On March 27, XIAO NOODLES (02408), known as the first listed Chinese noodle restaurant chain, released its inaugural annual results since going public. According to the financial report, the company achieved total revenue of RMB 1.622 billion in 2025, a year-on-year increase of 40.5%. Adjusted net profit reached RMB 135 million, surging 111.9% compared to the previous year.
While profit doubled, XIAO NOODLES also achieved a breakthrough in store scale. The total number of restaurants increased from 360 as of December 31, 2024, to 503 as of December 31, 2025. A key growth signal within this expansion is particularly noteworthy: the high growth in revenue and profit is not only due to the expansion of the store network but also stems from continuous improvements in single-store operational efficiency. This directly demonstrates XIAO NOODLES' achievement of "simultaneous growth in scale and quality."
In 2025, the company successfully achieved a 1.0% year-on-year increase in same-store sales. The average daily orders per same-store location rose from 393 to 432, a 9.9% increase, indicating sustained enhancement in brand health and customer loyalty, and showcasing strong internal growth resilience. This breakthrough growth in core metrics clearly reflects the leading-level resilience of XIAO NOODLES during a period of industry differentiation.
Facing a market opportunity exceeding RMB 300 billion in 2025, alongside headwinds from market consolidation, high costs, and intensifying price wars, XIAO NOODLES delivered a doubled profit result. This was achieved through strategies leveraging economies of scale, digital efficiency gains, a high value-for-money positioning, and a balanced approach to expansion. This resilience speaks for itself.
Beyond rapid performance growth, XIAO NOODLES also expressed firm confidence in its future development. The company announced in its annual report the distribution of a final dividend for 2025 of RMB 0.03 per ordinary H-share, actively rewarding shareholders in its first year as a public company. Concurrently, the company has been authorized to repurchase H-shares and, as of February 28, 2026, had utilized HKD 17.3 million of its own funds for buybacks. The combination of "dividends + buybacks" is relatively uncommon in the Hong Kong-listed catering sector, fully demonstrating management's strong confidence in the company's long-term prospects.
The combination of doubled profit, a store network exceeding 500 locations, and prudent capital management through dividends and buybacks not only highlights the company's robust short-term growth momentum but also reflects a development philosophy focused on long-term, stable operation. Resonating with these multiple positive factors, XIAO NOODLES is entering a new window for value reassessment.
**Three Core Strengths Drive Profit Growth Far Exceeding Revenue Growth** An analysis of the 2025 report reveals that the most prominent highlight of XIAO NOODLES' performance is the significant outperformance of profit growth compared to revenue growth. This not only confirms that management dividends and operational efficiency are entering an accelerated release phase but is particularly commendable given the overall pressure on the catering industry. This outperformance stems from the honing of three internal strengths.
First, optimized cost structure pushed restaurant profit margins to new highs. Effective cost control was a primary driver of rapid profit growth. During the period, through multi-dimensional cost optimization measures, the company's cost structure continued to improve. Notably, the cost of raw materials and consumables as a percentage of revenue decreased from 34.3% in 2024 to 32.4% in 2025, primarily due to enhanced procurement bargaining power and improved supply chain efficiency resulting from economies of scale. Furthermore, rental expenses as a percentage of revenue decreased from 18.2% in 2024 to 17.0% in 2025, mainly attributable to expansion from current downtown locations to surrounding areas with lower rental costs. Consequently, through supply chain optimization and control of procurement and rental costs, XIAO NOODLES' adjusted net profit margin increased from 5.5% in 2024 to 8.3% in 2025, an improvement of 2.8 percentage points.
Second, the "volume-for-value" strategy proved effective, with economies of scale diluting headquarters costs. High value-for-money has consistently been a core competitive advantage for XIAO NOODLES. Focusing on Chongqing Pea Noodle as its core popular product, the company implements tiered pricing based on store location, consistently maintaining a more accessible pricing strategy compared to surrounding fast-food chains, thereby building competitive barriers through extreme value-for-money. During the reporting period, amidst increasingly homogeneous competition in the catering industry, the average order value for both company-owned and franchised restaurants decreased, from RMB 32.1 and RMB 31.8 in 2024 to RMB 29.9 and RMB 28.8 in 2025, respectively, trading price for customer traffic growth. Despite the decrease in average spend per customer, the Gross Merchandise Value (GMV) saw a significant climb, reaching RMB 1.812 billion in 2025, a year-on-year increase of 34.4%. The substantial customer traffic effectively diluted headquarters operational and supply chain costs, leading to significant improvements in operational efficiency and ultimately driving the increase in total GMV and the doubling of profit.
