Former Luckin chairman launches noodle restaurants, analysts see potential
Published: Aug 09, 2021 10:20 PM
Photo: VCG

Photo: VCG

 Charles Lu Zhengyao, former chairman of Luckin Coffee, officially launched his noodle restaurants under the brand "Quxiaomian" in China on Sunday. Analysts said that it might be possible for Lu to replicate the Luckin business model, but that success will depend on adequate capital investment.  

The nation's first Quxiaomian restaurant opened in Southwest China's Chongqing Municipality, domestic news site 36Kr reported on Monday, adding that there was another store launched in Beijing on Sunday as well.  

The Global Times found at the Beijing restaurant that the ordering and delivering process is exactly the same as ordering coffee from a Luckin store.

It is possible for Lu to replicate the Luckin business model by standardizing the operation process, recipes and management in order to handle orders fast and efficiently as cooking noodles normally do not require high skills and the 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, by expanding rapidly and distributing a large amount of coupons, Zhang said, adding that the business model can be incorporated with the already mature food delivery system.

The profit for noodle restaurants can potentially reach 60 percent before tax as the main costs - human resources, stores and food ingredients - can be controlled. Noodle restaurants mostly rent small spaces in shopping malls or close to office buildings.

"The sales for the first day were fine since it was a Sunday, but there are more consumers coming in for lunch today," a member of staff at 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 two years for Quxiaomian to become established among consumers if the financing process remains stable. 

Noodle restaurants have been popular with investors this year, with a total of nearly 1.31 billion yuan ($202 million) being invested in several noodle restaurant companies so far in 2021, according to data from Aiqicha, a financial information service provided by Baidu.