By MA Yue
Chinese pub chain Helen’s International expects to make huge losses in 2022.
According to the low-rent pub chain’s earnings preannouncement, annual revenue will shrink by as much as 16 percent to 1.6 billion yuan (US$230 million). Helens’ net loss could plunge to 1.7 billion yuan, from around 300 million yuan a year before.
Helen’s made its debut on the HKEX on September 10, 2021 as the first pub chain in China to go public.
Like countless others, Helen’s blames the pandemic for its troubles. About a quarter of Helen’s 821 venues were closed at some time or another by Covid, which brought a loss of at least 600 million yuan.
While Helen’s might be quite determinedly pointing its finger of blame outward, a catastrophe program of aggressive expansion has brought the company close to its knees.
Founded in 2009, Helen’s secret is “highly efficient and timely service combined with trendy music, to bring our customers a carefree, relaxed, and enjoyable night atmosphere.”
And that atmosphere in Helen’s is decidedly “student.” Staff are largely in their twenties and thirties, the same age as most of the clientele. Helen’s is famous for selling its own products with 70 percent of beverage sales coming from branded drinks such as Helen’s craft beer.
In 2018, Helen’s had only 160 pubs, but five years later, there were more than 800. Helen’s looks for cheap locations in a prime areas - the rent is cheap but there is no shortage of customers.
In rural areas and small towns, Helen’s still attracts a very young customer base, but one much less dominated by the student crowd, and one with much less money. Low prices are the main way of attracting customers. Most bottled beers in Helen’s cost less than 10 yuan (US$1.50).
In a post-pandemic, digitized China, investors and entrepreneurs are all seeking new ways to get Chinese youth out of their bedrooms and into the offline marketplace. One of the distinctive features of Helen’s is its marketing strategy aimed at just such groups, so the pandmic certainly put an end to much of Helens’ wishful thinking. Some 130 pubs were shut down last year.
Meanwhile, the low-price positioning of Helen’s demands quite a high turnover. In small-town China – even in cities of millions – there is often very little to do in the evening, or at 1am, and less money to do it with.
Helen’s became very popular with people who intend to spend all night sitting at a table cuddled up to a solitary pint of beer, especially on a cold night. The pub might look full, but the customers are not spending much money.
