China Food

Hefu Laomian, to be listed soon

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was valued at 7 billion after the last round of financing.
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Wen: Dong Chailing; Editor: Xie Kangyu

Source: future consumption app (ID: lslb168)

 
Hefu Laomian, which has emerged from multiple rounds of financing, is now one step closer to listing under the rhythm of rapid expansion.
 
Recently, Jue Wei food announced that Hefu Laomian, a subsidiary of Jue Wei food, would be listed overseas. Hefu Laomian entered the investment territory of Jue Wei food in 2015, with the latter holding 16.92%. In the 10 years since its establishment, Hefu Laomian has completed 6 rounds of financing. The latest round of financing took place in July 2021, with an e-round financing of 800 million yuan. The shareholders include CMC capital, Zhongwei capital and Tencent investment, which also set a new financing record of pasta track, with a valuation of 7 billion yuan.
 
The standardization of products and the ability of back-end supply chain are increasingly heard in the mouth of new catering brands. Adopt the direct marketing mode and plan to open 1000 stores. Building a self built supply chain requires huge investment. These are higher than the target planning of peers, so that the single financing scale of Hefu Laomian is higher than that of other new players.
 
Under the pressure of market competition and cash flow, a number of catering head brands have also been listed recently, including Yang Guofu, Xibei and so on.
Among the listed catering enterprises, life is not easy, and their share prices are not rising with the improvement of the epidemic. Among them, Haidilao, the most representative, announced the closure of 300 stores due to “misjudgment”. At present, the market value has evaporated by more than 350 billion Hong Kong dollars. However, the ability of Haidilao to expand nationwide and build a supply chain is still an industry sample.
 
In the catering industry with a wide audience, the chain rate is low, and the opportunity to exchange scale for consumer awareness is still there. But when it comes to IPO, the weak brand system obviously can’t support a listed company. Among the predecessors in the catering industry, there are many examples of multi brand matrix collapse.
In terms of long-term value and brand growth, it needs to be verified by several billion players.
The target of 1000 stores is less than 400 at present
 
From the development process of Hefu Laomian, the company was established in 2012, opened its first offline store in Shanghai in 2013, and then concentrated in East China, which is not a new brand. We built our own supply chain earlier and paid attention to the passenger flow brought by site selection. The goal of Hefu Laomian is to reach a thousand store chain in the Chinese pasta track lacking brands.
 
During the epidemic period, multi capital investment was welcomed. Hefu Laomian focused on opening stores and sank to second and third tier cities. According to the “narrow door data”, the total number of stores in Hefu Laomian has reached 384.
 
Let consumers “fish noodles in the study”, which is the difference between Hefu and other noodle brands in style. Create a study style layout, locate the medium and high-end, and make it an object for people to explore stores on social platforms such as public comments and little red books.
 
Under the general trend of rising prices in the catering industry in recent years, it can be seen that more and more new brands are trying to lock in young groups with strong consumption power and seek higher added value. Including Hefu Laomian, in terms of standardization and digitization, it also tells the story of the benchmarking Macon giant.
 
The taste compatibility of its own pasta is strong. From the investment of the R & D team, what Hefu Laomian pursues is to make Chinese noodles as standardized as western food, so as to create a pop style with more popular taste and enough classics. With delicacy and health preservation as the selling point, Hefu Laomian sells a variety of soup noodles, as well as noodles, rice and snacks, with a total of more than 30 SKUs.
 
From the perspective of pricing, the price of Hefu Laomian is not cheap. For example, the signature herbal noodle soup series costs around 30 yuan. Several new brands of Lanzhou beef noodles, such as Chen Xianggui, Ma Jiyong and Zhang Lala, which were popular before, also took the high price route, but the customer unit price level was lower than that of Hefu noodles.
 
It is located in the core business district with relatively concentrated passenger flow, and the popularity of Hefu Laomian is quickly opened in first tier cities, which also brings high rents. In addition, adding the cost of manpower, equipment and raw materials, a bowl of noodles from Hefu Laomian is usually sold for 20-40 yuan, and the overall customer unit price reaches 45 yuan.
 
The increase in the number of stores has driven the growth of revenue. According to the data previously provided by Hefu Laomian, the average turnover of stores across the country is 550000 yuan per month, the floor efficiency is 4800 yuan per month and the human efficiency is 55000 yuan, which is at the top level of the industry. In terms of performance, the revenue growth of the brand has remained above 50% for many years.
 
