Chinese noodle restaurant chain operator Hefu-Noodle has secured nearly 800 million yuan (about $123.5 million) in a Series E round of financing led by CMC Capital Partners, a private equity (PE) firm founded by Chinese media mogul Li Ruigang.
Hefu-Noodle roped in ZWC Partners, a dual-currency fund platform that invests in China and Southeast Asia, as the firm’s new investor. Existing shareholders Longfor Capital, and Chinese technology giant Tencent’s investment arm re-upped in the Series E round.
The new round came after Hefu-Noodle closed 450 million yuan in a Series D round in November 2020. The previous deal was backed by Tencent, Longfor Capital and Meridian Capital, a media and entertainment-focused investment company.
Hefu-Noodle, which features authentic Chinese-style noodles and traditional study room-like décor, started operations in 2013 and has grown into a nationwide network consisting of over 340 restaurants by the end of June 2021.
In a statement on Thursday, the firm said that it targets to further boost the number of restaurants to 450 by the end of this year by opening a new store every two days. It claimed to serve over 50 million customers per year.
Although China’s catering industry took a hit at the prime time of the COVID-19 pandemic in early 2020, Hefu-Noodle said that the average revenue of its restaurant has fully recovered to the pre-virus level in the second half of last year. Specifically, it recorded an average monthly revenue of 550,000 yuan ($84,931.6) per store and 45 yuan (close to $7) in sales per customer.
“China’s catering market has great development potential given its massive market scale, yet a low penetration rate of restaurant chains,” Alex Chen, partner and chief investment officer at CMC Capital Partners, said in the statement.
“With the continued increase of shopping malls, improvement of supply chain infrastructures, and enhancement of digital store operations in China, we believe the external conditions for nurturing new-generation catering chain giants have matured,” said Chen.
Upon the completion of the new round, Hefu-Noodle plans to use the proceeds to enhance its strengths along the whole restaurant industry chain, develop new brands, improve its supply chain, and invest in digital operations, among others.