In the wave of China's catering industry, Hefu Noodle is undoubtedly one of the most talked-about brands.

With high-end positioning, high customer unit price, study-style dining environment, and selection of high-end shopping malls, this noodle brand, which started in 2013, quickly rose to prominence, attracting the attention of many investors.

In 2021, Hefu Noodle came to a highlight moment in its development.

That year, Hefu Noodle secured 800 million yuan in Series E financing, setting a financing record in the domestic chain catering industry, with its valuation soaring to 7 billion yuan.

Since its establishment in 2012, Hefu Noodle has completed six rounds of financing in a few years, with a luxurious lineup of investors, including Tencent, HuaYing Capital, and many other well-known institutions.

However, the catering market is ever-changing.

In 2022, the situation in the noodle race took a sharp turn for the worse, the financing craze suddenly cooled down, and many ramen brands began to shrink their stores.

As an industry leader, Hefu Noodle was the first to face severe challenges.

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Negative news such as financial losses, layoffs, and executive departures followed one after another.

Is the high-price road coming to an end?

For a long time, Hefu Noodle has always focused on the urban middle-class consumer group.

Through a series of carefully designed market strategies, it has tried to build a unique image different from traditional Chinese noodle restaurants.

The carefully selected store locations, elegant interior decoration, and the price range of 40 to 50 yuan all distinguish it from traditional family-style noodle restaurants.

According to data provided by Zhaimen Catering Eye, as of June this year, Hefu Noodle has opened 581 stores nationwide.

Among them, the proportion of stores in first-tier cities is as high as 42.5%, and new first-tier cities account for about 30.1%.

Shanghai alone has 114 stores, clearly outlining the strategic layout of Hefu Noodle's focus on the high consumer power market in its early years.

However, the high-end positioning and rapid expansion did not bring the expected high returns to Hefu Noodle.

According to the financial data disclosed by its investor Juewei Food, from 2020 to 2022, Hefu Noodle has been in a loss for three consecutive years.

Specifically, the net losses for these three years were 206 million yuan, 211 million yuan, and 299 million yuan, with a cumulative loss of more than 700 million yuan.

This continuous loss situation did not turn around until mid-2023, when the company first revealed in an internal letter that it had turned a profit.

The high customer unit price did not win the expected market for Hefu Noodle.

On the contrary, facing continuous operational pressure and the trend of rational consumption, price reduction has become the most practical and effective self-help path.

However, what was unexpected was that Hefu Noodle's price reduction path was faster and more aggressive than many people had anticipated.

In December 2023, Hefu Noodle founder Li Xueliang disclosed several important pieces of information at the brand's 2024 strategy meeting, the most eye-catching of which was the initiative to improve cost-effectiveness.

Li Xueliang said that the mainstream product prices of Hefu Noodle have been adjusted several times, "overall reduced by 20% to 30%".

According to him, currently, 50% of the company's products in the 20 to 30 yuan price range are available at member prices.

Just half a year later, on June 21, 2024, Hefu Noodle once again raised the "price butcher's knife".

The company's public account announced a new round of price reduction with the eye-catching words "price reduction of about 32%".

Among them, the selling prices of the main products such as Herbal Spicy Beef Noodle and Herbal Tomato Beef Noodle have all been reduced to below 30 yuan, with a reduction of up to 32%.

This price has been comparable to many mid-range noodle restaurants, indicating that Hefu Noodle is trying to get rid of its high-end positioning and aim at a broader mass market.

In sync with the product price reduction, Hefu Noodle has also made significant adjustments in its business model.

In April, Hefu Noodle officially started the alliance model, with a franchise threshold fee of 698,000 yuan, including design, decoration, standard equipment and other costs.

According to relevant media reports, compared with the previous franchise model, the cost of opening a store has been reduced by 300,000 yuan.

In 2022, the company briefly opened up franchising and recruited national partners, but a few months later it ended abruptly and returned to the full direct operation model.

This time, the restart of franchising undoubtedly exposed the compromises it had to make under financial pressure.

