RBF sweeps through the door, Northeasterners perk right up

By Muxin Xu

Edited by Jing Liu

Zhan Hao was in good spirits this Spring Festival. He even visited two brands on the morning of Lunar New Year's Day. Part of it was his new venture, "Zhuge Kaidian" — the former angel investor is using it to pivot entirely into RBF restaurant investing. But it was also because "the batch of stores I invested in before the holiday have been paying back like crazy. It's wild."

The entire Northeast had a good New Year too. The mutual lovefest between "Erbin" (Harbin) and the "little potato" tourists generated 16.42 billion yuan in tourism revenue. Liaoning, long the laggard among the three northeastern provinces, saw visitors pour in after Shenyang hosted a CCTV Spring Festival Gala sub-venue, with tourism revenue surging 572.7% year-over-year. The region's small shop owners raked it in, bringing the RBF investors behind them into the spotlight.

RBF may be the investment method most suited to this pattern of "regional, short-lived viral fame followed by explosive revenue growth." RBF stands for Revenue-Based Financing — the key word being Revenue. It targets brick-and-mortar operators in restaurants, retail, and services with stable cash flow, investing in individual stores and taking a percentage of daily (or monthly) revenue. The industry average is 300,000–500,000 yuan per store. The main domestic players in this space include Micro Connect, Yongchuan Capital, and Zhuge Kaidian (which only invests in chain restaurants), while traditional equity funds are also rushing to launch RBF vehicles.

The Northeast is becoming the biggest beneficiary.

For the longest time, the saying "don't invest beyond the Shanhai Pass" has cast a spell over this black-soil region. It has long been seen as the place where planned economy factors linger most stubbornly — the arrogance of power, listed company scandals, and population outflows have all blocked capital inflows. Yet the very barrier that equity investment couldn't cross has left a crack open.

Northeastern Cuisine and Northeasterners

Liu Zhengdong, Senior VP at Micro Connect and head of its northern region, has a massive screen in front of him showing real-time data on all the listed businesses in his territory. To date, Micro Connect's Macau exchange data shows 192 northern brands have listed for financing, with 2,800 stores on the platform.

Liu Zhengdong told Anyong Waves: Nationally, the most numerous listed stores are in offline retail — mainly general merchandise supermarkets, daily necessities, and even some unmanned retail formats. Beijing and Shandong stores concentrate in services, while the Northeast skews heavily toward restaurants. Micro Connect works with Half Pub here, as well as Yuecai Kitchen, which just listed on the Micro Connect Macau Exchange.

The "Northeastern restaurants" here don't just mean stores located in the three northeastern provinces. They also include chain brands headquartered in the Northeast that have blossomed nationwide — Mixian Bibimbap, Xijiade Dumplings, Yin Chu, Yang Guofu and Zhang Liang Malatang. Their founders all hail from the Northeast.

Over the past year, Zhan Hao met with hundreds of brands, "averaging nine meals a day." His fieldwork, combined with other industry insiders' observations, pieces together a collective portrait of Northeastern restaurant founders:

> 1. Brutal local competition

To stand out in an environment of rock-bottom prices where people joke about "Northeastern currency," you need to push labor and space efficiency to the extreme — creating a fiercely competitive landscape. Many outside brands now resist entering the Northeast. If their previous hesitation was about not believing in the region's market potential, now it's fear of the cutthroat competition.

> 2. Severe population concentration, with stores clustering in Shenyang

This hyper-competitive environment directly drives stores to leave. But the winners of this competition also gain the ability to expand nationwide. Data shows that among the three northeastern provinces, Liaoning's cities are the most polarized — Shenyang's store count is in a league of its own, thanks to its more developed brand marketing companies and third-party service providers. In 2023, while "Erbin" went viral, many brands that made it there immediately moved to develop in Shenyang next. A classic case is Mixian Bibimbap, which expanded from Jilin to Shenyang.

And Shenyang's stores aim for national reach. Yuecai Kitchen, a Northeastern-Cantonese fusion brand that grew up in Shenyang, is working to open stores in Shenzhen.

> 3. Clinging to repeat customers and regulars

Northeastern founders pay more attention to their business model and brand value. Repeat purchase rates and regular customers matter enormously to them: with fewer people around, you need the same customers coming back constantly. Here, the "viral brand" magic doesn't work. Without substance to back it up, trendy stores are just flashes in the pan.

> 4. Following the big brother

Having lived through state-owned enterprise restructuring, Northeastern founders still lean toward conservatism. In conversations with brands, Liu Zhengdong found that once you secure a partnership with a leading player, negotiating with second-tier brands becomes much easier. "The big brother effect is very pronounced."

Why are Northeasterners more drawn to restaurants?

You have to trace it back to the 1990s. In the recent wave of "Northeastern Renaissance" works, stories are often set against the backdrop of the 1990s layoff wave. The Northeast, as a heavy industrial base, bore the brunt — millions of laid-off workers sought new paths, including entrepreneurship. But those who stayed home quickly discovered: where there are no incomes, where are the consumers?

Fortunately, everyone has to eat. The low-barrier restaurant industry thus became the destination for massive labor flows, and chain stores — unshackled from local consumption limits — could go national.

But chain brands and equity investment aren't a perfect fit. When new consumer brands were white-hot in 2021, floods of capital poured in to artificially inflate trendy brands. New stores opened in succession, then closed in succession. Hutaoju, with its 600-day lifespan, proved this mismatch between equity investment and store-level revenue.

