(Source: Visual China)
"Since 2010, we have taken advantage of consumption upgrades, almost (borrowed) for ten years. Today's economic environment has undergone new changes, and consumer behavior has also changed. It feels like it's back to ten years ago, the challenge coefficient is the same, how should I choose today?" In early December this year, in the Beijing office of Hefu Lao Mian, Li Xuelin, the founder of Hefu Lao Mian, said to Tiger Sniff.
Since last year, a significant number of consumers have stopped paying for "high-end noodles". With the fading of the new consumption investment and financing boom, many noodle restaurant brands stopped burning money to open stores and entered a period of business recuperation.
The high unit price, study-style dining environment and location in mid-to-high-end shopping malls have made Hefu Lao Mian one of the most topical brands in the Chinese noodle restaurant track in the past three years. Since the opening of its first store in August 2013 in Rugao, Jiangsu Province, RT-Mart has opened more than 500 directly-operated stores in more than 80 cities. According to Tiger Sniff, this year, Hefu Lao Mian completed the target of opening 200 new stores ahead of schedule.
After three years of catering winter, Hefu Lao Mian has promoted a series of changes this year, and the transformation has begun to show results. According to the "Blue Book of China's Noodle Industry" recently released by Frost & Sullivan, the annual noodle consumption in China will be close to one trillion yuan in 2023, and as of September 2023, in the domestic noodle market, Hefu Lao Mian is the Chinese noodle restaurant brand with the largest growth rate in direct revenue, direct revenue growth and the number of directly operated stores.
Turning the clock back to 2021, it was the highlight moment of the noodle restaurant brand - players such as Hefu Lao Noodles, Wuye Mixed Noodles, Meet Xiao Noodles, Ma Jiyong, Chen Xianggui and Zhang Lala are all sought after by capital, among which the highest valuation is Hefu Lao Noodles. This year, it completed nearly 800 million yuan in Series E financing, setting a record for the highest financing in the field of domestic chain restaurants. Li Xuelin told Tiger Sniff: "At that time, I rejected the valuation of 14 billion yuan given by a certain institution, and only needed (another's) 7 billion yuan offer, because the money was too hot." In the ten years since its establishment, it has received six rounds of financing, with investors including Tencent, Longfor Capital, Huaying Capital, CMC Capital, Zhongwei Capital, etc.
The frenzied investment in the noodle restaurant track in 2021 has caused the bubbles of some projects to be "blown high", but these bubbles have also burst quickly. This year, the noodle restaurant track is no longer hot. According to the "China Catering Investment and Financing Development Report 2023", the number of financing events in the catering-related field in the first eight months of this year was 146, and the total amount of financing disclosed was only 6.71 billion yuan, accounting for 57.7% and 35.9% of the whole year of 2022, respectively. Noodle restaurant brands have realized that "hot money" does not equal brand strength.
The catering market has always been cruel. According to the data of the "White Paper on China's Catering Brand Power 2023", in January ~ August this year, the number of registered catering enterprises reached 2.197 million, and the number of cancellation of catering enterprises reached 762,000, which has exceeded that of last year. However, it is worth noting that since May, the number of cancellations of catering enterprises has increased significantly, which means that the industry elimination effect has begun.
How to survive and continue to evolve is an eternal problem for all enterprises. "Choose the right industry, take advantage of the general trend, enterprises can develop rapidly. This is a truth that Li Xuelin is convinced of. Coming to the second decade, how should Hefu Lao Mian "follow the trend"?
"Addition and subtraction" in difficult times
In the past three years, too many F&B people have left the market. Enterprise survey data shows that in 2020~2022, more than 1.7 million catering-related enterprises across the country have been cancelled and revoked, which is more than the sum of catering cancellation and revocation data in the past ten years.
In July 2021, Hefu Lao Mian officially announced nearly 800 million yuan in Series E financing, and relevant reports said that the business resilience since the epidemic is one of the factors for the brand to be recognized by investors. At that time, the average turnover of Hefu Lao Mian stores nationwide was 550,000 yuan/month, the ping efficiency was 4,800 yuan/month/square meter, the human efficiency was 55,000 yuan/month, and the per capita customer unit price was 45 yuan, which was at the top level of the industry.