Third, the continuous refinement of the standardized system contributed new profit increments, particularly from the Hong Kong market. The ongoing enhancement of the standardized system also provided strong support for the profit doubling. Since its inception, the company established a dual foundation of "chain operations + digitalization," building a digital system covering the entire chain from product development and supply chain management to store operations and customer service. Furthermore, XIAO NOODLES established a highly standardized, systematic, and digitalized operational system. For instance, the menu was streamlined to 30-40 SKUs, covering all dayparts and scenarios. Core ingredients are delivered uniformly from a central kitchen, simplifying store operations, with production processes broken down into over 200 quantifiable parameters, ensuring consistency and efficiency. During the reporting period, by continuously refining its standardized operational system, XIAO NOODLES significantly enhanced store operational efficiency while also building a replicable and implementable mature model for scaled expansion. Notably, the Hong Kong market, leveraging this standardized system, became a new engine for profit growth. The company stated in its financial report that the increased contribution from restaurants in the Hong Kong Special Administrative Region, which have higher operating profit margins, was a major factor in the improvement of overall profitability. By the end of 2025, the company operated 15 stores in Hong Kong, and as the store count steadily increases, the contribution of the Hong Kong business to overall profit is expected to continue strengthening.
Therefore, the profit growth rate significantly outpacing revenue growth is not accidental but the inevitable result of multiple measures including continuous cost structure optimization, comprehensive operational efficiency improvements, and cost reduction and efficiency gains through economies of scale. It also marks the company's formal achievement of a qualitative transformation with synchronized growth in both "revenue" and "profit."
**Store Count Exceeds 500, Scale Expansion Opens Greater Growth Space** In the catering industry, true expansion capability lies not in the speed of opening stores, but in the speed of profit growth after stable operations are established. XIAO NOODLES precisely validates this logic—while continuously expanding its store scale, it effectively diluted headquarters costs through customer traffic economies of scale, achieving a high-quality transformation of "increasing both revenue and profit." This is driven by its precise and steady expansion strategy.
XIAO NOODLES' geographical expansion strategy is characterized by a focus on core cities with gradual radiation outward, while actively exploring overseas markets, forming a multi-level, three-dimensional market layout.
On one hand, the company insists on deep penetration in first-tier cities. During the period, XIAO NOODLES consistently targeted first-tier and new first-tier cities as its main battleground for expansion. As of December 31, 2025, the company operated 356 company-owned restaurants and 40 franchised restaurants in these cities, accounting for 78.7% of the total store count (503). In core cities, the company adopts a high-density strategy. Following Guangzhou, Shenzhen surpassed 100 stores on October 9, 2025, becoming the company's second "hundred-store city." Beijing and Shanghai are also progressing towards the hundred-store target. This dense layout in core cities not only enhances brand influence but also realizes economies of scale and synergies.
On the other hand, the company continues to explore lower-tier markets. While first-tier and new first-tier cities remain the primary focus, XIAO NOODLES is also actively exploring opportunities in lower-tier markets. In 2025, the company opened 156 new restaurants, comprising 134 company-owned and 22 franchised locations. Within this expansion, XIAO NOODLES noticeably accelerated its presence in lower-tier cities, with company-owned restaurants in second-tier and below cities increasing by 16 to 39, and franchised restaurants increasing by 6 to 52. A significant proportion of new stores were located in these cities. Extending from core commercial districts to higher value-for-money areas, this regional structure optimization not only opens greater growth space for XIAO NOODLES but also, due to lower rental and labor costs in these markets, further enhances the profitability resilience of individual stores.
Beyond regional deepening, the company also extended its "business reach" to a global layout during the reporting period. On December 29, 2025, XIAO NOODLES' global 500th store, also its first store in Singapore, opened on Orchard Road, marking the substantive implementation of its overseas strategy. This not only verifies the export capability of its modern catering management system but also provides a new valuation anchor for the capital market.
With regional deep cultivation as its foundation and global layout as its wings, XIAO NOODLES has undoubtedly opened up broader growth space. According to Frost & Sullivan data, the size of the Chinese noodle restaurant market reached RMB 326 billion in 2025, with a projected CAGR of approximately 11.0% from 2025 to 2029. This multi-hundred-billion market红利 injects strong growth momentum for its sustained development.
**Conclusion** As the saying goes, "The stock market is a voting machine in the short run and a weighing machine in the long run." Backed by strong fundamentals and a clear growth path, the long-term development potential demonstrated by XIAO NOODLES has evidently garnered optimistic expectations from several brokerages. Among them, Guosen Securities published a research report stating that, considering leading chain catering companies generally enjoy valuation premiums during high-growth periods, and given that the company is successfully validating new models and experiencing rapid store rollout, it is expected to also enjoy a moderate valuation premium. Based on absolute and relative valuation methods, the firm calculated a reasonable share price range of HKD 7.8 to HKD 8.2 for the next year, initiating coverage with an "Outperform" rating. Based on the latest share price of HKD 4.78 (closing price on March 27), XIAO NOODLES' shares have potential upside of at least 63% to 72%.
It is evident that the core moat built by XIAO NOODLES through scaling, standardization, and digitalization is driving the company into a new cycle of value reassessment.