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Recently, three "Ruan Hu Hu" pastry shops opened simultaneously in Changsha, Hunan. Its other identity is a sub-brand launched by the new Chinese pastry brand Momo Dim Sum Bureau. This is a new move launched by Momo Dim Sum Bureau one year after it withdrew from the Hunan market.

Once upon a time, Momo Pastry Bureau was once known as one of the three new Chinese pastry chain brands that institutions could not compete for investment with Hutou Bureau and Luxi River. From the establishment of the brand and obtaining financing in 2020 to the withdrawal from the market outside Hunan Province in 2023, Momo Pastry Bureau has experienced the painful period of the new Chinese pastry industry from rapid expansion to store closure and contraction.

In addition to Momo Pastry Bureau trying out sub-brands, Luxi River recently opened up for franchising and proposed a "100 cities, 10,000 stores" plan, and the creditors' application for bankruptcy liquidation of Hutou Bureau was accepted by the court in March this year. Today's new Chinese pastry brands have different fates.

Momo Dim Sum Bureau launches sub-brand

Information from the WeChat public account and mini program of "Ruan Hu Hu" shows that the brand focuses on rice cake series products. It is worth noting that "Ruan Hu Hu" is a sub-brand of the new Chinese pastry Momo Pastry Bureau, and the customer service name sent by customers for prize redemption information is also "Momo Little Lion".

According to data, the parent company of Momo Dim Sum Bureau, Changsha Yibing Yicheng Catering Management Co., Ltd., was founded in 2020. It was once known as the three new Chinese pastry chain brands that institutions could not rush to invest in, along with Hutou Bureau and Luxi River. As of June 2022, Momo Dim Sum Bureau has received a total of 6 rounds of financing, and with the help of capital, it has gradually moved out of Changsha and expanded to cities such as Beijing, Hangzhou, and Wuhan.

However, the good times did not last long. In early 2022, news came out that Momo Dim Sum Bureau was adjusting its organizational structure, transforming from a brand-building-centered approach to an operations-centered approach, and laying off 40% of its brand employees. Wang Yuxiao, the founder of Momo Dim Sum Bureau, said at the time that the news was not true, and that the proportion of adjustments to Momo Dim Sum Bureau's back-end departments was less than 20%, accounting for less than 2% of the total number of employees.

Entering 2023, Momo Dim Sum Bureau closed its stores in Wuhan, Hangzhou, and Beijing one after another. At that time, Momo Dim Sum Bureau explained that its phased strategic focus was on Hunan, and the contraction of the battle line was temporary, and the cities where the stores were closed "would return again." After that, the company had more energy to spend on products. One obvious manifestation was that the product SKU (single product) was richer than before. The average monthly sales of the upgraded stores was 1.2 million yuan, with the highest exceeding 2.8 million yuan.

Wang Yuxiao, the founder of Momo Dim Sum Bureau, confirmed the claim of shrinking battle lines to a Beijing News reporter in July 2023. As for whether Momo Dim Sum Bureau will return to markets outside Hunan in the future, she said, "I will definitely go back in the future, but it is not clear how I will go back, so I must be fully prepared before going."

The WeChat applet shows that Momo Dim Sum Bureau currently has 37 stores in Changsha, Changde, Hengyang, Shaoyang, and Zhuzhou, Hunan, of which 32 are located in Changsha, and no stores are shown in other provinces. When the first store in Beijing opens at the end of 2021, Momo Dim Sum Bureau will have more than 60 stores across the country.

"Ruan Hu Hu", a sub-brand of Momo Dim Sum Bureau, is now affiliated to Hunan Zhaojian Catering Management Co., Ltd. Tianyancha shows that the company was established in November 2023 with a registered capital of 2 million yuan. It is 100% owned by Changsha Yibing Yicheng Catering Management Co., Ltd., the parent company of Momo Dim Sum Bureau. The current 3 branches are all located in Changsha.

Regarding the brand positioning and store opening plan of "Ruan Hu Hu", Wang Yuxiao replied to the Beijing News reporter on August 5 that the brand is still in the model testing stage and will be disclosed to the public after it is completed.

The rise and fall of new Chinese pastries

Luxihe, Hutouju and Momo Dim Sum Bureau, once the three major new Chinese pastry brands, now have different fates.

