Unlike stepping on the brakes of enterprise development in the second half of 2023, Li Xuelin, the founder of Hefu Lao Mian, is looking forward to speeding up in 2024. According to his plan, he will move towards the goal of 1,000 stores in the future.
In 2012, after Li Xuelin founded Hefu Lao Mian, financing actions continued. From 2016 to 2022, Hefu Lao Mian received 6 rounds of financing, with a total amount of more than 1.3 billion yuan. In 2021, Hefu Lao Mian completed nearly 800 million yuan in Series E financing, which also set the highest financing record in the domestic chain noodle restaurant industry, with a rumored valuation of more than 7 billion yuan.
However, in 2022, the entire noodle track will face problems such as financing difficulties, unsmooth store expansion, and declining customer flow. In 2023, all brands in the noodle track are trying to find ways to "save themselves", and price reductions and franchises have also become the common choices of many brands.
On January 21, 2023, Li Xuelin sent a Chinese New Year letter to all employees, which mentioned that everyone should "be fully prepared for the sun's exposure".
However, the "sun" did not rise so quickly. Li Xuelin found that his judgment was problematic, "At that time, I felt that 2023 was the first year of rapid recovery, and in fact, the structural adjustment should not be so fast, so we stepped on the brakes in the second half of the year." "It is understood that Hefu Lao Mian is not open to joining, crazy expansion, conservative plan to open 200 stores in 2023, in the end only slightly more than the conservative plan.
In the early days of the establishment of Hefu Lao Mein, Li Xuelin once ate the spoiled products in front of all the employees, so as to warn all employees: food safety and product quality are above everything.
In the Hefu Lao Mian Industrial Park in Rugao, Jiangsu, there is not only a high-standard "food safety laboratory" of nearly 1,000 square meters, but also the first kitchen of Hefu Lao Mian is located here. Through the online system, it can monitor all aspects of the production workshop and stores in real time, and will timely feedback and alarm when problems are found.
In front of the laboratory is the company culture hall of Hefu Lao Mein. A big 20,000+ transparent logo is displayed at the entrance of the cultural center, which is the "ultimate goal" set by Li Xuelin for Hefu, and it is also to motivate the internal team of Hefu.
Liberalize joint ventures and accelerate expansion
In the past ten years, Hefu Lao Mian has opened more than 500 directly-operated stores in more than 80 cities across the country, and the expansion rate is not fast. But that's about to change. In an interview, Li Xuelin said that he would move towards the goal of 1,000 stores in the future.
The reason why the expansion has been accelerated is because Hefu Lao Mian has officially opened up the joint venture strategy.
On the one hand, franchise has become the choice of more and more noodle restaurant brands. For example, after Wuye Mixed Noodles opened its first store in January 2018, it will be opened for franchise in May; Chen Xianggui opened its first store in March 2020 and will open its franchise in November 2023; Zhang Lala was founded in August 2020 and will open to franchise ...... at the end of 2022
On the other hand, Hefu Lao Mian has long been preparing for the opening of joint ventures. At the end of 2020, after the end of the D round of financing of Hefu Lao Mian, Li Xuelin talked with Wang Weiwei, the managing partner of Huaying Capital, and others, whether to open the joint venture. They conducted a review on the reasons for opening the joint venture, as well as whether the supporting chain and management and operation methods can support the joint venture.
At that time, there were only more than 200 stores in Hefu Lao Mian, and the store management and operation, product system, etc., did not meet Li Xuelin's requirements, and this topic was temporarily shelved.
In 2022, Hefu Lao Mian also thought about opening up to join, but in the end it still failed. Li Xuelin said that the reason why he has repeatedly slowed down the pace of joint operation is because he hopes to make the whole system more solid, "whether it is a franchise or an alliance, it is a great challenge to operation control, and it is even more difficult than self-operation." If the brand can't do well and can't make a profit, then the open franchise may get out of control, and it will also be considered as 'cutting leeks'. We have spent 10 years building the brand of Hefu, and we will not allow this kind of damage to the brand to happen. ”
Li Xuelin believes that he hopes to stand on the united front with the associates, "not to mention that they can make money and the government can make money, behind each associate, there are also countless families, we must be responsible for ourselves, but also for our partners." If you can't win-win, then you must let others win first, which is the mind and mentality that the industry's leading enterprises and leaders should have. ”。
This has virtually raised the requirements of Hefu Lao for associates. Li Xuelin believes that in addition to capital and network strength, it is best for affiliates to have channel resources such as supermarkets and supermarkets in the local area. "Our future cooperation may not only stop at store expansion, but also promote the city from point to area, and expand the business of cooperation to online retail and other ecological fields. ”
The question then arises, how does Hefu Lao Mian cope with the pressure brought by the expansion of scale to the organizational structure and operation management?
In terms of management, Li Xuelin does not agree with the concept of "rule by man", "Frankly speaking, it is a very traditional and original management concept to solve the company's operation problems by mobilizing people's ownership or enthusiasm. Relying on human experience to make decisions is very demanding for managers."
At the beginning of the establishment of Hefu Lao Mian, Li Xuelin consciously polished the operation system and iterated a very large and complex company management system. At present, 75% of the entire system is developed by the technical team of Hefu Lao Mian. The system can collect all store data and operation tracks, ** the next day's customer flow, help the middle and back office to stock up and distribute, etc.
