China Food

Will the listing of “anxious” Hefu instant noodles become a myth or follow suit


“ 
How much imagination does
noodle shop have?
 ”
A bowl of herbal thick soup noodles is a quiet space like a study. Li Xuelin, a native of Jiangsu, combined the two to create Hefu noodles with a valuation of up to 7 billion yuan.
Now, he is about to ring the bell overseas with Hefu noodles.
 
Recently, Jue Wei food released an announcement that its wholly-owned subsidiary, Shenzhen netju, will go overseas for listing.
 

 

It has been more than ten years since the overseas listing of Ajisen ramen. The track finally woke up from the silence and ushered in another spring.
 
Last year, the full outbreak of the powdered noodles track gave birth to dozens of financing, and three upstarts of Lanzhou beef Ramen took the lead. The older Hefu Laomian finally came to the end after eight years of long-distance running.
 
The next step for Hefu noodles is to open a shop overseas and continue the next long-distance run. In Li Xuelin’s words, Hefu Laomian should “be China’s McDonald’s”.
Hefu Laomian ready for listing?
Is it profitable to open a noodle shop in the core business district? Previously, no brand disclosed relevant information to the outside world, and the profit and loss became a mystery.
 
With the disclosure of the listing of Hefu Laomian, its revenue finally surfaced.
 
In October last year, Shenzhen netju adjusted its equity proportion in Hefu Laomian. In this announcement, the attached figure shows the financial situation of Hefu Laomian from 2020 to the first half of 2021.
 
 
According to the data, the revenue of Hefu Laomian in 2020 was about 1.107 billion yuan and the net profit loss was about 210 million yuan; As of the first half of 2021, its revenue was 846 million yuan and its net profit was 13.85 million yuan.
 
Obviously, the government has turned losses into profits.
 
According to the previous report of 36 krypton, the Jiangsu and Zhejiang region of Hefu Laomian handed over a brilliant report card in December 2020. The average monthly average of a single store was 500000 yuan, the average daily turnover of the store was 7 times, and the human efficiency reached 56000 yuan / month.
 
In the aftermath of the epidemic, the situation is very good. It has not only obtained 450 million yuan of financing from Tencent, Longhu capital and Huaying capital, but also accelerated the expansion of stores.
 
It was not long after the completion of this round of financing that Hefu Laomian began to open stores aggressively, and the number of stores increased explosively. In the first half of 2021, the total number of Hefu Laomian stores nationwide exceeded 340, and the number of new stores in the first half of 2021 alone was the same as that in 2020.
 
This means that Hefu Laomian is expanding at an average rate of opening a new store every two days. However, in 2017, the number of Hefu Laomian stores exceeded 100.
 
At present, there are 440 stores in Hefu Laomian, which are mainly concentrated in the core business districts of first tier and new first tier cities. The number of stores in Beijing and Shanghai alone accounts for more than 50%. Therefore, stores in first tier cities are still the main source of Hefu’s revenue.  
 
The size of the scale and the rent of the store are closely related to the revenue.
 
Taking Meiluo City, one of the shopping malls with the largest passenger flow in Shanghai, as an example, the rent of its 100 square meter shop is about 90000-120000 yuan per month. Among all the stores of Hefu Laomian, except the express store (70-80 square meters), the size of other standard stores, gold medal stores, delivery stores and Michelin gold standard stores are more than 100 square meters.
 
Lanzhou beef Ramen brand “Chen Xianggui” in Meiluo city has a store size of about 70 square meters. However, Chen Xianggui’s customer unit price is about 20-30 yuan, which is far lower than the consumption level of 50 yuan per capita of Hefu Laomian. Several media have reported that Chen Xianggui, Ma Jiyong and Zhang Lala, three brands stationed in office buildings and shopping centers, are in a state of loss.
 
Is Hefu Laomian, burdened with high rent, really ready for listing?
 
In fact, on the premise that the first tier market is close to saturation, Hefu Laomian also intends to enter the second and third tier cities. However, in attacking the sinking market, Hefu has insufficient stamina to fish for noodles. The sum of its new stores in the second and third tier in 2021 is less than the number of expanded stores in Shanghai.
 
One of the reasons is that Hefu Laomian has never been opened to join, and all stores are direct stores. Another reason is that brands with lower customer unit price, such as Wuye noodles and Xiaomian, are entering the shopping center, and the advantage of Hefu Laomian in sinking the market is not obvious.
 
It is worth mentioning that the chain brand Wuye noodles has opened thousands of stores at the end of last year. In the same year, it also obtained 300 million yuan financing from CDH VGC and B capital, setting a record for the largest amount of a-round financing in the catering industry.
 
Hefu Laomian, which is struggling to sprint, has many strong enemies before it is listed.
 
