The growing popularity of Taiwan-style eateries in major mainland cities has caught the fancy of US investment bankers.
Used to the fare served up in New York delis, these bankers are not exactly eager to wash down "double boiled frog legs" with a glass of "pearl" milk tea. Instead, they are coming with checkbooks in hand to buy into the restaurants that serve these dishes.
Wall Street heavyweight Goldman Sachs together with Chinese private equity firm Whitesun Equity Partners on Thursday pumped in $30 million for a 20 percent stake in Hangzhou-based C.straits Caf, which operates a chain of restaurants mainly in Hangzhou and Fuzhou. Other well-known restaurant chain operators that have been targeted by foreign investors include Diocoffee, Chamate and Christine Bread House.
"The food and beverage industry in China has huge growth potential because of the steady rise of personal incomes," said David Chou, director and general manager of Goldman Sachs, in a statement.
Goldman Sachs will help C.straits expand by adding restaurants in new markets before seeking a public listing, Chou said.
C.straits now operates 400 restaurants either directly or through franchise. It plans to expand to 5,000 within 10 years in Hangzhou, Wuhan, Tianjin, Chongqing and other cities, the company said.
"We plan to list on the Shanghai main board in the first quarter of 2010," said Taiwanese businessman Yang Jinfa, C.straits' chairman.
C.straits said it targets businessmen and top-tier consumers by providing coffee and Western food.
"We are dedicated to building a coffee and Western food chain," said Jin Meiyang, C.straits president.
The expansion will help C.straits compete with the likes of Starbucks and Chamate. The company is also focusing on second-tier cities.
The sales revenue of the food and beverage industry broke through the 1 trillion yuan mark in 2006. The Ministry of Commerce expects revenue to reach 1.22 trillion yuan for 2007 and to rise at 17 percent annually.
Lihua Fast Food, Daniang Shuijiao (or Daniang Dumpling) and Beijing Laojia Restaurant are poised to launch their IPO plans.
Goldman Sachs has also invested in Chinese companies including Ping An Securities, Focus Media and Industrial and Commercial Bank of China.
Source: China Daily