Laoxiangji has failed in its five attempts to go public, with its valuation nearly halved as it pivots to a franchise model.

After five attempts to access the capital market over five years, Laoxiangji's long march toward a public listing has hit another roadblock.

On July 8, 2026, the six-month review period for Laoxiangji's third Hong Kong stock prospectus expired automatically, leaving its reserved ticker code "H02066.HK" unlisted and unused.

From 45 regulatory inquiries on the A-share market to three failed submissions for Hong Kong listing, compounded by a halved valuation, slowing growth, and lingering compliance issues, let's break down the listing journey of this leading Chinese fast-food brand.

The Full Story of Its Listing Attempts

Laoxiangji's capitalization drive began amid the 2022 boom of Chinese restaurant listings. In May that year, it formally submitted its first prospectus to the Main Board of the Shanghai Stock Exchange, aiming to seize the title of the first publicly traded Chinese fast-food brand.

However, regulators soon issued 45 in-depth inquiries covering the historical background of the controlling shareholder, food safety management, and supplementary social security and housing fund contributions, directly targeting core weaknesses in the enterprise's internal control system and bringing the listing progress to a complete halt.

After a year of supplementary materials submission and compliance rectification, Laoxiangji voluntarily withdrew its A-share application in August 2023. The official explanation was that "the listing timeline on the Shanghai Stock Exchange did not align with its development strategy and financing plans." In essence, it was unable to fully resolve the legacy issues that regulators had focused on, leaving it with no choice but to seek alternative listing channels.

After abandoning the A-share path, Laoxiangji fully shifted its focus to the Hong Kong Stock Exchange, entering a cycle of three successive listing submissions that all ended in failure.

It submitted its first Hong Kong prospectus in January 2025, filed for the second time in July that year after its financial documents expired, and made its third submission in January 2026 in partnership with China International Capital Corporation and Haitong International Capital. This third attempt ultimately lapsed on July 8, marking all five of its IPO efforts over five years as unsuccessful.

Laoxiangji's setback in its IPO bid is not an isolated case. Public operational data from the Hong Kong Stock Exchange shows that in the first half of 2026, the Main Board received a total of 373 listing applications. By the end of June, 534 applications were in the processing stage, while 110 were marked as expired, rejected, or denied.

The erosion of confidence in the capital market is directly reflected in its valuation.

The capital flight first manifested in the exit of institutional shareholders. The prospectus reveals that in January 2024, two pre-IPO institutions, Maixing Investment and GF Qianhe, fully liquidated their holdings and exited the company, further fueling doubts in the investment market about the enterprise's growth potential.

The continuous preparation for listing has consumed substantial human and financial resources, causing Laoxiangji to miss the optimal window to raise funds through an IPO to expand its supply chain and roll out its national layout. The passive situation in the capital market continues to worsen.

Business Operation Analysis

Laoxiangji is mired in a structural dilemma where revenue and profits are rising, but growth has stalled.

From 2022 to 2024, Laoxiangji's revenue reached 4.528 billion yuan, 5.651 billion yuan, and 6.288 billion yuan respectively. Its year-on-year growth rate plummeted from 58.38% to 24.80%, and eventually fell back to 11.27%. In the first eight months of 2025, the company's revenue growth further dropped to 10.9%, with its scale expansion essentially entering a low-speed phase.

The net profit trend is under the same downward pressure as revenue. Its net profit over the three years was 252 million yuan, 375 million yuan, and 409 million yuan respectively, with corresponding growth rates of 86.67%, 48.81%, and 9.07%. It only saw a slight rebound to 11.75% in the first eight months of 2025, leaving profit growth almost stagnant.

The weakness in profitability is prominently reflected in its gross margin indicator.

From 2022 to 2024 and in the first eight months of 2025, Laoxiangji's gross margin stood at 20.3%, 23.3%, 22.8%, and 24.6% respectively. It has long fluctuated narrowly around 23%, a significant gap compared with industry peers like Xiaocaiyuan (over 65%), Green Tea Group (nearly 69%), and Country Style Cooking (over 56%).

The root cause lies in Laoxiangji's heavy-asset layout across the entire industry chain: it has built 3 chicken farms, 2 central kitchens, and 8 distribution centers on its own. Raw material and labor costs combined account for more than 63% of total revenue, squeezing its profit margins.

To offload the burden of heavy-asset expansion, the enterprise launched a large-scale adjustment to its store structure.

At the end of 2022, the number of directly operated stores peaked at 1,007, while there were only 118 franchise stores. By the end of 2024, the number of directly operated stores had decreased to 914, while franchise stores surged to 808, with 146 directly operated stores converted to franchised operations throughout the year. The proportion of franchise stores skyrocketed from 10.5% to 45.5%. By the end of August 2025, a total of 1,777 stores across the country covered 9 provinces.

Consequently, the revenue contribution from the franchise business climbed rapidly, rising from 3.8% in 2022 to 20.6% in the first eight months of 2025, making it the core source of incremental revenue.

However, the franchise model hides hidden profit risks. According to calculations in the prospectus, the average payback period for franchisees is as long as 24 to 30 months, far exceeding the 12-18 month average of leading industry brands. This makes store investment less attractive, creating a long-term risk of mass exodus of franchisees.