However, due to the impact of the environment, like some catering brands, in order to alleviate the growth pressure of the main business, Hefu Lao Mian also had to start looking for the "second growth curve".
As early as November 2020, a month after the completion of the 450 million yuan D round of financing, Hefu Lao Mian tested the hot pot track and opened stores called "Hefu Hot Pot and Her Noodles" in Shanghai and Beijing. For another example, in April 2021, Hefu Lao Mian launched another sub-brand "Hefu Xiao Mian Xiao Jiu" in Shanghai, in addition to noodles, the store also added new products such as low-alcohol wine, grilled skewers, fried chicken, lo-mei, sauerkraut fish, etc., covering a variety of dining scenes such as one-person meals, afternoon tea, and social gatherings.
But these attempts are hardly successful.
Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, once said that there are very few retail companies in the world that can do more than three large-scale formats. The reason is easy to understand, the organization and management, site selection, business model, supply chain system and customer service of each business are very different. "Regardless of the field, taking the multi-brand route requires trial and error, and you have to be able to digest those mistakes. Everyone is moving forward. A consumer FA who has been in the industry for nearly 10 years and has served dozens of catering brands said to Tiger Sniff.
(Source: Visual China)
The challenges come from many aspects, in addition to finding new growth points, Hefu Lao Mian is also facing cost pressures, among which the problem of personnel costs cannot be ignored.
"Hefu is in a state of rapid development, but last year we had to put the brakes on it. Li Xuelin bluntly said to Tiger Sniff that under the huge inertia, there will be problems if the brakes are not stepped on well, and there will be problems if the brakes are too fast.
In the exchange in August this year, Li Xuelin said that as soon as the epidemic began, the company's management meeting mentioned that it was necessary to ensure the safety of funds, and the specific way was to optimize the organizational structure and welfare benefits. He did not shy away from discounting the salaries of partners and most of his employees. "These initiatives have their own specific environmental considerations. After the epidemic has passed, it is a matter of hindsight. The company is gone, the family is gone, except for thinking about how to survive, isn't everything else a joke?"
Under such preventive actions, Hefu Lao Mian has retained relatively abundant funds, which has enhanced the anti-risk ability of Hefu Lao Mian. In this regard, Li Xuelin added a point of view: "What our core team needs is a group of like-minded brothers with the same three views, not the guests of the enterprise. When the company makes money, everyone has to share a little more. However, when the company wants to give everyone a back-up, it is also necessary to control the capital risk, and the company's capital security is the first. We need to be able to share both joys and sorrows. ”
Entering 2023, the catering market will gradually recover. A person familiar with the matter told Tiger Sniff that many of the employees who left in the past year have returned to the company this year.
Compete in the open
In the past year, Li Xuelin has been thinking: What did Hefu Lao Mian look like in the past, and what should Hefu Lao Mian look like in the future?
"In the past, Hefu was 'single Hefu', which refers to a single brand, a single model, and a single channel. In the future, Hefu will be 'ecological Hefu' and 'open Hefu', catering is a line, retail is a line, and the supply chain is also a line. He told Tiger Sniff that it is imperative for Hefu Lao Noodle brand and Hefu Group to seek strategic upgrading.
The multi-brand strategy has become the second growth engine of Hefu Group. It will establish a multi-brand matrix through independent incubation or acquisition, and currently has three brands: "Hefu Lao Noodles", "Alan Family Beef Noodles and Beef Rice" and "One Ramen".
Taking the main brand and Fu Lao Mian as an example, the focus has been adjusted in four aspects: product positioning, product structure, price band and store opening strategy.
From the perspective of product positioning, in the past ten years, its label has been "study" and "high-end", and in the next ten years, it will focus on "health, green, and inclusive". In the early days of its establishment, Hefu Lao Mian played the concept of pan-health ("nourishing the heart"), and the product positioning after the upgrade in the past two years has become clearer - "the health noodle in the study", and it wants to continue to consolidate this mental cognition in the future.
