Laoxiangji's Fifth IPO Attempt Fails, Valuation Halved to About 8 Billion Yuan

The founder's daughter holds a 15% stake in Hei Laoji.

By Jia Zicong | Edited by Gao Yan | Source: Yema Finance

After five failed IPO attempts in as many years, Hei Laoji has recently celebrated a family milestone.

On September 17, a netizen shared a video of the wedding of Shu Wen, daughter of Hei Laoji founder Shu Congxuan and the company's executive director. The event was attended by numerous guests. The bride, Shu Wen, wore a traditional red Xiuhua dress and was seen arm-in-arm with her father, Shu Congxuan. The groom was photographed sitting with his mother-in-law, Zhang Qiong, and brother-in-law, Shu Xiaolong. The groom's identity has not yet been publicly disclosed.

However, this joyous family occasion carries a different significance due to another label attached to Shu Wen: she is one of the actual holders of 92.02% of the voting rights in this leading中式 fast-food chain.

Just two months prior, Hei Laoji's Hong Kong IPO prospectus, submitted in January 2026, automatically expired on July 8 after six months. This marks the company's fifth failed attempt to go public in five years.

How is it that a "Chinese-style fast-food" chain, beloved by customers and with outlets nationwide, cannot find a place on the capital market's table? More concerning: its valuation has quietly been cut in half.

A Wedding Reveals a Typical Family Business

Shu Wen, 33, is the daughter of founder Shu Congxuan and Zhang Qiong, and the younger sister of current Hei Laoji Chairman Shu Xiaolong. After graduating from Liaoning University of Science and Technology in 2013 with a degree in Animation Design, she joined Hei Laoji. Starting from entry-level positions and financial accounting, she worked her way up to R&D Deputy Director and Deputy General Manager. On December 19, 2024, she was appointed Executive Director, primarily responsible for overseeing the group's financial operations, management, and regulatory compliance.

Interestingly, this executive director, who holds the reins of financial oversight, is not a finance professional by training—her background is in animation design. This arrangement raised questions when disclosed in earlier prospectuses, with some questioning how a non-finance professional could oversee financial operations.

Shu Wen's true capital-market identity is as a shareholder. According to Hei Laoji's latest prospectus:

• Shu Xiaolong (Chairman & CEO) holds 70.78% through Constantly Soar Ltd.
• Shu Wen holds 15.02% through Jump Spark Ltd.
• Dong Xue (Shu Xiaolong's wife) holds 6.22% through Favourable Impression Ltd.

Together, the three control 92.02% of the voting rights.

In other words, over 90% of the voting power in this restaurant giant, with annual revenue exceeding RMB 4 billion, is firmly held within the founder's immediate family circle—his son, daughter, and daughter-in-law. Founder Shu Congxuan himself does not directly hold any shares in Hei Laoji.

Shu Xiaolong and Dong Xue have appeared on the Hurun Rich List for consecutive years, with a combined wealth of RMB 5.5 billion in 2022 and 2023, ranking 1,127th and 1,090th respectively. Shu Congxuan, having transferred all his shares, did not make the list.

Although Shu Congxuan has stepped back from day-to-day management, he remains the "soul" of Hei Laoji. He stays active on short-video platforms and variety shows, with his "Zen boss" personal brand deeply intertwined with the company. After gaining fame for tearing up employee salary-cut petitions and holding a rural press conference for just RMB 200, Shu Congxuan has continued to engage the public with his down-to-earth image—trying new foods, sharing everyday stories, and even performing stand-up comedy. He has over 1 million followers on Douyin alone, an intangible asset he has left for Hei Laoji.

This "one-family-decides" structure drew regulatory scrutiny during the A-share review process. The prospectus itself acknowledges that the family-style equity structure and lack of decision-making checks and balances are core concerns for the capital market.

With his daughter Shu Wen's wedding, the family baton has been passed forward another step. Beyond the celebration, the hard battle facing the second generation of the Shu family remains in the capital market, and Hei Laoji's IPO process continues to be a focus of external attention.

Five Battles in Five Years: Valuation Drops from RMB 18.1 Billion to RMB 8 Billion

Hei Laoji's long march toward capitalization began during the 2022 wave of Chinese restaurant IPOs.