In the outlet of catering retailing, in order to expand the home consumption scene, Hefu Laomian launched the “Hefu mall” in 2020. Including staple pasta and snacks, Hefu Laomian has launched more than 20 retail products. Its tmall flagship store shows that the instant noodles combination with the highest sales volume of the brand has a discount price of 149 yuan and a monthly sales volume of more than 20000. This achievement is close to the new brand of “Ramen theory” isokinetic food.
 
In the brand development process described by the founder, the construction of back-end supply chain and digitization is earlier than the action of opening a store. Previously, in an interview with 36 krypton, Li Xuelin, founder of Hefu Laomian, said that before the first store opened, the brand had been invested in the supply chain and central factory system supporting 1000 stores.
 
In the self built supply chain, Hefu Laomian has built a 15000 square meter central factory, which is responsible for the cold chain distribution from the factory to the store. Including the noodle production base put into operation last year, with an annual output of 20000 tons, which can support the supply of 1500 stores. In terms of digitization, Hefu Laomian has built its own information system including supply chain, operation and logistics to get through the front, middle and back office business.
 
With the goal of improving traditional categories and chaining, the new brand usually falls into a profit dilemma due to excessive investment on the cost side. In this regard, the same is true of Hefu Laomian.
 
Previously, when the e-round financing of Hefu Laomian was completed, Jue Wei food disclosed that the revenue of Hefu Laomian in 2020 was 1.107 billion yuan and the net profit loss was 215 million yuan.
Until the first half of 2021, the performance of Hefu Laomian turned from loss to profit, with a revenue of 846 million yuan and a net profit of 13.85 million yuan in the first half of the year. This means that the operating cost of Hefu Laomian has been optimized.
The expansion anxiety of noodle shops
 
As a catering brand that has been established for 10 years, the outbreak of Hefu Laomian actually occurred in recent two years. In the last two rounds, they received 450 million yuan and nearly 800 million yuan of financing respectively, and rapidly expanded the store network at the speed of opening a store in an average of two days.
 
From the outside world, new players have shown full enthusiasm in opening stores. Let’s take a look at the KPI of each store: it is planned to increase to about 200 stores by the end of 2021; Chen Xianggui estimated that there would be 600 in the next three years; Wuye noodles is expected to exceed 1000 by the end of 2021; It is estimated that by the end of 2021, the total number of stores will reach 450. In the early planning for the construction of the central factory, the goal of Hefu Laomian was to serve 1000 stores.
 
After achieving standardization, it further moves towards chain, and replicability becomes more critical. Song Qi, founder of Xiaomian, said in an interview with 36 krypton that the opening rate is an important indicator to measure whether the catering brand is growing rapidly, and it should maintain a growth rate of at least 100% every year.
 
At present, there are less than 400 stores in Hefu Laomian, which is far from the original target of 450. In essence, franchising is not open, and direct marketing is used to ensure quality control. For brands such as Hefu Laomian, opening a store needs to be more cautious. Previously, the personnel management and food safety problems of some catering brands were exposed, and the reputation declined rapidly.
 
From the first store to more than 340 stores before listing, Haidilao took more than 20 years. Nowadays, the newly born catering brands run much faster than the once king of hot-pot/" 22375 rel="nofollow" target="_self">hot pot. Including Hefu Laomian, the number of new stores in 2021 doubled compared with 2020.
In the financing direction after the epidemic, the catering sector has become a hot spot. The attribute of strong cash flow, coupled with the improvement of standardization, many new brands have better digital ability than traditional enterprises, giving capital the opportunity to revalue offline catering. For example, the valuation of the new round of financing in small face is 3 billion yuan, which has tripled in more than three months.
 
In essence, as the epidemic has become the biggest uncertain factor affecting the industry, especially for non chain restaurants, offline catering needs a good single store profit model and the ability of rapid replication to improve its anti risk ability. Brands with supply chain advantages and standardized output capacity can grow against the trend during the epidemic.
 
At this time, the IPO plan was announced, and the branding and business scale of Hefu Laomian will receive attention.
From the current brand matrix, Hefu Laomian has adopted a multi brand strategy. It has launched a sub brand “Xiaomian Xiaojiu”, adding flavor snacks and drinks as the second curve, and plans to open 50. In addition, Hefu Laomian has also opened concept stores such as “cooking workshop”, but it has not aroused too much water spray, which is still driven by the main brand.
 
During the epidemic period, the offline traditional catering industry was in a downturn, which gave the new brand a window period to quickly copy the store and enter the shopping center.
Now, the catering industry has basically returned to its original level. From relying on the natural flow of the business district to improving consumers’ awareness of it, and even draining the business district, only the head catering brand can realize it. Under the goal of thousand stores and ten thousand stores chain, all new players need the precipitation of the brand for a long time.
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