Since last year, the popularity of "health catering" has continued to rise. According to Ele.me data, since the beginning of winter this year, the sales of takeaway drinks with "health" in Changsha have increased by 362% over the same period last year, and the main orders for health tea drinks come from office business districts, with users aged 18-35 accounting for more than 7%. Integrating the concept of "medicine and food of the same origin", health coffee, health milk tea, health soup porridge, health pastries and other products are competing for the attention of young people.
"In the past, when I made fast food, how could anyone pay attention to organic, green, and healthy?" Li Xuelin said bluntly to Tiger Sniff. Based on the current market demand, the team accelerated product iteration. Focusing on the health scene, Hefu Lao Mian launched 4 product lines in one year, namely health noodles, health soup, health dishes and health tea, which is unprecedented in the speed of new products. According to Tiger Sniff, from 2013 to the present, Hefu Lao Mian has iterated at least 217 versions of the menu.
"Expensive" is the most evaluated by a number of celebrity noodle restaurant brands in the past three years. Li Xuelin "moved the knife" on the price system of Hefu noodles.
"Going with the flow is not tactical, it's strategic. Li Xuelin believes that in the stage of consumption upgrading, the product pricing of Hefu Lao Mian is reasonable, because the user experience is also inseparable from the quality of service and the store environment, "but today's consumption trend has changed, the price system has deviated from the track, and if you have the ability, you can quickly correct it back and do the right thing." ”
Hefu Lao Mian tries to broaden the price band and do price stratification. More than 50% of the products under 30 yuan in the menu have recently been selected, and the highest price is the time-honored crab noodle noodles with an original price of 108 yuan. The proportion of products with 20-30 yuan has increased, and intangible cultural heritage snacks, fried foods, drinks and other categories have been launched. The increase in categories can indeed attract more users to spend, but in order to retain high-value users, Hefu Lao Mian must enhance the competitive advantage of its main products and improve its membership operation capabilities. According to Tiger Sniff, the number of Hefu noodles members has exceeded 20 million.
"The essence of the brand is premium, and only the premium brand has the opportunity to do research and development, ensure better quality, and enter a virtuous circle of development. If it turns out to be a simple competition for low prices, it will be really sad. When it comes to the price war of 9.9 yuan in the catering industry, Li Xuelin said that in order to seek greater development, Hefu Lao Mian will choose a long-term safe price band.
Combined with the data of the narrow door restaurant, the per capita unit price of Hefu Lao Mian and Ma Jiyong is about 40 yuan, the per capita unit price of Chen Xianggui and Zhang Lala is 30 yuan ~ 35 yuan, the per capita unit price of small noodles is about 28 yuan, and the per capita unit price of Wuye noodles is about 25 yuan. According to the "2022 China Chinese Noodle Restaurant Industry Development and Consumption Behavior Monitoring Report", 51.5% of respondents spend 16-30 yuan on noodles at a time. Consumers return to rationality, not that consumers only care about price, but rather remind brands to provide value that matches price.
In order to achieve large-scale expansion, a major change in Hefu Lao Mian is the opening of joint business.
One of the reasons behind this is not difficult to understand, which can be answered by Tan Zhiwang, a partner of Wushi Innovation Capital, "In the case of an uncertain market environment, franchise chains are more stable and have stronger anti-risk capabilities." ”
"In the past two years, one of the issues we discussed the most (with Li Xuelin) was whether to open a store, where to open a store, and how to open a store. Wang Weiwei, managing partner of Huaying Capital, the D-round investor of Hefu Lao Mian, told Tiger Sniff.
In fact, franchise has become the choice of more and more noodle restaurant brands.
