XIAO NOODLES, touted as the "first Chinese noodle chain IPO," debuted on the Hong Kong stock market but saw its shares plunge 27.84% on the first day (from an issue price of HK$7.04 to a closing price of HK$5.08). As of the latest check, the stock fell another 1.18%, leaving its market cap at just HK$3.568 billion amid widespread market skepticism. With rival Hefu Noodles preparing for an IPO and Xiangnian Food banned from listing due to fraud, why is this "essential noodle" market tripping up both investors and entrepreneurs?
1. No one expected the "eating noodles in the dark" meme to become reality. The phrase originated in 2011 after Chongqing Brewery's vaccine dream collapsed, when a retail investor lamented selling their home to cover margin calls and eating noodles alone at night. It has since become a symbol of hardship for small investors in China's capital markets.
2. XIAO NOODLES: Cornerstone Investors Face Over 10 Million in Floating Losses While XIAO NOODLES isn't another Chongqing Brewery scandal—its issues lie in its business model—the meme fits all too well.
**Founders**: Three South China University of Technology alumni (Song Qi, Luo Yanling, Su Xuxiang), formerly at McDonald's, Yum! Brands, and Johnson & Johnson.
**Key Financials**: - Revenue (2022–2024): RMB418M → RMB800M → RMB1.154B - Net Profit: -RMB35.97M → +RMB45.91M → +RMB60.7M (profitable for two straight years) - H1 2025 profit surged 95.77% YoY
**Operations**: - 465 stores (451 in mainland China, 14 in Hong Kong), with over 65% in Guangdong. - Average order value dropped from RMB36.2 (2022) to RMB31.8 (2025), reflecting a volume-over-margin strategy.
**Backers**: Jiumaojiu, Xijiade, Country Garden Ventures, Hillhouse, Haidilao, etc.
**Plans**: Accelerate expansion into lower-tier cities, overseas markets, and franchising, targeting 500+ new stores from 2026–2028.
**IPO Details**: Cornerstone investors subscribed to $22M (HK$171M) worth of shares, or 25% of the total offering. Participants include Hillhouse's HHLR Advisors, Guotai Junan affiliates, Sheng Ying Investment, Zeta Fund, and Haidilao Singapore. Hillhouse, Sheng Ying, and Zeta each invested $5M, while Haidilao Singapore put in $2M.
**Market Reality**: The noodle business, though seemingly resilient, is fiercely competitive with rising rents, labor, and ingredient costs. A bowl priced at RMB30 may yield less than RMB3 in profit. Once seen as the "next bubble tea," noodle chains failed to standardize flavors or build strong brand loyalty. Investors now demand more than just "10,000-store" PowerPoint dreams.
**Upcoming IPO**: Hefu Noodles - Rumored Hong Kong IPO aiming for $100M–$200M. - Positioned as premium "wellness noodles in a study," with prices ranging from RMB24 (vegetarian) to RMB108 (crab roe noodles). - Over 400 stores (end-2023) and RMB2B+ in total funding from Tencent, Alibaba, and others.
**Failed IPO Case**: Xiangnian Food (dried noodles) - Barred from A-share listing for five years due to financial fraud, fabricated transactions, and evidence destruction. - Revenue: RMB2.2B, but 50% of distributors were employee relatives.
Comments