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While traditional restaurants grapple with traffic anxieties and escalating costs, a Xinjiang stir-fried rice noodle brand named “Hua Xiaoxiao” quietly expands across China, boasting over 3,000 locations by 2025. This once-niche cuisine has unexpectedly become a nationwide phenomenon, marking a dark horse victory in the Chinese restaurant chain landscape.
This isn’t merely a fleeting “viral sensation”; it’s a calculated business move, tapping into prevailing market winds with precision.
Hua Xiaoxiao’s founder, Zhao Gang, isn’t your typical restaurateur. With a background as a marketing director at gaming company Blueport Interactive and years of digital marketing experience in public relations, Zhao ventured into the food industry in 2015. Eschewing the conventional “open-expand-fundraise” path, he implemented a systematized business model to catapult Xinjiang stir-fried rice noodles, a regional delicacy, onto the national stage, achieving scalable replication within a few short years.
From Exploration to Focus: Why Xinjiang Stir-Fried Rice Noodles?
Zhao’s initial venture, the “Four Youths” Hunan rice noodle brand, operated on a direct-sales model. He soon realized, however, that the Hunan rice noodle category was excessively fragmented, making it difficult to establish a strong brand identity. The direct-sales model was capital-intensive and challenging to manage and rising beef prices created additional pressures. These factors hindered scalability.
“We initially thought the restaurant business had a low barrier to entry,” Zhao remarked. “We soon discovered, however, that the real challenge wasn’t making a single bowl of noodles, but how to consistently and reliably make ten thousand.”
The COVID-19 pandemic became a catalyst for Hua Xiaoxiao’s strategic shift. With dine-in services severely impacted, Zhao reconsidered his approach, asking: what kind of food category could be easily replicated, offer high repurchase rates, and be readily standardized?
After careful assessment of numerous rice noodle options, he pinpointed Xinjiang stir-fried rice noodles. A culinary fusion of northern and southern Chinese flavors with a 30-year track record in Xinjiang, it had a clear and distinct consumer identity unlike the more diverse Hunan rice noodle offerings.
“It utilizes southern rice with northern noodles, offering a spicy yet not fiery taste, and a fragrant yet not greasy profile,” Zhao explained. “It primarily features chicken and other stable ingredients. Most importantly, it’s a clearly definable category, but without a national leader.” This wasn’t just a chance decision; it was a systematic analysis of category potential, market dynamics, supply chain considerations, and consumer demands.
E-commerce: More Than Just a Sales Channel, It’s a Growth Engine
For Zhao Gang, e-commerce is more than a mere sales channel; it’s a vital source to power brand growth.
During the early stages of the pandemic, Hua Xiaoxiao initially employed e-commerce with aim to complete brand model validation. E-commerce platforms provide not just an increase in traffic but also provide an effective way to enhance both product excellence and consumer insight. “In the past, brands focused on a well-located store, but now, brands must be well-represented through eCommerce as well as have an excellent product” Zhao states. eCommerce minimizes the need for “golden locations” Zhao states, enabling community stores and satellite stores to perform efficiently, while reducing set-up fees and increasing operational flexibility.
Furthermore, algorithms on each platform allows for a direct feedback loop which enable Hua Xiaoxiao to make immediate improvements. The data provided by platforms provide product development and innovation. In Zhao’s words, “We can hear customer feedback immediately and adapt accordingly.” By actively engaging with consumers online, the brand is building their foundation through consumer loyalty and membership programs.
After increased subsidized deals from TaoBao flash sales, Hua Xiaoxiao orders on Eleme and other platforms dramatically increased, up to 100% YOY. Moreover, sales in Shenzhen and Jiangxi increased by over 200% YOY, with e-commerce accounting for 60-70% of total revenue.
“Hua Xiaoxiao’s brand is also enhanced by e-commerce,” Zhao emphasizes. “We are able to introduce XinJiang cuisine to the masses while also popularizing XinJiang culture.”
In Zhao’s point of view, eCommerce platforms serve as a catalyst to new brands, effectively testing out their products and streamlining their internal infrastructure by iterating quickly. “Even opening up a store in a small community, eCommerce allows a brand to be seen by the masses, so long as the product is great”, Zhao states. The algorithms which are provided through platforms such as consumer profiles and store selection algorithms enable smaller brands to compete with larger brands. He adds, “The presence of strong presence on eCommerce can be extended to the real world with stores opened up and a greater success probability.”
Increased Increment Through a Multi-Platform Approach
When asked about how the eCommerce sales model differed versus the typical sit in restaurant model, Zhao states that eCommerce is a valid approach. “Different businesses define the market differently. However, trends will not change on their own accord.”
He believes that although the restaurant industry has not been standardized, the eCommerce approach allows brands to scale and go on a trajectory of continuous improvements through standardization.
Zhao admits that healthy competition between platforms will allow brands to have greater flexibility of choice and space.”The monopolization of one platform is detrimental to merchants” Zhao states. He adds, “The existence of multiple platforms enable lower costs, higher efficiency, increased services, and a superior ecosystem. This helps fuel the advancement of the industry.””
There is an abundant amount of restaurant options that the barrier to entry is considered low, but it’s much harder to be successful.” “Platforms should give support in customer management and operational excellence.”
Hua Xiaoxiao’s final goal is to expand to tens of thousands of stores and become the conduit of Chinese culture abroad. The naming behind the brand reflects this exact ambition. “Hua Xiaoxiao is named after the XinJiang pomegranates, representing the 56 ethnicities in China. The company aims to allow customers to experience XinJiang and Chinese culture.”
Hua Xiaoxiao has locations in the United States and is planning on expanding to the Southeast Asia and the Middle East to popularize XinJiang food and culture.
Hua Xiaoxiao has experienced a significant transformation. The restaurant industry is gradually switching from traditional models (product oriented) to new, product-oriented models which also emphasize the importance of operational excellence and data analysis, with eCommerce as a catalyst to promote change and quality.
To summarise Zhao Gang’s thoughts, “It is still important for restaurants to have excellent products and high product quality. It is equally important to have operational skill and customer analytics.
eCommerce is no longer just a supplement, but the foundation to new restaurants. Brands that can utilize eCommerce will win.”
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Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/6519.html