Twenty years later, investors battered by the new consumption bubble began seeking new paths too.

Equity Disillusionment

"I'm never participating in any equity investment again," Zhan Hao said.

Before founding Zhuge Kaidian, Zhan Hao was a founding partner at JianGuo Venture Capital, having invested in over 80 early-stage projects including Honglingjin, Financial No. 1 Store, and Cunshang Yi Wu. After more than a decade in traditional PE/VC, he's now gradually shifting capital allocation out of VC and into RBF investing.

Yu Xiaoye previously worked in strategic investment at a Dalian company, investing in several local consumer brands. In the process of evaluating projects, he gradually discovered that some SMEs had relatively limited financing options, and the emerging RBF model could serve as a supplement. Yu Xiaoye decided to start his own FA firm. He told Anyong Waves that local FAs typically use three channels to place the chain stores they source:

First, becoming local tentacles for institutions like Micro Connect. Since early 2024, Micro Connect has developed many partners to source projects. This relationship resembles the traditional FA project-pushing model. Through two years of operation, Micro Connect has calculated investable store data models: either more than 10 stores, or annual revenue exceeding 3 million yuan. They generally test partnerships with existing stores first, then invest in new locations once the model is proven. Partners sometimes also perform broker functions, like helping brands prepare materials for the Macau Exchange.

Second, some traditional equity funds in transition to RBF investing need consulting services.

Third, some projects inevitably don't meet Micro Connect's hard criteria. At that point, Yu Xiaoye refers stores to individual investors. For example, one individual investor was very interested in the tea beverage track, wanted to find tea companies, but considered equity investment too risky — so he accessed stores through RBF first. And Yu Xiaoye would tell him: if through his capital injection the store expands and performs well revenue-wise, Yu Xiaoye would recommend the brand to larger institutions, and he could achieve a safe exit.

Using RBF as a safety line for equity investment is most investors' choice — after all, fully leaving VC/PE takes courage. Zhan Hao told Anyong Waves that he's also persuaded many friends around him to join him in RBF, but most are still hesitant, not turning as decisively as he did.

In Liu Zhengdong's view, this precisely shows the two investment methods aren't in conflict: "A large number of our stores come recommended by professional investment institutions. Jokingly, some brand founders feel like Micro Connect is working for them — after all, Micro Connect puts up the money to expand stores and drive up valuations, with more of the benefit accruing to shareholders rather than store-level revenue."

For most investors, RBF is a way to add flowers to brocade, not a replacement. Its rise echoes the mood of the times: no longer betting on 100x or 1000x returns, but lowering risk for stable returns — and what could be more concrete and reassuring than cash flow and store data?

Of course, RBF investment carries its own risks. Yu Xiaoye told Anyong Waves that as a novel financing method, local entrepreneurs harbor concerns while also trying to find its loopholes. One wire he must stay taut when sourcing projects: if a store owner asks about using personal QR codes to collect payments, they must be immediately rejected.

Micro Connect's risk management is more systematic. Its largest team isn't frontline investment — it's technology. This team supports the connection to the revenue-sharing system for 13,000 listed stores: stores can keep using their own SaaS systems, and as long as they give Micro Connect access, it can complete risk management and data capture.

Plus, with Micro Connect currently focused on the Micro Connect Macau Exchange, after two years of layout, it now seems to be moving "behind the scenes" toward platformization.

Vitality

Entrepreneurs don't always welcome investors bearing cash — founders who've lived through the restaurant/consumer bubble bursting especially so. Zhan Hao has experienced awkward moments: restaurant founders would rush to tell him "no IPO, no fundraising," "capital is evil," cataloguing these phrases with specific names attached.

But he understands their concerns. "Equity investment is a one-time injection that essentially forces enterprises to spend the money quickly. But the restaurant industry has its own growth rhythm, different from the explosive growth of the internet era — that's why Xiaocaiyuan took a full ten years from founding to IPO."

And Liu Zhengdong, who has accompanied hundreds of physical brands through the pandemic test, knows well the difficulty of "surviving." He told Anyong Waves: to build national chains, you first need supply chain coverage, then management personnel coverage — with the former requiring substantial capital. At this point enterprises face three choices: bank loans backed by physical assets, equity financing culminating in IPO, or seeking RBF-type investment capital.

The better the enterprise, the more options it has. But for most enterprises, they currently face an objective environment where equity financing is difficult. Yet without expansion, there are even fewer opportunities for future financing — to the point where bank loans might default. For these founders, how to combine these financing methods at different time periods is key to stumbling through survival.

The chain brands that RBF invests in often face exactly this situation. They may have previously taken equity investment, but those old shareholders all need to exit. The founder just emerged from the pandemic, hasn't caught their breath, yet must come up with a large sum to support shareholder exits or dividends — a predicament.

So founders turn to RBF investors, obtain financing, then restructure their equity — buying back old shareholders' stakes, or using it for dividends. Of course, nearly every founder says this is only temporary; once through the difficulty, they'll still seek equity financing.

In a sense, the choices of restaurant bosses and the出路 of equity investors both resemble the entire Northeastern saga. An era of wind and clouds faded into decline, bringing them together on this land at this moment — squeezing out vibrant vitality from the cracks.

Image source: Anyong Waves, photographed at Shenyang China Industrial Museum