Internal governance and market layout also have shortcomings. The enterprise is in the middle of a family power transition period: founder Shu Congxuan stepped down from his top management position in November 2023, and his son Shu Xiaolong took over as the head of the company the following December. The succession by the second generation of the family, coupled with drastic transformations in the business model, has put the internal management structure and strategic execution rhythm into a running-in phase.

Its regional layout is highly concentrated: the revenue from its core markets of Jiangsu, Zhejiang, Shanghai, and Anhui accounts for over 80% of total revenue, with stores in Anhui province making up nearly half of the total. Brand recognition in markets outside Anhui is low, making national expansion extremely challenging.

Multiple Contributing Factors

Citing data from CIC Consulting in its prospectus, the overall market size of China's Chinese fast-food industry reached 809.7 billion yuan in 2024, and the institution predicts the market will grow to 1.2058 trillion yuan by 2029, representing a compound annual growth rate of 8.3% over the period.

The industry has a low level of large-scale integration, with an overall chain operation rate of only 32.6% and a CR5 market concentration ratio of just 3.6. A large share of the market is occupied by small and micro businesses such as family-run restaurants.

Measured by total transaction value in 2024, Laoxiangji ranks first in the Chinese fast-food segment with a 0.9% market share. However, when counted across the entire fast-food industry, its market share drops to 0.5%, placing it eighth in the industry. Its competitive advantage in large-scale branding has not yet been fully established.

Affected by the differentiated dietary preferences across regions, the standardized replication of dishes and operating models in Chinese fast-food is highly difficult, creating a clear gap compared to the 67.9% chain operation rate of Western fast food.

This industry characteristic, on one hand, creates long-term room for leading enterprises with supply chain capabilities to integrate the fragmented market, and on the other hand, poses a core challenge for Laoxiangji to overcome as it promotes its national market layout.

Looking at the enterprise's own development strengths, its core differentiated advantage lies in its integrated layout across the entire industry chain.

Laoxiangji has independently built a complete business chain covering broiler breeding, central kitchen precision processing, full-domain cold chain distribution, and offline terminal store sales. Its dishes are priced in the mass consumption range of 12 yuan to 17 yuan.

This operating system helps the enterprise independently control the quality of food ingredients at the source, reducing the difficulty of food safety management. At the same time, it uses large-scale centralized procurement to mitigate the cost impact caused by raw material price fluctuations, forming a core competitive barrier that distinguishes it from asset-light franchise enterprises that only output branding.

As the chain operation rate of China's catering industry steadily rises, extensive small and medium-sized catering operators with weak quality control are gradually being eliminated by the market. Leveraging its existing store layout foundation and mature supply chain system, Laoxiangji can capture part of the released stock market share.

If it successfully lists on the Hong Kong Stock Exchange, Laoxiangji will use the raised funds to upgrade its digital operation system and expand the construction of supply chain production bases, further strengthening its ability to participate in industry integration.

However, it must be objectively noted that multiple practical constraints are continuously hindering its capitalization progress, which are also the key issues that regulators have focused on in all of Laoxiangji's IPO applications.

According to the regulatory penalty records disclosed in the prospectus, from 2022 to 2024, 13 directly operated stores received administrative penalties for non-compliant operations, such as storing and using expired food ingredients, failing to meet disinfection standards for tableware, and finding foreign objects in dishes, which negatively impacted consumer experience and brand reputation.

After a large number of directly operated stores were converted to franchise stores, the headquarters' difficulty in quality control over terminal stores is bound to increase. Under the decentralized management of the franchise system, the probability of group public opinion incidents related to food safety has risen, creating potential uncertainty for the brand's long-term reputation.

Looking at the broader Hong Kong capital market environment, the valuations of listed catering enterprises are generally low. Coupled with the current backlog of IPO applications on the Hong Kong Stock Exchange and stricter review standards, even if the enterprise submits a new application, it is unlikely to replicate its previous valuation of 18.1 billion yuan, and the actual amount of funds raised may shrink.

Overall, Laoxiangji's five unsuccessful IPO attempts are the result of a combination of factors: the fragmented market structure of the Chinese fast-food industry, weak profitability caused by its heavy-asset operating model, and lingering legacy compliance issues.

If it cannot consolidate the bottom line of food safety management, optimize the pain point of the overly long payback period for franchisees, and break free from the development limitation of over-reliance on the East China region for revenue, the enterprise will still face considerable challenges in achieving its listing goals.

For the new-generation management team led by Shu Xiaolong, a more rational choice at this stage is not to hastily restart the IPO application, but to focus on refining the franchise operation and management system, addressing all kinds of compliance weaknesses one by one, and steadily expanding into new markets outside its core region.

Only by gradually restoring confidence in the capital market through continuously improving operating fundamentals can it break the listing deadlock and embark on a practical path to long-term development.

This article is from the WeChat official account "Insight IPO" (ID: dongcha-ipo), author: Yang Licheng, editor: Chen Xiaoran, and published with authorization from 36Kr.