However, there are more signs that Hefu is not waiting to die, and has been looking for another growth space in the past two years.

second curve or growth anxiety?

When a single category is difficult to open the gap with competitors, adding new categories and launching sub brands has become a common means for catering enterprises to build the second curve.
 
There are not a few sub brands incubated by food enterprises. In 2020 alone, Haidilao launched a number of sub brands, such as shibabo, laopaiyoumianer, Qiaoqiao’s powder, Qin Xiaoxian and so on. These sub brands just aim at sinking markets like Sichuan and Henan.
 
The revenue and popularity of Taier pickled fish and Mr. rice of rural base built by jiumaojiu are even better than its parent brand. Of course, few sub brands have overshadowed the main business and become the pillar of brand profitability. In most cases, most of the vice cards have disappeared before they have a firm foothold in the fierce competition.
 
Nevertheless, Hefu Laomian still chose to go all out. Taking 2020 as the dividing line, the urgency of finding the second curve has been fully demonstrated.
 
In November 2020, Hefu Laomian completed the round D financing of 450 million yuan. This round of financing was led by Tencent capital and Longhu capital, followed by Huaying capital.
 
Just one month after the completion of this round of financing, Hefu Laomian suddenly started a hot-pot/" 22375 rel="nofollow" target="_self">hot pot business, and a new store called “Hefu hot-pot/" 22375 rel="nofollow" target="_self">hot pot and her noodles” was added in Shanghai and Beijing.
 
Although the category of hot-pot/" 22375 rel="nofollow" target="_self">hot pot has been added, consumers do not buy it, and the product with the highest consumption frequency is still pasta. hot-pot/" 22375 rel="nofollow" target="_self">Hot pot is the biggest dish for diners. A large pot of spicy hot-pot/" 22375 rel="nofollow" target="_self">hot pot costs 138 yuan.
 
Compared with Yoshinoya’s 68 yuan self-service hot-pot/" 22375 rel="nofollow" target="_self">hot pot and Banu’s 29 yuan per capita hot-pot/" 22375 rel="nofollow" target="_self">hot pot “taoniang’s small kitchen”, Hefu’s noodles failed in price. The unclear positioning also makes it impossible for them to go to the same challenge arena with professional players such as Xiabu Xiabu.
 
Less than a year later, the hotpot business of Hefu Laomian was “broken”, and stores in Beijing, Shanghai, Jinan and other places have changed the store name from “Hefu hotpot and her noodles” to “Hefu Laomian”.
 
Immediately after that, the “anxious” Hefu Laomian began to incubate sub brands. First, taking advantage of the upsurge of “catering + tavern”, the sub brand xiaomianxiaojiu was officially launched, and the first store opened in Shanghai’s 96 square.
Consistent with the earlier logic of increasing per capita consumption by hotpot, xiaomianxiaojiu also aims at the scene of “dinner”. The difference is that Xiaomian Xiaojiu focuses more on multi period consumption. In addition to drinking at night, we provide rice wine, yellow rice wine, milk wine and other low alcohol wines. We also consider the transition period of afternoon tea and launch single products such as flower tea and handmade yogurt.
 
In order to win the scene of multi consumption, Hefu Laomian also launched another sub brand – Caishen small stall at the same time, which has been renamed “Caishen noodles”.
 
The God of wealth also takes the medium and high-end route. In addition to staple foods such as rice and noodles, it also provides snacks such as kebabs and fried food, as well as large portions of dishes such as pickled cabbage fish, stinky tofu and fat intestines for 2-3 people.
 
Without exception, the locations of the stores of the two brands are shopping malls and business districts near office buildings, which are determined to do business different from traditional pubs and large stalls. In terms of business, both small noodles, small wine and God of wealth noodles are superimposed on the single category of “noodles” based on its past successful experience.
 
In the battle of the stock market, Hefu Laomian has not broken through, and the two sub brands are still undergoing small-scale market verification.
 
A bowl of noodles valued at 7 billion, how to keep diners?
 
When it comes to “redo” catering, Li Xuelin was the first group to see the tuyere.
 
In August 2013, the first store of Hefu Laomian was officially opened in Jiangsu Rugao RT Mart. The noodle shop won the first prize in the first round just by design. Few brands in the catering industry use black as the main color. Hefu Laomian preset the dining scene of “study” for diners, and the black symbolizing pen and ink becomes calm and full of memory points. In the scene, Hefu Laomian gives the noodle restaurant a new imagination.
 
Eating noodles in the study became popular, which became a new thing in the catering industry at that time. The patrons who came to the hall let the government find second, third or even dozens of stores, successfully entering the hinterland of Shanghai, and set up the Shanghai center.
 
Half of the success of Hefu noodles can be attributed to Li Xuelin’s early two practices that shocked the industry.
 