Since 2020, the slogan "All consumer products are worth redoing" has almost resounded throughout the investment circle, and the baking track has also ushered in an investment boom. In 2021 alone, Momo Dessert Bureau ushered in three rounds of financing, and baking brands such as Hutou Bureau, Luxi River, Daddy Sugar, Xuanma, and Tianyuanism have also successively received capital support.

Wang Yuxiao previously said in an interview with a reporter from the Beijing News that the annual revenue of the country's largest baking brand is only more than 2 billion yuan, and the industry does not have an absolute leading brand. "It is expected to take three to five years to form a real leading effect like Heytea and Nayuki."

Momo Pastry Bureau is not the only one targeting the top baking brands. With the help of capital, Hutou Bureau accelerated its expansion out of Changsha in 2021 and entered five cities including Guangzhou, Shanghai, Beijing, Wuhan and Shenzhen. In 2023, Hutou Bureau withdrew from other major markets outside Wuhan before Momo Pastry Bureau, and failed to hold on to its base in Changsha.

The official WeChat public account of Hutou Bureau published an article in November 2022 titled "I want to talk to you about some changes in Hutou Bureau" (later deleted), saying that Hutou Bureau is facing huge financial pressure and temporarily withdrawing from some regional markets. In the future, it will be based in East China and South China and radiate to surrounding cities. On December 12 of the same year, Hutou Bureau announced that it would open up to franchising and turn to large-scale operations with direct sales and business partners. In January 2023, Hutou Bureau reported that it had obtained tens of millions of yuan in financing, but two months later, employees broke the news that the boss had run away and owed suppliers a total of 200 million yuan in payments, rent, loans, and wages, and was on the verge of bankruptcy.

In January 2024, Hutouju's parent company Shanghai Wanwu Youyang Catering Management Co., Ltd. (hereinafter referred to as "Wanwu Youyang") had a new bankruptcy review case. The applicant Sheng Moumou applied to the court for bankruptcy liquidation on the grounds that Wanwu Youyang could not repay its due debts and lacked obvious repayment ability. In March, the Shanghai No. 3 Intermediate People's Court accepted the bankruptcy application against Wanwu Youyang.

An insider previously told the Beijing News that new Chinese pastry brands are expanding at a fast pace, and consumer investment and financing have basically stagnated in 2022. Poor single-store operations, coupled with the impact of the epidemic and weather, have forced stores to shrink. However, new Chinese pastry brands have not fundamentally changed the underlying logic of baking, and their products are highly homogenized, with no essential difference from Western baking. It is a wise move to shrink stores and do a good job with individual stores.

Compared with the disappeared Hutouju and Momo Dim Sum Ju that retreated to Hunan, Luxihe is one of the few new Chinese pastry brands that can still hold on to the national market. According to data, Luxihe was founded in Nanjing, Jiangsu in 2013. Its founder Huang Jin came from Yingtan, Jiangxi, the "hometown of baking". As of now, it has more than 500 stores.

In January 2023, Luxi River received several hundred million yuan in Series A financing from Longbai Capital and Bailian Chegao Capital, and the funds were mainly used for supply chain construction and digital upgrades. However, in July 2024, Luxi River, which has always adopted a direct sales model, also began to recruit partners and proposed a "100 Cities and 10,000 Stores" plan.

Wen Zhihong, a chain industry expert and general manager of Hehong Consulting, believes that the total volume of my country's baking market is large and has room for growth, but the market is mostly dominated by regional brand chains and the concentration is not high. Luxihe previously mainly operated directly, and its expansion speed and penetration speed in the sinking market were limited. The franchise model is not as asset-heavy as the direct operation model, and opening up the franchise is the right choice. "As far as I know, Luxihe's operating system is relatively mature, and it has made major breakthroughs in management and strategy." On the other hand, when Momo Dim Sum Bureau launched a sub-brand, Wen Zhihong commented that it was an act of "holding a golden bowl to beg for food." Momo Dim Sum Bureau itself has brand influence and product line foundation, but it launched a sub-brand before the main brand has grown. This reflects that the strength of the team behind it lies in innovation, and it does not have the ability to grow the brand, which is a kind of path dependence.

Beijing News Chief Reporter Guo Tie

Editor: Qin Shengnan

Proofread by Liu Baoqing