Revenue Performance - Total revenue for the year ended December 31, 2023, was 13,272,075 in 2022[283]. - Total revenue increased by 13,272,075 in 2022 to 4,822,949, or 50.8%, from 14,314,157 in 2023, primarily driven by bakery products[3]. - Revenue from bakery products in China rose by 8,705,218 in 2022 to 996,040, or 126.7%, from 1,782,030 in 2023, due to higher sales of seasonal and beverage products[3]. - Revenue from the United States decreased by 3,780,867 in 2022 to 167,861, or 27.4%, from 444,958 in 2023, impacted by increased competition[6]. - Revenue from U.S. beverage products decreased by 2,047,670 in 2022 to 327,805, or 29.3%, from 792,573 in 2023, primarily due to the closure of Chanson Greenwich[6]. - The PRC Stores accounted for 82.9% of total revenue in 2023, while the U.S. Stores contributed 17.1%[283]. Product Offerings - The PRC Stores had over 707 types of bakery and seasonal products available, including 145 new products introduced in 2023[283]. - The U.S. Stores offered 108 types of eat-in menu items and bakery products, with 20 new products launched in 2023[283]. - Revenue from bakery products constituted 87.6% of the PRC Stores' revenue in 2023, while seasonal products and beverage products accounted for 9.1% and 3.3%, respectively[284]. - The U.S. Stores generated 27.0% of their revenue from eat-in services in 2023, with beverage products making up 57.9%[285]. - The PRC Stores currently offer over 707 types of bakery products and more than 40 types of beverage products, with bestselling items including little puffs, chocolate cakes, and Americano[303]. Market Expansion and Strategy - The company plans to expand into new markets by opening new stores and enhancing its presence in Xinjiang and New York City[298]. - The company aims to improve in-store customer experience through renovations and standardized employee training[299]. - The company intends to increase brand awareness through marketing efforts, social media presence, and e-commerce sales[301]. - The partnership with Aranka Media Enterprise since 2019 aims to improve brand growth and customer relationships through enhanced media strategy[344]. Customer Engagement and Membership - The PRC Stores had approximately 582,000 members as of December 31, 2023, with sales to members accounting for 51.47% of total sales[312]. - The PRC Stores offer a member day discount of 12% off original prices each week to stimulate sales[341]. - The PRC Stores and U.S. Stores conduct periodic customer satisfaction surveys to gather insights on product quality and customer needs[335]. Financial Performance - Gross profit for 2023 was 6,102,671 in 2022, reflecting improved sales performance[468]. - Total operating expenses rose to 7,540,696 in 2022, primarily due to increased selling and administrative expenses[468]. - The company reported a net income of 1,288,205 in 2022[468]. - Operating income for 2023 was a loss of 1,438,025 in 2022, indicating better expense management[468]. - SG&A expenses are expected to continue increasing as the company invests in new store openings, product launches, and market penetration efforts[465]. Supply Chain and Production - The PRC Stores contract third-party producers for seasonal products, with production based on previous sales records and capacity[305]. - Top suppliers of the PRC Stores in 2023 included Urumqi Yuxin Jiayuan Commerce and Trade Co., Ltd., which constituted 11.93% of total raw materials[329]. - Top suppliers for U.S. Stores in 2023 included Baldor Specialty Foods (28%), Southern Glazers of NY Metro (12%), and The Chefs' Warehouse (13%) of total raw materials[331]. - The central factory has an annual production capacity worth RMB150 million (approximately 2.5 million), with RMB14.7 million (approximately $2.1 million) already spent as of December 31, 2023[346]. Employee Management - The PRC Stores and U.S. Stores have a total of 410 employees as of December 31, 2023, with 356 in the PRC and 54 in the U.S.[366]. - The PRC Stores maintain an in-house R&D team of six employees, focusing on product quality and customer trends[354]. - The PRC Stores and U.S. Stores expect to invest resources to retain more qualified employees in their R&D team[354]. - The company has not fully deposited social insurance fees for all employees as required by relevant regulations[442]. - The company has not yet paid housing funds for all employees, which is mandated to be at least 5% of the monthly average salary[443]. Regulatory Compliance - The U.S. Stores are subject to extensive federal, state, and local government regulations, which could impact operations if licenses are not obtained or retained[444]. - The U.S. Stores must comply with zoning, land use, and environmental regulations, which could delay construction and increase development costs[446]. - The U.S. Stores are required to comply with the U.S. Fair Labor Standards Act, which could increase labor costs due to minimum wage changes[448]. - Environmental laws may impose significant fines and liabilities for non-compliance, potentially affecting the business and financial condition of the U.S. Stores[450]. Legal and Taxation - An income tax rate of 10% applies to dividends declared to non-PRC resident investors, which may be reduced to 5% under certain conditions[438]. - Xinjiang United Family and its branch offices currently pay VAT at a rate of 13% for manufacturing and selling bakery products, down from 16% prior to April 2019[433]. - Three of the UFG Entities are paying VAT at a reduced rate of 1%, while the rest are exempt from VAT[433]. - The urban maintenance and construction tax is levied at a rate of 7%, educational surcharges at 3%, and local education surcharges at 2% for Xinjiang United Family and its branch offices[437].
Chanson International (CHSN) - 2023 Q4 - Annual Report