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On January 8, 2026, documents disclosed by the Hong Kong Stock Exchange revealed that the leading Chinese fast-food chain Laoxiangji has submitted its third listing application for the main board, with CICC and Haitong International acting as joint sponsors. Laoxiangji's path to capitalization has been exceptionally bumpy, accompanied by a significant decline in its valuation. During its initial attempt to list on the A-share market in 2022, its market valuation reached a high of 18.1 billion yuan. However, according to the "Global Unicorn List" released by the Hurun Research Institute in June 2025, its valuation had shrunk to 9 billion yuan.
Behind this halved valuation, Laoxiangji potentially faces several operational risks: (1) From a performance perspective, its revenue and net profit growth rates have noticeably slowed in recent years; (2) Its heavy-asset model results in a gross profit margin that is not particularly competitive; (3) Over the past few years, a funding gap for relevant contributions has persisted and expanded annually, accumulating to a substantial total amount; (4) While the rapid growth of franchised stores has increased the store count, it has also introduced new management challenges, with frequent food safety issues leading to multiple administrative penalties.
The halved valuation and repeated IPO setbacks are underpinned by slowing performance growth and the risk of substantial fines for social security contribution arrears.
Laoxiangji's predecessor was a restaurant named "Feixi Old Hen" founded in Hefei, Anhui province in 2003, which was renamed "Laoxiangji" in 2012. Unlike typical fast-food enterprises, Laoxiangji operates a full-industry-chain model, encompassing everything from "front-end breeding, mid-processing to terminal cooking and sales."
Laoxiangji's journey to capitalization has indeed been fraught with difficulties. It initially targeted the A-share market. In May 2022, Laoxiangji first submitted its listing application to the China Securities Regulatory Commission (CSRC) for the Shanghai main board. In October of the same year, the CSRC raised inquiries about 45 issues, including actual controller bribery, food safety, and social security and housing fund contributions. By the end of that month, Laoxiangji submitted its second IPO application. In February 2023, its application was transferred to the Shanghai Stock Exchange for review, prompting another update to its prospectus. In August 2023, Laoxiangji voluntarily withdrew its application, marking the shelving of its A-share listing plan. In January 2025, Laoxiangji shifted its focus to the Hong Kong Stock Exchange, subsequently updating and resubmitting its prospectus in July 2025 and January 2026 after its initial application lapsed.
The坎坷 capitalisation path has been accompanied by a sharp decline in valuation. During its first attempt to list on the A-share market in 2022, its market valuation soared to 18.1 billion yuan, positioning it as the prime candidate for the "first share of Chinese fast food." However, the "Global Unicorn List" released by the Hurun Research Institute in June 2025 indicated its valuation had shrunk to 9 billion yuan, merely half of its peak value.
The repeated setbacks in Laoxiangji's listing journey are not due to a single cause but are the result of multiple long-standing "hard wounds" in its operations and governance. These issues have significantly eroded confidence among regulators and investors.
Firstly, from a performance standpoint, Laoxiangji's revenue and net profit growth rates have noticeably decelerated in recent years. From 2022 to 2024, its total revenue was 4.528 billion yuan, 5.651 billion yuan, and 6.288 billion yuan, respectively, with year-on-year growth rates of 58.38%, 24.80%, and 11.27%. During the same period, its net profit was 252 million yuan, 375 million yuan, and 409 million yuan, respectively, with year-on-year growth rates of 86.67%, 48.81%, and 9.07%.
Secondly, its heavy-asset model results in a gross profit margin that is not particularly advantageous. The company's "full industry chain" model was once a core selling point for quality control, striving for integrated management from breeding and processing to distribution. However, this heavy-asset model also brings significant cost pressures, which is why Laoxiangji's gross profit margin is at a relatively low level compared to listed peers in the industry.
Furthermore, compliance issues regarding social security and housing fund contributions persist. The compliance problems Laoxiangji faces concerning social insurance and housing fund contributions represent a major, long-standing, and worsening concern throughout its IPO process.
According to its latest prospectus, the funding gap for these contributions has persisted and expanded annually over the past few years, accumulating to a considerable total amount. As early as during its A-share listing queue, regulatory authorities repeatedly questioned its compliance regarding social security and housing fund payments. Although the company attempted remedies, such as obtaining guarantees from major shareholders, the protracted nature and scale of the problem led regulators to view the soundness of its internal controls with caution.
According to the company's latest prospectus, for the years 2022-2024 and up to the end of August 2025, the shortfall in social insurance and housing fund contributions was approximately 10.7 million yuan, 21.4 million yuan, 36.3 million yuan, and 31.9 million yuan, respectively. The potential maximum fines liable for social insurance arrears could be approximately 16.1 million yuan, 42.7 million yuan, 81.9 million yuan, and 74.7 million yuan for the respective periods. Additionally, if relevant authorities apply to the court for compulsory enforcement, the maximum enforcement amounts potentially faced due to housing fund contribution arrears during the track record period could be approximately 5.4 million yuan, 7.2 million yuan, 9.0 million yuan, and 7.1 million yuan for the respective periods. (Source: Company Prospectus)
Frequent Food Safety Issues and Penalties Amid Franchise Expansion
To accelerate scale expansion, Laoxiangji has vigorously promoted a franchise model in recent years, converting a large number of company-owned stores to franchised outlets. While the rapid growth of franchised stores has increased the total store count, it has also introduced new management challenges.
In 2022, 2023, and 2024, the gross profit from franchised stores was 50.363 million yuan, 65.714 million yuan, and 144 million yuan, respectively. The gross profit margin declined consistently from 28.9% in 2022 to 20.1% in 2024. Explaining the declining margin trend in its prospectus, the company attributed it to increased costs associated with strengthening the franchise management system to support rapid expansion. This included deploying more dedicated management personnel and, starting in 2024, centrally assuming responsibility for raw material logistics previously handled by franchisees, leading to a significant rise in related costs. Concurrently, raw material costs increased to enhance menu competitiveness.
Nevertheless, Laoxiangji has explicitly stated its future plan to continue expanding the franchise store network to further increase market coverage. For catering enterprises, especially those aspiring to become public companies, food safety is the lifeline. Inherently, control over franchised stores is weaker than over company-owned stores, posing risks in food safety, service quality, and brand standard consistency. The prospectus discloses that between 2022 and 2024, the company and several of its subordinate stores experienced food safety incidents, resulting in a total of 13 administrative penalties. These penalties primarily addressed issues such as using ingredients past their expiration date, employing non-compliant sanitary utensils, discovering foreign objects in dishes, failing to fully implement procurement inspection systems, improper food storage, and incomplete food safety documentation. (Source: Company Prospectus)
Furthermore, numerous complaints related to Laoxiangji's food safety issues exist on platforms like HeiMao Complaints and Xiaohongshu. On the HeiMao Complaints platform alone, there are over a thousand complaints containing the search term "Laoxiangji," with multiple complaints specifically concerning food safety, such as "insects in dishes" and "unidentified hair found in food." If these complaints are valid, they starkly expose vulnerabilities in the standardization of store operations and the food safety management system during rapid expansion, particularly as the difficulty of control intensifies with the accelerated growth of franchised stores. (Source: HeiMao Complaints)
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Editor: Company Observation