China’s Largest Spicy Hot Pot Chain Yangguofu Files For Hong Kong IPO

As the first fast food-style spicy hot pot brand in China to attempt a public listing, Yangguofu is leading the race, but food safety concerns persist.

Yangguofu, China’s largest spicy hot pot chain by revenue, submitted an application for a listing on the Hong Kong Stock Exchange on Tuesday, Feb. 22, with China Securities International serving as its exclusive sponsor. Yangguofu didn’t disclose the amount it plans to raise.

In the first three quarters of 2021, Yangguofu, named after its founder, recorded a revenue of CNY 1.163 billion ($184.092 million), up 60.86% year-on-year and exceeding the total income of 2020. The net profit of this period hit CNY 202 million, registering a year-on-year growth of 114.89%.

The Shanghai-headquartered company posted a revenue of CNY 1.182 billion and CNY 1.114 billion in 2019 and 2020, respectively, and reported a net profit of CNY 181 million and CNY 169 million during the same period.

In 2003, Yangguofu started as a self-operated eatery specializing in fast food-like, single-serving portions of hot pot in Harbin, capital of northeastern China’s Heilongjiang Province. 

Over the years it evolved into a company with research and development centers in 2015 and even introduced 16 ready-to-eat retail products in 2021. The brand has expanded its network through franchises, with restaurants mushrooming across China and beyond. 

By Sept. 30, 2021, the brand had operated 5,783 restaurants globally, including three self-operated restaurants in Shanghai, 5,759 franchises in 31 provinces and cities in China, and 21 in Australia, Canada, South Korea, the United States, Japan, and Singapore.

Its major competitor Zhangliang had opened over 5,800 stores by mid-2020. New brands are also emerging and playing catch-up, such as Mijie, Xiaogu Jiejie, and Diaosi, which only had 700, 600, and 590 stores, respectively, as of Dec. 31, 2020, and most are confined to their home regions. 

Although Yangguofu led China’s spicy hot pot scene, it is no stranger to controversies. The exponential growth of restaurants operating under its brand is often accompanied by a slew of food safety incidents, sparking concerns about the firm’s management and its leverage over franchised merchants.