The recent legal action taken by the restaurant chain XIAO NOODLES against a small, family-run noodle shop in Nanyang, Henan province, has ignited significant public controversy and a customer boycott. The shop, named "Yujian Xiaomian" (a name referencing Chongqing), was accused of trademark infringement by the larger chain, whose brand name is "Yujian Xiaomian" (meaning "encounter noodles").
The owner of the small shop, Ms. Mao, expressed distress over the lawsuit. She stated that running a small business is challenging, and the potential settlement cost of several thousand yuan would equate to the profit from selling hundreds of bowls of noodles. She explained that the name was chosen simply to denote authentic Chongqing-style noodles, with no intention to imitate another brand.
Public sentiment quickly sided with the small shop. A wave of consumer backlash ensued, with many customers requesting refunds through XIAO NOODLES' mini-program. Comments supporting the family-run business flooded the shop's online listing.
In response to the growing outcry, Song Qi, the founder of XIAO NOODLES, issued a public apology in the early hours of June 15. He announced the company's decision to withdraw the lawsuit and to gift its registered Class 35 "Yujian Xiaomian" trademark to the small shop free of charge. Song admitted to significant management failures in the trademark enforcement process and disclosed that the company has terminated its cooperation with the external law firm involved.
Legal Perspective on the Trademark Dispute
However, this incident involving the Nanyang shop is not an isolated case. Public records show that since the beginning of 2024, XIAO NOODLES has initiated multiple trademark infringement lawsuits against various individual businesses, many of which have since ceased operations.
Legal experts have weighed in on the case. Wang Longguo, a partner at Shanghai Shenyihe Law Firm, commented that the gifted trademark holds limited practical value for a small individual business. The core function of a trademark is legal protection against impersonation, a risk that is relatively low for a small, local shop with limited fame.
While acknowledging that there might be a superficial legal basis for the lawsuit due to phonetic similarities, Wang argued that a comprehensive assessment suggests a genuine infringement is highly unlikely. He explained that trademark infringement requires a judgment on similarity and likelihood of confusion. The characters "Yu" (referring to Chongqing) and "Yu" (meaning encounter) differ in form, meaning, and tone. Furthermore, the public is more likely to associate "Yujian Xiaomian" with Chongqing cuisine rather than confusing it with the XIAO NOODLES brand.
Pattern of Litigation Against Small Businesses
Public records indicate a pattern of similar lawsuits filed by XIAO NOODLES against other small noodle shops across the country in 2024. These targeted businesses were all individual proprietorships, and they have all since closed down.
The founder's apology letter acknowledged the management misstep and the cessation of the law firm partnership. When contacted for further comment on its trademark enforcement policies, the company referred back to the content of the public letter.
This situation highlights a reported practice within some industries known as "legal revenue generation," where companies outsource intellectual property enforcement to law firms. These firms may engage in bulk screening, sending demand letters, and filing lawsuits. Faced with high legal costs, many small businesses opt for settlement, generating income for both the law firm and the brand.
Wang Longguo noted that authorizing third-party law firms for trademark enforcement is common. However, he emphasized that well-known companies should consider not only the legal merits but also the commercial ethics and social expectations before initiating litigation. Abuse of legal rights can trigger consumer boycotts and severely damage brand reputation.
Financial Performance Amidst Expansion
In its public responses, XIAO NOODLES stated it understands the difficulties of starting a business, having grown from a single small shop itself. Founded in 2014, the chain has expanded rapidly with standardized operations and capital backing.
By the end of 2025, the company operated 503 restaurants. It reported robust financial results for the year, with revenue reaching 1.622 billion yuan, a 40.5% increase year-on-year, and net profit attributable to shareholders of 106 million yuan, up 74.8%.
Despite this strong top-line growth, some core operational metrics showed pressure. Both average order value and same-store sales growth for company-operated outlets declined in recent periods before showing a slight recovery in the full year 2025. The company attributed lower average spending to strategic price reductions aimed at attracting customers.
The company's share price has faced challenges since its IPO. At the latest close, the stock was trading at HK$3.74 per share, representing a decline of approximately 47% from its issue price of HK$7.04.