In May of that year, the company first submitted a prospectus to the Shanghai Stock Exchange's main board, with a market valuation of up to RMB 18.1 billion, making it a strong contender for the title of "first Chinese fast-food stock." However, in October, the China Securities Regulatory Commission (CSRC) issued 45 feedback items, scrutinizing everything from social insurance and housing fund contributions to food safety, historical capital increase procedural flaws, and the founder's past bribery case.

After a second filing in February 2023 under the full registration system, the company voluntarily withdrew in August, citing a misalignment with its "strategic development and financing plan" timeline.

• January 2025: First Hong Kong filing → Expired in July due to expired financial data.
• July 2025: Second Hong Kong filing → Expired.
• January 2026: Third Hong Kong filing → Expired on July 8.

Five years, five attempts, all unsuccessful.

The persistent failures first showed in the valuation. In 2022, when targeting the A-share market, Hei Laoji was valued at approximately RMB 18.1 billion. By the 2025 Hurun Global Unicorn List, this had shrunk to RMB 9 billion. By 2026, institutions generally estimate the valuation at only about RMB 8 billion—a near halving in four years.

Why does it keep getting stuck at the IPO stage? The hard truths repeatedly exposed in the prospectuses remain largely unchanged with each filing.

1. The Persistent Social Insurance and Housing Fund Gap

From 2022 to the first eight months of 2025, Hei Laoji's shortfall in social insurance and housing fund contributions was approximately:

• 2022: RMB 10.7 million
• 2023: RMB 21.4 million
• 2024: RMB 36.3 million
• 2025 (8 months): RMB 31.9 million

Total shortfall: Over RMB 100 million. According to legal counsel estimates, the maximum potential fines for insufficient social insurance contributions alone could exceed RMB 244 million. This was a key issue in the CSRC's first round of 45 inquiries.

2. Gross Margin "Too Low for Fast Food"

In 2024, Hei Laoji's gross margin was only 22.8%. For comparison:

• Xiao Cai Yuan: Over 65%
• Green Tea Group: Nearly 69%
• Haidilao (heavy asset model): Consistently above 56%

The root cause is its proud but capital-heavy full-industry-chain model. The company operates three self-built chicken farms, two central kitchens, and eight distribution centers. By consolidating breeding and processing into its financial statements, the cost of raw materials and consumables has risen to over 40% of revenue. Fu Yifu, a special researcher at Sushang Bank, told media: "Self-raising chickens and building central kitchens and distribution systems require massive upfront investment with high fixed costs. When stores expand, marginal profits are easily eroded by operational and depreciation costs, making it difficult for the single-store model to scale profitability as quickly as an asset-light model."

3. Growth Quality and Regional Concentration

• Revenue growth has slowed from 58.38% in 2022 to 11.27% in 2024, and only 10.9% in the first eight months of 2025.
• Store concentration remains high in East China. Jiangsu, Zhejiang, Shanghai, and Anhui account for over 80% of revenue. Consumers in Guangdong and Sichuan provinces might as well "not have heard of this chicken."

Zhu Danpeng, a food industry analyst, told media that Hei Laoji's bumpy IPO road reflects that it has not yet become a truly national brand, with shortcomings in brand effect, scale effect, fan effect, and supply chain completeness.

The Most Telling Sign: External Capital Votes with Its Feet

In January 2024, early institutional investors Maixing Investment and GF Qianhe fully exited their positions. Hei Laoji repurchased their shares for approximately RMB 153 million. These two Pre-IPO investors, who had helped double the company's valuation, chose to cash out and leave. Today, the only remaining external shareholder is Jiahua Capital, holding 4.98%.

Amidst these controversies, the Shu family's succession drama is unfolding, and the capital market's tough questions now fall on the shoulders of the second generation.

The Second Generation Takes Over: Can "New Measures" Solve Old Problems?

In 1982, Shu Congxuan, after being discharged from the military, returned to his hometown in Feixi County, Hefei, Anhui Province. Using RMB 1,800 originally intended for his wedding, he started a chicken farm. In 2003, seeing an opportunity in the Chinese fast-food industry, he opened the first "Feixi Old Hen" restaurant. Following advice, he rebranded the chain as "Hei Laoji" in 2012, and subsequently expanded from Anhui into Jiangsu, Hubei, Shanghai, and beyond.

