Popular fast food chain Hefu-Noodle announced that it had raised 800 million yuan ($ 123 million) in its last funding, joining the ranks of a new generation of local Chinese restaurant brands whose rapid expansion has made them the darlings of investors.
Investors in Hefu’s latest round of funding included CMC Capital and ZWC Partners, as well as outgoing investors Tencent and Longfor Capital, according to Hefu’s announcement Thursday.
Since its founding in 2012 and opening its first store a year later, Hefu has become known for its bright shops offering various shapes of noodles typically costing between 30 yuan ($ 4.63) and 50 yuan per bowl. The company is one of a growing number of local restaurant chains catering to the country’s increasingly demanding middle class.
Such regional and national chains were rare before Yum Brands entered the market with its first KFC outlets in the late 1980s. But a growing number of local favorites have emerged over the past two decades as people eat more at restaurants, led by names like popular fondue chain Haidilao and marinated fish specialist Tai Er.
Hefu’s latest funding comes less than a year after raising 450 million yuan last November. Prior to that, he raised around 300 million yuan combined in several earlier funding rounds dating back to 2015.
Hefu used the funds for a steady expansion that took him beyond his original roots from east China in Shanghai to north, south and central China. The company operated more than 340 stores in 37 cities in 17 provinces as of the end of June. It expects rapid expansion in the second half of this year, aiming to reach a total store count of 450 by the end of the year.
CMC Capital said the chain has recorded an overall revenue growth of more than 50% in recent years, with average stores now generating around 550,000 yuan in revenue each month.
A number of Hefu’s competitors went on to IPOs, mainly in Hong Kong but also in the United States. Haidilao raised nearly $ 1 billion when it went public in 2018 in Hong Kong, and since then its shares have more than doubled. Tai Er parent Jiumaojiu International listed in Hong Kong in early 2020, and has seen its shares almost quintuple since then.
Yum also previously separated its operations in China for a separate listing in New York in 2016, and the new company, Yum China, make a secondary list in Hong Kong last year.
Contact reporter Yang Ge ([email protected])
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