XIAO NOODLES, hailed as the "first stock of Chinese-style noodle restaurants," has released its first performance forecast since listing on the Hong Kong Stock Exchange. The company anticipates reporting a net profit of 100 million to 115 million yuan for 2025, representing a year-on-year increase of 64.7% to 89.5%; its adjusted net profit is projected to reach 125 million to 140 million yuan, marking a significant surge of 95.6% to 119.1%. In the current climate where the broader catering industry faces widespread pressure, this profit growth rate, which far outpaces revenue expansion, typically signals an accelerated release of management leverage and operational efficiency. Scale expansion remains the primary driver of growth. By the end of 2025, the total number of XIAO NOODLES restaurants reached 503, a nearly 40% increase from the 360 stores at the end of the previous year. This translates to an average of more than one new store opening every three days over the past year. However, amid fierce market competition, XIAO NOODLES is also confronting the common industry challenge of declining average spending per customer. From 2022 to 2024, the average order value at XIAO NOODLES restaurants dropped from 36.1 yuan to 32 yuan, while the average daily sales per store have also been on a downward trajectory. Beyond sheer scale, what truly determines profit elasticity lies in the "downgrading" location strategy and improvements in operational efficiency. The company indicated that its restaurants are expanding from high-rent core locations in city centers to surrounding areas with lower costs. Concurrently, as the store count increases, the profit contribution from the Hong Kong Special Administrative Region is also steadily rising. In the first half of 2025, the operating profit margin for company-owned restaurants in tier-one and new tier-one cities was 14.1%. In contrast, this figure reached 19.8% and 21.8% in tier-two and lower-tier cities and the Hong Kong Special Administrative Region, respectively, a difference exceeding 5 percentage points. Currently, the Chinese-style noodle restaurant market remains highly fragmented, with the top five players collectively accounting for only about 3% of the total Gross Merchandise Volume. This indicates that leading brands, leveraging standardized store models and robust mid-office support, still possess significant consolidation potential for the future. Looking ahead from the current standpoint, XIAO NOODLES' ambitions do not stop here. According to its plan, the company aims to open an additional 520 to 610 new restaurants between 2026 and 2028, utilizing a hybrid model of company-owned and franchised stores. This implies that within the next three years, its store network has the potential to double again from the current base of approximately 500 stores.
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