In November 2023, Shu Xiaolong succeeded his father as Chairman. In July 2024, Shu Congxuan officially announced his retirement. The 37-year-old second-generation leader stepped into the spotlight, inheriting the heavy burden of "taking the baton and sprinting toward an IPO."

Shu Xiaolong did not arrive as a parachute executive. After earning a Bachelor's degree in Business Administration in the US in 2012, he returned to China and started as a junior employee in a restaurant. He worked his way up through store manager, regional director, general manager, and vice chairman. After taking the helm, he introduced a set of new initiatives summarized as "Digitalization, Healthification, Globalization, and Governance Standardization."

• Digitalization & Governance: Hei Laoji has built a comprehensive data system covering breeding monitoring, central kitchen production scheduling, cold chain logistics, store POS, and membership management. In corporate governance, it has established a 7-member board, three independent non-executive directors, and audit, remuneration, and nomination committees—a structure aligned with Hong Kong listing requirements.
• Healthification (2026 Core Direction): Shu Xiaolong drove the third-party testing of 191 products for calories, protein, fat, carbs, and sodium, with results displayed on price tags. Hei Laoji claims to be the only pilot enterprise for nutritional labeling in Chinese fast food. In January 2026, the company signed a long-term partnership with the General Administration of Sport of China to bring professional sports nutrition standards to its stores.
• Globalization: In April 2026, Hei Laoji opened its first overseas store in the IOI Mall in Kuala Lumpur, Malaysia. The menu was adapted for local dietary restrictions, and the domestic digital management model was replicated.

These moves add narrative to the fundamentals. However, when it comes to the capital market's core concern—profit quality—the new measures seem more like "painting over an old foundation."

The Franchise Expansion "Growth Story"

Shu Xiaolong has set a goal of "10,000 stores in ten years, with franchising as the main driver." The number of franchise stores has surged from 118 in 2022 to 733 by August 2025, with their share of total stores jumping from 10.5% to 44.2%. Franchise revenue has grown at a compound annual rate of over 100% in three years.

However, the prospectus reveals that a significant portion of these franchise stores were converted directly from company-owned stores. In 2024 alone, 146 company-owned stores were converted to franchises.

This contraction of company-owned stores and expansion of franchises has, to a large extent, smoothed out the growth rate but has not truly solved the problems of single-store profitability and quality control.

Persistent Quality Control Issues

Hei Laoji was once an industry benchmark for transparency. Since 2021, the company has published monthly self-inspection reports, proactively disclosing issues like expired ingredients, unclean equipment, and improper operations at various stores, along with corrective actions. However, this proactive disclosure does not seem to have fully driven comprehensive improvement in store-level quality control.

As of September 17, 2026, the Black Cat Complaints platform shows over 1,400 complaints related to Hei Laoji, with foreign objects in food, utensil hygiene, and ingredient freshness being recurring issues.

Hei Laoji's struggles are not unique. In the same赛道, Country Style Cooking has failed three times to list in Hong Kong, and Lao Niang Jiu's attempts to list on the A-share main board and the Beijing Stock Exchange over four years both ended in termination. While brands like Mixue Bingcheng, Guming, Xiao Cai Yuan, and Green Tea Group have successfully gone public, the Chinese fast-food segment has yet to produce a true leading listed company.

The capital market's pricing logic for restaurant companies appears to have shifted—from a scale premium based on store count to a profit premium focused on earnings quality, compliance governance, and supply chain capability.

As the wedding of the second generation concludes, Shu Wen and Shu Xiaolong must answer not just "When can we go public?" but also, as the company scales, whether this enterprise, with 92% of its equity held by family members, can actually make money in a compliant, clean, and sustainable way. The halved valuation is the market's most direct answer to the current situation. But whether this "chicken soup," nurtured for 44 years, can be served on the capital market's table for a sixth time remains an open question.

Have you eaten at Hei Laoji? What do you think? Feel free to share in the comments.

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