As a result, most of the decisions in the front office rely on the system, not on a single person. In Li Xuelin's view, the system built inside Hefu Lao Mian can not only reduce the probability of human error, but also improve the efficiency of the front desk, and the energy consumption can be reduced by up to 40%, so as to reduce costs and increase efficiency.
According to Xu, the manager of the Shanghai branch of Hefu Lao Mein, when he first joined Hefu Lao Mian in 2015, one process might require three people, but after a series of reforms such as the training system, one person can now move multiple positions.
Get out of the haze and make your own blood
Many people only look at the loss of enterprises, and I can only say that it is not easy for Hefu to come out and talk about the future now. Li Xuelin said.
Li Xuelin said that the reason why Hefu Lao Mian was able to survive this difficult stage was that on the one hand, there was financing, and on the other hand, it had mastered profitability, "there is more money in the account, and the cash flow is healthy."
Li Xuelin, who has become a "survivor", has also become more tolerant from a person who can't rub sand in his eyes at all and is resolute, "I can also accept imperfections or defects."
As an investor, Wang Weiwei said that they often persuade Li Xuelin as a friend to treat the younger senior management and employee team to update the way of communication management.
Qin Yihe, vice president of Hefu Lao Mian Products, felt the change in Li Xuelin's management style, "He is more tolerant and understands our work better." When there is a problem, he will encourage and enlighten us more so that we don't stretch too hard. ”
However, Li Xuelin joked that he didn't need to be encouraged. "They (investors) always encouraged me, but I just refused. He told investors: "Don't worry, Hefu can't die, and this industry won't collapse, it's normal to be a little difficult." In Li Xuelin's view, he has a strong sense of self-discipline and does not need to be encouraged, "I am a person who encourages others." ”
However, Li Xuelin's relaxation does not mean that he is completely flat, and during the epidemic, he has also made many attempts. "The ** chain and middle and back office of Hefu Lao Mian are very strong, and theoretically they are overmatched for the store, so early on, our investors and shareholders suggested that they try different scenarios, store types or categories to occupy different scenarios of consumers. Wang Weiwei recalled.
We have been exploring different types of enterprises, models, and the second growth curve of online and offline channels, but the success of each brand may be affected by various factors such as environment and time, so in the future, we still hope to find more points that can be more in line with Hefu and then deepen them. Qin Yihe added.
Wang Weiwei and other investors also gave Li Xuelin some suggestions for new development, such as only opening one or two stores of each type in the case of limited investment amount, and several more attempts, and Alan's family and a ramen were screened out in this process.
Alan Jia is a sub-brand with an average price of less than 30 yuan for Hefu Lao Noodles, and has opened more than 50 stores. Li Xuelin told reporters that Hefu Lao Mian has broadened the first belt of the product and increased the proportion of products below 30 yuan. "We are involved in both mid-to-high-end and mid-range brands, and I definitely don't do low-end (end) brands, I think it's boring to do this. ”
The catering noodle market is a trillion-level market, and brands do not necessarily go to the sinking market, as long as they occupy a certain share in the existing target positioning, it is already a very large market. Zhang Gejian, partner and managing director of Sullivan Greater China, said.
Go overseas and look for new growth points
Since the opening of the first store of Hefu Lao Mein, Zhang Gejian and his team have begun to pay attention to this brand. In his opinion, Hefu Lao Mian can run out, in addition to doing well in the first chain, digitalization and food safety, etc., it is also just in time to catch up with the industry. But what is even more rare is that the brand has remained calm under the tuyere.
When Hefu Lao Mian carried out the E round of financing, some investment institutions gave a valuation of 14 billion yuan, but in the end, Li Xuelin chose financing with a valuation of 7 billion yuan. In Li Xuelin's view, the reason why Hefu Lao Mian survived mainly depends on their extreme care about security boundaries in the past. For potential risks, they have always retained adequate response plans.
When the company grows bigger, I think the first thing the founders consider is not innovation, but whether the company is safe enough. If you are safe enough, you need to add an insurance before it, is the cash flow safe enough? Li Xuelin said that this is one of the important reasons why the epidemic has been able to withstand for three years.
At the same time, Li Xuelin has always believed that profitability is very important, and cash flow is the lifeline of an enterprise. "Nowadays, many young entrepreneurs may not understand this and always want to innovate, but in fact, no matter how it changes, the logic and essence of business have not changed. I think we should be in awe of the things that should be respected, such as the interests of partners and the preferences of consumers, which are all things that must be considered by enterprises. ”
In 2024, after building a joint venture ecology, the next step of Hefu Lao Mian is to go to sea, according to Li Xuelin, the company is already talking about cooperation with Southeast Asia, and after the Southeast Asian model is verified, it will consider expanding to Australia, the United States, Europe, etc. in the future.
Li Xuelin also emphasized that we must make steady progress in the sea. "Many domestic brands are a little blindly optimistic about going overseas, and some of them don't even know whether they can go to sea, or how to go overseas. In this case, the herd mentality is the most avoidable. If such a large Chinese market can't do well, it would be whimsical to talk about going overseas. ”
For Hefu Lao Mein, going overseas is not simply to open a store abroad, but more importantly, how to go global, in the new cultural environment, with high-quality products and services to achieve a good connection between the brand and customers, to win the favor of global consumers.