Combined with the data of narrow door restaurants, let's look at the opening of these noodle restaurant brands: Wuye Mixed Noodles is the first catering brand invested by Hillhouse Venture Capital, which opened its first store in January 2018 and opened to join in May of the same year, and currently has 1,003 stores; Meet Xiaomian was established in 2014 and opened to join in 2019, and currently has 232 stores, mostly directly operated stores; Chen Xianggui opened its first store in March 2020 and opened to join in November this year, with 240 stores at present; Zhang Lala was founded in August 2020 and opened to join at the end of last year, and currently has 99 stores; Ma Jiyong was established in 2019At present, it still adheres to the direct sales model and has opened 263 stores.
The key node that made Li Xuelin decide to open the joint operation was when the number of directly operated stores of Hefu Lao Mian exceeded 500. He believes that Hefu Lao Mian has entered a new starting point, and the whole system has been verified, which can support its steady expansion. The system can continue to operate because the supply chain and digital intelligence system have played a prominent role in it. "With very technical strength, operational capabilities and brand potential, after opening the joint venture, Hefu dares to say that it can be responsible for partners. Li Xuelin said.
Under the new store opening strategy, the location of Hefu Lao Mian's stores has also become more diversified. In June this year, Hefu Lao Mian reached a strategic cooperation with Huangju Commerce, which will help it open stores at airports, high-speed rail stations and other places. According to Tiger Sniff, the Hangzhou East Railway Station store of Hefu Lao Mian was opened in the second half of last year, and its monthly revenue has exceeded one million yuan this year.
After the opening of the joint business, how to make the direct business and it achieve effective synergy has put forward higher requirements for the supply chain, digital capabilities and organizational construction of Hefu Lao Mian.
"Always struggle, never slack off"
From a mobile phone retail cross-border restaurant chain to leading troops to fight for more than 20 years, Li Xuelin has always demanded himself: always struggle and not slack off.
"In the past three years, the people of Hefu have forced out some skills, and these skills will not be lost in the future. Li Xuelin revealed to Tiger Sniff that through continuous iterative upgrading of the supply chain and digital intelligence system, as well as activating organizational changes, the average monthly human efficiency of stores this year has been improved, reaching up to 80,000 yuan.
In difficult times, some of the characteristics of "Hefu people" have been highlighted. Wang Weiwei appreciates the team's execution, which is also a point that Xia Bei Investment, Managing Director of CMC Capital, and Fulao Noodles value a lot. Li Xuelin specifically mentioned a saying: do things according to the rules. For example, the company requires that the process approval should not exceed 2 working days, the reply to group messages during working hours should not exceed 8 hours, and the ringtone should be muted during meetings. "Do you find these things difficult? Develop efficient work Xi, and everyone is capable and confident. Li Xuelin said that to do catering is to pay attention to various details.
Whenever a new employee joins, Li Xuelin basically tells this story: In 2013, a few days after the opening of the first Hefu Lao Mian restaurant, he found a batch of expired and spoiled beef tongue, immediately pulled all the employees to the conference room, ate it in front of them, and vomited. Seeing this scene, a few female colleagues cried. He also went to the factory and asked his colleagues to watch him dump all the boiled soup. "Don't do what your conscience can't get by. ”
Over the years, after contacting so many partners, Li Xuelin, who has always been vigorous and resolute, has a change: as a manager, he is no longer overly demanding of perfection in his team, and he is trying to become more tolerant and calm.
In the face of market changes, Li Xuelin's goal to the team is, "We can respond quickly and really solve problems, and we can still run without falling behind, running chaotically, and running without rigidity." ”
Hefu Lao Mian is "running" into more and more second- and third-tier cities. According to Tiger Sniff, Hefu Lao Mian will open its first store in Hong Kong in the near future, and will consider entering Singapore, Japan and other countries in the future. "Hefu Lao noodles have a brand tonality, and the product level is not a regional characteristic noodle, and there is no absolute benchmark compared with traditional noodles, and its taste adaptability is to support going global. Wang Weiwei said.
On the road of "long-distance running", adjust your breathing, adjust your tactics in time, persevere, and persist.
"This year, when I chatted with other founders of catering brands, what they said the most was that they must be in good health. Halfway through the marathon, the body can't carry it first, so how can you run into the main venue?" Li Xuelin sighed to Tiger Sniff.