The encyclopedia · Strategy & Leadership · Strategic decision · 2020–2024
Hefu Laomian burned ¥700M then shrank nearly a third of its noodle stores
The VC-feted premium noodle chain backed by Tencent and Alibaba lost ¥700M in three years and cut its store count from 600+ to 400+ in under nine months.
Hefu Laomian (和府捞面) · 2024-09
What happened
Founded in 2012, Hefu Laomian built itself as China's premium noodle chain — a ¥40 bowl in bookshop-style stores. Backed by Tencent, Alibaba's 绝了基金, Longfor Capital and CMC Capital, it raised over ¥16 billion obliquely: six rounds topped ¥1.3 billion between 2016 and 2022, capped by an ¥800 million Series E in 2021 that set a record for a Chinese noodle chain and valued it at over ¥7 billion.
The model never made money. From 2020 to 2022 the chain lost ¥206 million, ¥211 million and ¥299 million — about ¥700 million in three years. Expansion masked the losses: stores grew past 600 across 60+ cities by 2023, and the founder set a 2026 target of over 2,000 stores.
The reckoning came in 2024. In April a rumour of 20-30% layoffs surfaced; Hefu said it cut only about 120 staff, 1.4%. In June it cut prices sharply — many bowls fell below ¥30. By September the official store count had dropped to 400+, meaning nearly a third of locations had closed in under nine months.
The brand also lost trust. A 315 consumer day report questioned whether the stores used pre-made 料理包 (batch-prepared meal packs), forcing a denial amid China's broader 预制菜 backlash. Hefu denied the products were pre-made.
Why it happened
- The premium ¥40 position competed against cheaper, faster alternatives — young diners saw better value in sub-¥20 bowls and 平替 substitutes during a spending downturn.
- Growth was funded by capital, not profit: six financing rounds sustained a store expansion that never produced a return, so when funding froze the expansion inverted into closures.
- The 2024 预制菜 (pre-made meal) controversy, on top of a demanding premium menu, eroded the 'premium handmade' story the price depended on.
- The franchise pivot came late — Hefu announced its own-store-plus-licensed model only in late 2023, after rivals like Lanzhou noodle chains had already saturated the market.
The lesson
A premium price needs a moat a low-barrier category can't copy; pouring venture capital into store growth without a unit-profit model just postpones the reckoning.
Aftermath
Hefu moved its Shanghai office from the Bund to Hongkou to save rent, cut prices on most of its menu, and switched to a store-plus-licensed (联营/加盟) model. It said cash flow stayed positive and maintained an ambition of 2,000+ stores by 2026, but its store count kept falling through 2024 alongside a wider contraction in China's mid-to-high-end dining.
Sources
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