Big-Store Renovation Is Guoquan's Core 2026 Lever, with Short-Term Revenue Disturbed by High Base and Macro Pressure

Overview

This report is a conference summary after Goldman Sachs met with Guoquan management at the 2026 APAC Consumer and Leisure Corporate Day, focusing on 2Q26 operating updates, 2026 guidance, big-store renovation, product expansion, new store formats, franchise model, shareholder returns, and overseas expansion. Management said 2Q26 revenue growth slowed, but full-year guidance was maintained and 2026 profit growth is expected to outpace revenue growth.

Core views

The core view is that Guoquan faces short-term pressure from June high-base effects, softer macro, low-margin live-streaming products, and raw-material cost volatility, while big-store renovation is delivering stronger revenue productivity and store-level profitability improvements. The company shifted 2H26 opening focus to big stores and uses revenue contribution rather than store count as the main evaluation metric. For new businesses, frozen durian and camping stores help build supply-chain and traffic, while stir-fry stores still need validation. On shareholder returns, the company committed to semi-annual dividends, with dividend amounts not lower than 60% of repurchase amounts; some repurchased shares are used for equity incentives, and the remainder will be cancelled before the next AGM.

Analysis framework

The report is mainly based on operating updates and strategic comments disclosed by management during the Corporate Day exchange, and synthesizes themes such as revenue, store openings, expenses, raw materials, margins, product expansion, big-store unit economics model, new formats, franchisee behavior, M&A/shareholder returns, and overseas expansion.

Methodology notes

• conference notesManagement Communication Summary

  Organize short-term operating performance, annual guidance, and strategic progress from corporate-day discussions.

  The report did not build an independent financial model or change ratings, and instead organized 2Q26 operations, 2026 targets, and big-store renovation around management disclosures.

• unit economics modelBig-Store Renovation UE Evaluation

  Compare investment amount, size, number of freezers, sales productivity, payback period, and store profitability between big stores and standard stores.

  Big-store investment is about RMB200K, above RMB140K for standard stores, but management said sales productivity is higher, payback is about 1.5 years, and store-level EBITDA and profit have turned positive.

• factor profileGS Factor Profile

  A framework used by Goldman Sachs to compare stock growth, financial returns, valuation multiples, and composite attributes.

  The appendix explains this framework, but the main body of this report does not provide specific factor quantiles or an investment rating for 2517.HK.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 2517.HK

  Core report subject; Goldman Sachs marked as Not Covered

  Strengths

  Big-store renovation is progressing well, with 30%+ SSS growth in upgraded stores in Jan-May; stores have turned positive at EBITDA and profit level; management maintained the target of profit growth exceeding revenue growth; shareholder return arrangements are relatively clear.

  Weaknesses

  2Q26 revenue growth decelerated; live-streaming and some new products have lower margins than core categories; raw-material cost volatility remains a pressure; stir-fry stores are still in pilot phase.

  Comparison

  Big-store investment is higher than standard stores, but store size, number of freezers, and sales productivity are stronger, while payback remains around 1.5 years.

  Risks

  Weak consumer macro, high-base effects in June and beyond, imported beef and oil-price volatility, insufficient franchisee willingness to increase investment, and limited standardization in new formats.

Key data

• 2Q26 revenue trendApril showed mid-single-digit year-on-year growth, May low single-digit growth, and June was affected by high base and macro softnessTicket size was broadly flat; 6/2024 and 6/2025 SSS were 30%+ and mid-single-digit, respectively.
• 2026 profit targetManagement maintained the target of profit growth outpacing revenue growth1H26 gross margin was pressured by lower-margin live-streaming products and raw-material costs, but was eased through cost locking, product-mix adjustment, and domestic beef supply support.
• Big-store renovation progressCompleted more than 500 by end-May 2026Target is to renovate 2,000-3,000 stores over the next 2-3 years.
• Upgraded-store SSS growth30%+ SSSg in Jan-May 2026Some early pilot stores saw about 50% revenue growth in February, then moderated.
• Big-store versus standard-store investmentBig store about RMB200K, standard store about RMB140KBig stores are usually 14+ freezers and over 80 sqm; standard stores are around 6 freezers and 50-100 sqm.
• Big-store payback periodAbout 1.5 yearsManagement said company subsidies and external cost sharing lower franchisee out-of-pocket capex versus the static model.
• Camping stores100+ locations open or in preparation by end-MayAfter a successful pilot in Zhengzhou in September 2025, replication began in 2026; dispersed site selection and limited standardization make expansion more labor-intensive.
• Use of repurchased sharesUp to 100 million repurchased shares used for equity incentives, with the remaining shares cancelled before the next AGMThe company will also continue semi-annual dividends, with dividend amounts not lower than 60% of repurchase amounts.
• Overseas expansionHong Kong stores expected to open by end-JulyManagement said overseas expansion will be a gradual long-term investment, and rapid short-term ramp-up is not expected.

Impact & implications

For investment judgment, the implication is that if big-store renovation continues to validate 30%+ SSS growth and an approximately 1.5-year payback, Guoquan can transition from store-count expansion to improving per-store quality and revenue contribution. However, short-term same-store performance may still be affected by high-base comparisons, weak consumption conditions, raw-material costs, and franchisee willingness to invest. New products and formats are more oriented toward long-term supply-chain and traffic-building capabilities, with short-term margin contribution likely lower than core categories.

Risks

• Weak macro consumption environment may continue to slow revenue and SSS growth.
• High-base effects in June and subsequent months may suppress year-on-year growth performance.
• Imported beef, oil prices, and geopolitical factors may cause raw-material cost volatility.
• Live-streaming products and new SKUs have lower margins than core products and could drag margins.
• Big-store renovation depends on store conditions and franchisee willingness to increase investment, which may progress slower than expected.
• Camping-store site selection is fragmented and standardization is limited, making expansion relatively labor-intensive.
• Stir-fry stores are still in pilot validation, and large-scale scaling before 2027 remains uncertain.
• Overseas expansion is positioned as a long-term, gradual process with limited short-term contribution.

What to watch

• 2H26 big-store openings and renovation count, and whether revenue contribution outperforms store-count metrics.
• Whether 30%+ SSS growth at upgraded stores can persist over larger samples and longer periods.
• Whether 2026 profit growth indeed outpaces revenue growth.
• Progress in raw-material prices, imported-beef substitution, and domestic beef supply development.
• Margin and traffic impact of new products such as frozen durian, eggs, frozen seafood, and bakery items.
• Replication speed, site-selection efficiency, and standardization capability of camping stores.
• Validation results of stir-fry store pilots and potential rollout pace in 2027.
• Whether Hong Kong stores open by end-July and the subsequent overseas expansion pace.
• Actual execution of semi-annual dividends, repurchase share incentives, and cancellation plan.