told Kaibo Finance that the main reason was that under the pandemic, Helen's business model had inherent contradictions: positioning in the low-price market required a large number of stores to support revenue, but when the number of stores continued to increase, it formed huge cost pressure. Especially when offline operations were hindered during the pandemic, losses would increase.
**Continuing to Go Down-Market and Opening Franchising**
**Cannot Save Helen's** Facing the crisis of "turning from profit to loss," Helen's is trying every means to find new ways out. In this financial report, the effect of the adjustment began to show, but it was a drop in the bucket. Helen's reduced expenses by closing stores and suspending operations of some stores in the fourth quarter of 2022, concentrated resources on developing the more down-market markets that were less affected, and actively explored a new cooperative model of franchising. In simple terms, Helen's self-rescue method is "down-market cost reduction": while closing stores, it is advancing into third- and fourth-tier markets, abandoning the single direct-operated model, opening "franchise cooperation," and trying to improve profitability. Closing stores is also the main way for most offline catering businesses to tighten their belts during the pandemic. For Helen's under the "heavy-asset direct-operated model," closing stores can reduce a large part of expenses such as rent, utilities, and labor. But unlike the immediate cost reduction effect of closing stores, the other adjustments have not yet been able to significantly improve Helen's efficiency. First is the expansion of the down-market. Unlike ordinary bars and KTVs that focus on location and traffic, Helen's advantage of high cost-performance is that it can open mini-bars in down-market cities. Ideally, the location strategy of "poor location but low price to drive traffic" can bind Helen's with young groups such as small-town youth and workers. Currently, small-town youth in third- and fourth-tier cities still contribute the vast majority of Helen's revenue. But the strategy of continuing to go down-market has not improved Helen's performance. According to the financial report, the number of stores and average daily sales per store in third-tier and below cities were lower than in 2021. In 2022, Helen's had 308 stores in third-tier and below cities, but while opening stores, the total number of stores still decreased net; the average daily sales per store was 7,300 yuan, a significant decrease from 9,400 yuan in 2021. Second is the franchise model that was mentioned multiple times in the performance report and developed rapidly in 2022. In 2022, among revenue from customer contracts, "franchise stores" brought 11 million yuan in revenue, accounting for only 0.7% of total revenue. So far, the franchise effect has not been reflected, and Helen's still has to rely on direct-operated revenue.
Image source / Helen's financial report
The financial report mentioned that the franchise model was opened to enter a broader market, that is, to open stores in third- and fourth-tier cities. However, how to ensure that new stores can replicate the headquarters from products to services, processes, brand, and talent training is a concern for the outside world. Currently, Helen's specific management model has not been presented in detail.
**Besieged "Mini-Bars"** Three years ago, young people flocked to Helen's to check in. Three years later, the same group wrote on Xiaohongshu: "Helen's is still there, I thought it had gone bankrupt!" If the main reason for the loss is the pandemic, then why haven't Helen's down-market and franchise strategies shown obvious improvement after the pandemic gradually dissipated? Because Helen's has more and more competitors. According to data from iiMedia Consulting, the market size of China's mini-bar industry in 2021 was about 128.04 billion yuan, and it is expected to reach 148.78 billion yuan in 2023. The mini-bar industry is no longer what it was five years ago, and the bar market is attracting more and more participants. The first batch of rising competitors are independent bars, which are the most numerous. Like street-side mom-and-pop stores, although these mini-bars have not formed branding and chain operations, they are everywhere. After entering the down-market, the original local mini-bars and new forces are also "besieging" Helen's. A mini-bar entrepreneur told Kaibo Finance that the initial investment to open a mini-bar in first- and second-tier cities may be around 800,000 to 1 million yuan, but in third- and fourth-tier cities, opening an 80-square-meter mini-bar requires only about 150,000 yuan, and the cost can be recovered within 3 to 4 months. Many young people now choose mini-bars as their main or side business. Data shows that as of the end of 2020, there were about 35,000 bars in China, of which more than 95% were independent bars. By revenue, the top five brands in China's bar industry accounted for only 2.2% of the market share, of which Helen's market share was 1%. This was its highlight moment; currently, the share is only less. The second batch of rising competitors are emerging mini-bar brands, such as TAPS, Mao Yuanwai, Hutaoli Music Bar, Erma Bar, and COMMUNE Commune. Because their brand characteristics and product richness tend to be diversified and segmented, they have gradually become the new favorites of young people. The third batch are cross-border brands that are increasingly involved in the mini-bar business. In addition to Jiangxiaobai in the alcohol industry, there are also Haidilao, Hefu Noodles, Lao Xiang Ji, Coucou, Xiabuxiabu, Xijiade, and Meizhou Dongpo in the catering industry; and Nayuki Tea, Tims Coffee, and Seesaw in the tea and coffee industry, all trying to get a share of the mini-bar market. Among these endless competitors, Helen's characteristics no longer seem obvious. In the past, Helen's could be called the "Pinduoduo of nightclubs" or the "Starbucks of bars," competing on cost-performance and seizing the "third space" of young people. Now, on the one hand, Helen's has announced a round of price increases due to pressure from rising raw material costs, with increases ranging from 0.2 yuan to 0.9 yuan. But the financial report shows that the gross margin contributed by Helen's own alcoholic beverages has decreased from 80.2% in 2021 to 75.6% in 2022.
Image source / Helen's financial report
On the other hand, most of the emerging mini-bar brands are also focusing on young people's social scenes. Internet-famous check-ins are no longer exclusive to Helen's, and Helen's has not formed a spatial recognition like Starbucks. Yang Renwen, director of the research institute at Guosheng Securities, analyzed in an article that Helen's expansion of new store types and exploration of new business models are already on the way. At the same time, the "Helen's · Yue" stores with the franchise + light-asset and "food stall + mini-bar" model can further help Helen's develop the down-market and strengthen brand power. He believes that with the recovery of customer traffic and the restoration of offline consumption scenarios, Helen's is expected to usher in a recovery in performance growth. After Helen's issued a profit warning announcement, its stock price rose for two consecutive days on March 1 and March 2, once rising more than 11%. Industry insiders said this was a sign that the market is optimistic about the future development of the continuously adjusting Helen's. At the end of May 2022, Helen's founder Xu Bingzhong wrote on his Moments: "Even if the pandemic were not here, I, who love to toss around by nature, would again be confused about the meaning of struggle." With the elimination of the pandemic's impact, it is unknown whether Helen's can complete the goal of opening 2,200 stores by the end of 2023 as written in its prospectus. Now, under large-scale losses, the probability of achieving this goal has become very small, and whether Helen's can reverse the situation in the future still requires more adjustments.
*Cover image source: Visual China


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