However, although Hefu Noodle has reduced the franchise threshold, its entry fee is still higher than the industry average.

According to statistics from the Franchise Star, more than 90% of the franchise fees in the catering noodle restaurant industry are below 500,000 yuan.

Can cross-border bets work?

Faced with growth bottlenecks, Hefu Noodle is also trying to open up a "second growth curve".

In November 2020, just one month after completing a 450 million yuan Series D financing, Hefu Noodle first targeted the hot pot market and launched "Hefu Hot Pot and Her Noodles" stores in Shanghai and Beijing.

Followed by the launch of the "Hefu Small Noodles and Small Wine" sub-brand in April 2021, trying to cover a variety of dining scenes such as one-person meals, afternoon tea, and social gatherings.

Subsequently, sub-brands such as "Cai Shen Xiao Pai Dang" (later renamed "Cai Shen Noodles"), "Pick me Coffee & Hot Food" convenience stores, and "A Lan Jia Beef Noodles" were launched one after another.

It is worth mentioning that in addition to the main noodle business, Hefu Noodle has recently launched a wonton series for less than 20 yuan and a casserole rice for less than 30 yuan, trying to attract more consumer groups through price differentiation.

In addition, the company has also entered the "mixed rice" race with the brand "Hefu Mixed Rice Master", quietly opening a number of takeout stores in first-tier cities such as Beijing, Shanghai, and Shenzhen.

However, despite Hefu Noodle's somewhat hasty exploration of diversification, and the incubation of several sub-brands in a short period of time, these attempts seem to have failed to become a real growth engine.

Returning to the core business of the company's noodles, Hefu Noodle's core products have encountered a trust crisis.

At the beginning of this year, some media reported that Hefu Noodle's products are actually pre-cooked dishes, the noodles are mass-produced by factories, the toppings are also pre-cooked, and only need to be simply heated, and the soup is made by diluting the seasoning bag with water.

This revelation undoubtedly shook the foundation of the brand's "high-end positioning" and triggered consumers' doubts about its brand value.

It is true that equating the cleaned vegetables, semi-finished products, and finished products processed by the central kitchen with pre-cooked dishes is not entirely objective.

However, considering Hefu Noodle's high price positioning, it is not unreasonable for consumers to be disgusted with "eating seasoning bags at high prices".

In the final analysis, what consumers care about most is always the question of "is it worth it".

If the product can match its price, the market will naturally leave a space for the brand to survive.

In the rapidly changing catering market, how to maintain the consistency of brand positioning during expansion, and balance diversification and specialization, is still a problem that Hefu Noodle needs to solve urgently.

When the hot money receded, at the beginning of this year, the news that Hefu Noodle planned to go public in Hong Kong and intended to raise 100 million to 200 million US dollars once sparked heated discussions in the market.

Although the company later issued a statement denying the news, the funding needs of Hefu Noodle, which has not been financed for a long time, are indeed undeniable.

At the company's 2024 strategy meeting, founder Li Xueliang proposed the strategic direction of "finding friends, going down, going overseas, and deep layout", and planned a grand goal of opening 20,000 stores in the next 10 years.

In 2016, Li Xueliang once said that the company would enter the Hong Kong market in 2017.

However, it was not until 2024 that Hefu Noodle finally arrived late, opening its first Hong Kong store in Causeway Bay.

Seven years is enough to change the market pattern.

When Hefu Noodle finally landed in Hong Kong, the consumer investment environment has also changed.

This is no longer the era of 2019 that allowed brands such as Luckin Coffee and Perfect Diary to rise rapidly by burning money.

After the hot money receded, the intrinsic value and sustainable profitability of enterprises once again became the focus of market attention.

For Hefu Noodle, the urgent task may not be how to expand rapidly, but how to survive in this long competition.

As Li Xueliang said in an interview with the media: "This year, when I chatted with other founders of catering brands, what everyone said the most was that we must take good care of our health.

If we can't hold on halfway through the marathon, how can we run into the main venue?"