Momofuku is getting in on the $47 billion instant noodle market after a rough 2020. The CEO broke down how the restaurant group is transforming its business model for a post-pandemic world.

Close up of restauranteur David Chang — David Chang, Momofuku
Rene Johnston/Toronto Star via Getty Images

Momofuku launched its own brand of "cleaner" instant noodles on Aug. 25.
The move comes as the renowned Japanese restaurant group transforms its business model post-pandemic
Momofuku's CEO told Insider about plans to make half the company's revenue outside its restaurants.
See more stories on Insider's business page.

Momofuku, the crown jewel of David Chang's food empire known for its posh ramens and trendy Japanese staples, is making a bet on instant noodles.

The restaurant group is launching its own brand of 4-minute noodles for a piece of the $47 billion instant noodle market, and is the latest example of how restaurants - even the most successful ones- are navigating the pandemic.

The noodles are manufactured with A-Sha Foods, a Taiwanese noodle company that specializes in instant noodles that are air-dried, as opposed to deep-fried for preservation. There are three flavors - soy and scallion, spicy soy, and tingly chili - and the noodles cook up in four minutes.

The decision to get into packaged dried noodles was born pre-pandemic, but the current economic environment many restaurants face today "really expedited plans to move into that space," Momofuku CEO Marguerite Zabar Mariscal told Insider.

It's a step in a different direction for Momofuku, which at its biggest counted two multi-city chains in Fuku and Milk Bar and 16 restaurants. In 2020, Momofuku shuttered two restaurants, one in New York City and the other in Washington, D.C., and now it's banking on packaged consumer goods and online cooking classes to weather the pandemic.

"For us, when we thought about expansion, when we thought about, 'How do we interact and feed more people across the country,' we knew that we might have to look at a different path than just restaurant expansion," Zabar Mariscal said.

Momofuku is gearing up to have 50% of its revenue come in from beyond its restaurants' four walls, she said, adding that tight margins, seemingly shrinking talent pools, rent and food costs in major cities where it operates would make it "harder to stay competitive."

Plus, 90% of the people that follow David Chang and Momofuku on Instagram - a key social media channel for the company's educational and marketing efforts - don't live in cities in which Momofuku operates restaurants, Zabar Mariscal added. "We've always had this demographic of people that we haven't really been able to reach," she said.

"We just knew diversification was going to be important and if anything, kind of create like a life cycle between the restaurants, products, digital experiences like cooking classes, that we really got into during the pandemic, and have multiple touch points for customers," she said.

During development, it was important for Chang to create a healthier, restaurant-grade noodle product, hence the partnership with A-Sha Foods, which is the brain behind the air-drying noodle process and three-item ingredients list (wheat, salt, and water). The noodles are being featured at the original Momofuku Noodle Bar as a nightly special but there are no concrete plans to make them a permanent item, Zabar Marisacal added.

The noodles, which have currently sold out online with a 40,000-person waitlist, are the next step in Momofuku's business model transformation. The company made its foray into the consumer packaged goods market last fall with the launch of its chili oil, soy sauce and sesame seed oil.

"We see it as kind of like the opening set, but are super excited to really continue to think about, 'What can these noodles be?' Whether it's different shaped noodles, recipes that more closely mirror what someone's seen in one of our restaurants," she said. "How can we take that home and out of the kitchen of our restaurants so that's something we're exploring right now and hope to have soon."

Read the original article on Business Insider