China Consumer

Quick returns?

A Chinese fast-food chain serves up first onshore IPO


Started in Anhui, now set to list in Hong Kong: Laoxiangji

Chicken is a such a staple of the provincial cuisine in Anhui that it has inspired sayings such as “From Feidong to Feixi, delicious is the old hen.”

A particularly well-loved chicken soup – Feixi Laohen – is also the star of the show at Laoxiangji, which hopes to become the first of China’s fast-food chains to list domestically.

The Anhui-based group, known as Home Original Chicken in English, has been in business since 2005 and now boasts about 1,000 outlets, largely in Eastern China. Over the past decade-and-a-half it has sought to build a reputation for clean restaurants and a reliable menu. Standardisation is the order of the day: food is prepared at central kitchens and then distributed to individual outlets (we first wrote about the restaurant group almost exactly two years ago; see WiC473).

Laoxiangji must contend with the same challenges and opportunities as other local fast-food chains. Firstly, there’s the issue of China’s sheer size and diversity. This means that the country’s cuisine has developed along distinctive regional lines (in culinary terms the country is as diverse as the continent of Europe, something we pointed out in our book China in 50 Dishes, which can be downloaded from our website at:

When its citizens do opt for fast food, many still choose from overseas-originated menus. KFC and McDonalds dominated much of the early scene after first arriving in China in the 1980s, albeit adapting parts of their menus to suit local tastes over time.

Hong Kong-listed Yum China currently holds the franchise for KFC, in addition to those of Pizza Hut and Taco Bell. It has no intention of losing ground to local challengers, announcing plans recently for a further 1,700 outlets on top of its current network of 11,415.

Companies like Laoxiangji will struggle to establish the same kind of scale. But their localised focus gives them a different set of skills in seeking to emulate the fast-food giants. The American businessman Colonel Sanders introduced the world to fried chicken. Its far newer Hefei-based competitor is best known for its steamed chicken wings with bamboo shoots.

Aside from its localised menu, Laoxiangji is also relying on one of the country’s most famous comedians, Yue Yunpeng, to make a splash on its behalf. The promotional campaign makes the point that Yue started off life working as a restaurant dishwasher and is well known for his frugal lifestyle, making him an ideal brand ambassador for Laoxiangji’s cheap but nourishing nosh.

Private equity investors also have an appetite for China’s fast food operators, especially those with ambitions for a national footprint. As of August, there had been 86 investments reaching Rmb43.91 billion ($6.87 billion) in the sector this year, according to That’s double the sector’s total investment for the whole of 2020.

Some of the former favourites in the industry have disappointed investors, however. Sichuan hotpot chain Haidilao has seen its share price come dramatically off the boil, dropping from HK$82 in February to HK$20 in mid-November. Company bosses have blamed an overaggressive expansion plan: Haidilao opened 544 new stores in 2020, but announced plans to close 300 of its new total of 1,500 stores at the beginning of this month (see WiC563).

Laoxiangji’s founder Shu Longxuan says that he won’t make the same mistakes. Last year he was filmed wripping up a letter from a member of staff asking if there would be redundancies because of the Covid-19 pandemic. The video subsequently went viral.

It’s not just Haidilao that has been suffering. Other Hong Kong share debuts that have traded down include the rice noodle chain TamJai International, which listed in September. Yet the downturn doesn’t seem to be deterring a clutch of other fast-food chains, led by Laowang, which translates as King of Fishing in English. The Cantonese hotpot chain filed for a $200 million Hong Kong IPO in September. It has 136 stores across Hong Kong and is famous for its stewed chicken and pork tripe soup.

Bloomberg reports that Dash Brands, the Chinese franchisee of Domino’s Pizza, is also considering a listing in the city, with plans to raise $100 million early next year.

Taiwan’s Ting Hsin, which owns Chengdu-based fried chicken operator Dicos, is also said to be considering a share sale in a bid to raise about $800 million in new capital.

Meanwhile Laoxiangji faces another domestic competitor in the race for bragging rights as the first A-share listing of from the fast-food sector, according to the Chinese press. It may need to watch out for the IPO plans of Laoniangjiu, which takes its name from the Shanghainese term for a ‘busybody’. It has been growing its network across Zhejiang, Jiangsu and Anhui provinces with 300 outlets. It is best known for its Kung Pao Chicken and fish-flavoured pork slices.

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