Hong Kong 6-Mid: Helens Chinese Trademarks Ruled Invalid, Market Cap Plunges
Have you been to Helen's? Recently, Helens lost its Chinese name. Three Chinese trademarks "Helens", "Helens Bistro", and "Helens Big Paidan" were ruled invalid by court final judgment. The company stated the dispute has no material impact on overall business, daily operations or financials, and it can continue using undisputed trademarks. But capital markets react faster to uncertainty.
Helens' Trademark Defense: Chinese Trademarks Invalidated
Founded in 2009, Helens first opened at Wudaokou, Beijing, targeting foreigners and international students initially using "Helen's" English trademarks, registering related English marks in 2013. Core Chinese trademarks were not registered until 2018. Trademark dispute primarily between Chengdu Helen Binfen Hotel Co. and Helens. The opponent registered two "Hailun" trademarks in 2016 under Class 43 (restaurant, bar services), and in 2023/2024 filed invalidation requests against Helens' Chinese marks, claiming similarity and likelihood of confusion. After three years of back-and-forth, on June 25, Helens announced the court's final ruling invalidating three Chinese trademarks. Helens said it can continue using uncontested marks. As of now, Helens' offline stores and online communications still use "Helens" Chinese name; impact on stores not yet visible, but capital markets are more sensitive. After the announcement, stock price opened lower on June 26, falling over 6% intraday, closing at HKD 1.58. Public info shows Helens once reached HKD 30 billion market cap at IPO, now only HKD 2 billion, a drop of over 90%.
From "Young People's First Bistro" to Store Contraction: Value Model Under Pressure
Helens' early stores surrounded universities, serving foreigners and students. Founder Xu Bingzhong repositioned it as "offline free social space for young people" emphasizing extreme value-for-money: bottled beer under RMB 10, cocktails just over RMB 20. This youth + value model was replicated. By end 2021, store count reached 782, and the company listed in Hong Kong that year as "largest chain bistro in China." 2021 prospectus showed revenue grew from 115M to 565M to 818M RMB from 2018-2020; net profit 9.7M, 79.1M, 70.1M respectively. Own-brand beverages contributed high margins, making up over 60% of revenue; direct factory sourcing and scale gave cost advantage on third-party brands.
However, aggressive expansion raised costs, plus pandemic factors. In 2021, Helens net loss was 230M RMB; in 2022 net loss expanded to 1.6B RMB. After cumulative loss over 1.8B, Helens started closing stores: by end 2023, it had 479 bistros, down 288 from a year earlier, more than 40% below peak of 850+. Simultaneously, Helens shifted from full direct operation to franchising—the "Happy Beer Partner" program. Initial investment threshold was at least 600K RMB; by 2024, new store threshold lowered to 400K, reflecting pressure to expand and improve operations.
Bistros Everywhere: Same-Store Decline and Weakening Price Appeal
2025 financials: annual revenue 540M RMB, down 28.3% YoY; net profit 33.95M RMB, turning profitable. Own-brand beverage revenue share and gross margin improved; store-level gross margin increased to 73.77%, better than prior year. But operational challenges remain: same-store daily sales for direct and franchise stores were 8,500 RMB, down over 18% YoY; single franchise store daily sales only 4,100 RMB, all store types declining. In the catering sector where daily revenue often exceeds 10K, franchise store income is under pressure. Nearly 70% of Helens stores are in tier 3 and below cities, testing profitability.
Meanwhile, young people's options for drinking and socializing have significantly increased. In the past year, over 38,000 new bistros opened—from home bars, craft beer bars, live house bistros to various bistro concepts, with consumption scenes diversifying. Among them, the "food + drink" bistro format has surged. Huan Shi (Illusory Master) has grown rapidly; its parent company, Extreme Object Thinking, filed a prospectus with HKEX in January this year. Huan Shi has over 100 stores in China; 2024 revenue exceeded 1B RMB. Unlike Helens, which uses low price and scale, Huan Shi goes for atmosphere, higher pricing, per capita over 100 RMB. Prospectus: first 9 months of 2025, single-store daily sales 29,880 RMB. By offering brunch, afternoon tea, dinner, and nighttime drinks, it extends operating hours beyond 18 hours to boost efficiency. Alcohol and beverages contribute about 45% of revenue, of which 85% are alcoholic drinks. During the same period, overall gross margin was stable at 68.7%, above industry average. However, Huan Shi also faces challenges including higher store costs and consumer complaints about food taste/quality affecting brand reputation.
China food industry analyst Zhu Danpeng believes low, mid, and high-end brands each have markets. For bistros, the industry is in rapid expansion but not concentrated. In about 5 years, with capital push and consumption dividend, a head brand and clearer competitive landscape may emerge. He also noted pricing isn't the only factor; the hard core factors for bistro future are brand effect, scale effect, fan effect, supply chain completeness, and single-store operation ability. Due to different store locations, strategies should differ. For Helens, the biggest challenge remains how to manage each store well.