As early as before opening the first store, Li Xuelin, who crossed the border from 3C products to the catering industry, spent tens of millions of yuan to fly with his team members around the world to eat noodles and do market research.
 
Therefore, there are many special cases of Hefu Laomian, from the “herbal soup bottom” in raw materials to the “meal in 15 minutes” and “free noodles” in services. These innovations attracted a large number of passengers, made Hefu Laomian stand out from a group of affordable noodle restaurants, and raised the value of noodle restaurants.
 
The premise of fulfilling the above services is that Li Xuelin has built a supply chain for 1000 stores before opening any stores.
 
At the moment when capital is pouring into the catering industry, investors will take the initiative to come to the door only by having a complete supply chain.
Since its establishment, Hefu Laomian has completed 6 rounds of financing successively, which is the flour brand with the largest number of financing rounds at present. Among them, the earliest financing occurred in 2015. Shenzhen netju and Wuhan Zhonghe venture capital under Jue Wei jointly invested 30 million yuan. The most remarkable thing is that Tencent made two bets and became the third largest shareholder of Hefu Laomian.
 
Supply chain and strategic model are the value of Hefu Laomian as a good target. In the eyes of diners, Hefu Laomian has always been a “study” noodle restaurant, the core elements have not changed, and the menu has been updated, but no new memory points have been generated.
 
Li Xuelin once said, “Hefu Laomian operates a brand and advocates a way of life, not just noodles”. In other words, Hefu Laomian hopes to attract consumers to pay with brand culture.
 
More than ten years ago, Ajisen Ramen was introduced into China, unifying the taste of ramen with standardized production, turning the concept of “Japanese Ramen”, which is only in Japanese drama and Japanese romance, into an entity, giving the catering industry a new imagination.
 
The central kitchen and supply chain can replicate the taste, but not the culture. Japanese Ramen is a memory carrier of the post-80s and post-90s, just like the impact of KFC and McDonald’s on China’s catering industry. In the past, Ajisen Ramen was synonymous with “Japanese Ramen”.
Nowadays, under the influence of multiple factors such as the “fake bone soup” incident, internal contradictions and disputes, and the lack of product innovation, Ajisen Ramen has fallen into a long-term weakness and almost came to an end.
 
Similarly, before wenheyou left Changsha, its founder Wenbing’s vision was to build wenheyou into a Disney in the catering industry. After leaving the province, wenheyou was “acclimatized”. After a short period of excitement, Shenzhen super wenheyou has changed its name to “Laojie oyster market”. In order to integrate into the Guangdong government, wenheyou has made several internal adjustments, but less than half of the stores are in business, and most brands are either evacuated or unemployed.
 
Therefore, “anxiety” is not a bad thing for the upcoming Hefu Laomian. As the “first stock of Chinese noodle restaurant”, what the government should worry about most is how to keep customers.
Brand culture is a long-term investment, and it is difficult to see significant benefits in the short term. Therefore, “anxiety” is not a bad thing for the upcoming Hefu Laomian. As the “first stock of Chinese noodle restaurant”, what the government should worry about most is how to keep customers.
 
In the past two years, Hefu Laomian has achieved large-scale expansion by opening more than 200 new stores. Because the infrastructure expansion is not ahead of the supply chain, the problem of harmony is not solved.
 
However, the only market that Hefu Laomian can leverage at present is the business district of first tier cities on which it strongly depends. Once the new store can’t keep customers, this lightning expansion model will bite itself back, making Hefu Laomian step into the footsteps of Haidilao’s large-scale closure.
 
After all, unlike the Internet or other technology intensive industries, the catering industry is difficult to achieve geometric growth and create multiple S-shaped growth curves.
 
Take didi as an example. Before listing, its valuation was close to $100 billion. Behind the seemingly beautiful scenery, Didi struggled to “beg money” from investment institutions and used more than 20 times of financing to support the “money burning war” of scale. With the help of capital, Didi was able to end its bitter battle with Uber China and unify the online car Hailing market.
 
Although there are nearly 500 million annual active users around the world to support revenue, Didi has only realized a small profit. Since its establishment in 2012, Didi has been in a deep loss dilemma until the first quarter of 2021.
 
On the contrary, it is doubtful whether it can be connected by the second and third tier cities, and how many stores can the first tier cities digest?
Capital makes the times, or the times makes heroes, will be reversed because of a bowl of authentic noodles and a new story that can be passed on for a long time.
Author: ether; Source: Food Alliance Research (ID: canmengyj), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily fbic & Expo 2022] foodaily daily food joined hands with the world’s top business and industrial partners to build fbic222 global food and beverage Innovation Conference & the first foodaily Expo “new food era – brand ecology” in Shanghai from May 31 to June 2, 2022. We invite you to witness it together. (click the picture to see the detailed introduction). related reading

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