Former Luckin Chairman Launches Noodle Restaurants, Analysts See Potential
Charles Lu Zhengyao, former president of Luckin Coffee, officially launched his noodle restaurants under the brand “Quxiaomian” in China on Sunday. Analysts said it might be possible for Lu to replicate Luckin’s business model, but success will depend on adequate capital investment.
The country’s first Quxiaomian restaurant opened in southwest China’s Chongqing Municipality, domestic news site 36Kr reported on Monday, adding that another store was also opened in Beijing on Sunday.
The Global Times discovered at the Beijing restaurant that the ordering and delivery process is exactly the same as ordering coffee from a Luckin store.
It is possible for Lu to replicate Luckin’s business model by standardizing the operation process, recipes and management in order to fulfill orders quickly and efficiently, as cooking noodles does not normally require high skills and processing time. is short, Zhang Yi, CEO of consulting agency iiMedia, told the Global Times on Monday.
Lu is likely to further develop the noodle restaurants in the same way as Luckin, expanding rapidly and distributing a large amount of coupons, Zhang said, adding that the business model can be integrated with the already mature food delivery system. .
The profit of noodle restaurants can potentially reach 60% pre-tax, as the main costs – human resources, stores and food ingredients – can be controlled. Noodle restaurants mainly rent out small spaces in shopping malls or near office buildings.
“Sales on the first day were good since it was a Sunday, but there are more consumers coming to lunch today,” a staff member from the Beijing store said on Monday.
However, the fundamental premise for rapid expansion is a considerable amount of capital investment. Zhang said it might take Quxiaomian two years to establish itself among consumers if the funding process remains stable.
Noodle restaurants have been popular with investors this year, with a total of nearly 1.31 billion yuan ($ 202 million) invested in several noodle catering companies so far in 2021, according to data from ‘Aiqicha, a financial information service provided by Baidu.