Quxiaomian Founded By Former Luckin Coffee Chairman Seeks Funding Despite Slow Expansion
Chinese media Tech Planet reported on Saturday that Quxiaomian, a restaurant founded by Charles Lu Zhengyao, former president of Luckin Coffee, was seeking a new round of funding. A knowledgeable source says that Quxiaomian is valued at 1 billion yuan ($ 155 million) in this round, and that he wants to raise 100 million yuan.
Lu started preparing for Quxiaomian last April. This is Lu’s second entrepreneurial venture after Luckin Coffee. Quxiaomian offers eight food categories, such as hot and spicy noodles, potted meat and vegetables, desserts, drinks and cold dishes. So far, 25 Quxiaomian restaurants have opened and are operating since August 8.
The Quxiaomian team lacks experience in the restaurant business and therefore, as a compensation, they try to attract customers with ultra-high discounts. Luckin Coffee was a master at launching price wars. But without discounts, Quxiaomian noodles are much more expensive than other noodle shops. In addition, consumers had higher expectations for Quxiaomian and subsequently were disappointed with the cost-value disparity resulting in a low redemption rate.
Quxiaomian does not copy Luckin Coffee’s crazy expansion efforts. A Luckin Coffee staff member told Tech Planet that the coffee chain initially grew very quickly, but that may be because a cafe is relatively small. A small cafe may take just two weeks to decorate and open while a larger cafe may take a month.
However, a delayed expansion makes employees less confident in the company. Quxiaomian plans to expand its stores in two batches: the first batch will take place in 14 first-tier cities or new first-tier cities, such as Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou; the second batch was supposed to be in 8 other cities from August 18, including Fuzhou, Nanchang, Changsha and Hefei.
SEE ALSO: Former Luckin President Charles Lu Launches New Business: Restaurant Chains
However, Tech Planet has learned from Quxiaomian staff that the expansion plan for the second batch has been put on hold and will take place in early September. An employee working for the expansion says they now work primarily on market research.
A total of 106 noodle shops can be searched on the Meituan app, of which 25 are active while the rest are not yet open. A person close to the top of the company said restaurants that aren’t in business now won’t be opening anytime soon and could be redesigned for refurbishment.