Lao Xiang Ji Franchise Expansion Speed Analysis: Risks and Concerns Behind 6x Growth in 3 Years

Based on the searched information, I will analyze the store expansion speed issue of Lao Xiang Ji after it launched its franchise program from multiple dimensions.

Time Node	Total Stores	Direct-Operated Stores	Franchise Stores	Franchise Store Proportion
End of 2022	1,125	1,007	118	10.5%
April 2025	1,564	911	653	41.8%
August 2025	1,658	925	733	44.2%

: [0]

• The number of franchise stores grew from 118 at the end of 2022 to 653 in April 2025,
  a nearly 6-fold increase
  [1]
• Revenue from franchise stores soared from RMB 174 million to RMB 717 million,
  with an annual compound growth rate of 102.9%
  [1]

Year	Revenue	Year-over-Year Growth Rate
2022	RMB 4.528 billion	-
2023	RMB 5.651 billion	24.8%
2024	RMB 6.288 billion	11.27%

, the revenue growth rate plummeted from 58.38% in 2022 to 11.27% in 2024 [2], showing a clear slowdown trend.

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Metric	Direct-Operated Stores	Franchise Stores	Gap
Daily Sales per Store	RMB 16,000	RMB 12,400	-22.5%
Table Turnover Rate	4.8 times/day	3.6 times/day	-25%
Revenue per Square Meter per Day	RMB 82.2/㎡/day	RMB 72.6/㎡/day	-11.7%

: Calculated based on prospectus data [1]

• Dropped from 28.9% in 2022 to 20.1% in 2024 [1]
• Risks of a “volume growth with weak profitability” model

• Reduced from 1,007 in 2022 to 911 in 2025 [2]
• The large-scale conversion of direct-operated stores to franchise stores in 2024 attracted market attention

• The chain rate of Chinese fast casual dining is only 32.5%, far lower than the 67.9% of Western fast food [3]
• The industry has great integration potential, with leading brands successively proposing the “10,000-store target”

• Ranked first in the 2024 Chinese fast casual dining market with a 0.9% market share [1]
• Holds a 2.2% market share in East China, 2.5 times that of the second-place brand [3]

• Has 3 standardized chicken farms, 2 central kitchens, and 8 distribution centers [1]
• Constructing a new central kitchen project in Hefei to support expansion [1]

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As of August 2025:

• Stores in East China account for 86.5%
  [3]
• 784 stores in Anhui Province, accounting for 47.3%
  [3]
• The number of stores in Anhui Province is 5 times that of the second-largest Chinese fast casual dining brand

This “home base dependence” model brings three major risks:

1. Visible market ceiling: Limited penetration space in Anhui Province
2. Cross-regional operational challenges: Need to adapt to taste preferences in different regions
3. Increased supply chain costs: Difficulties in cold chain logistics coverage

: [2]

• Early stage: Franchisees converted from internal employees (conservative and stable)
• Current stage: Increasing proportion of external franchisees (rapid expansion)

, which means:

• Shift from “internal incubation” to “socialized expansion”
• Higher requirements for brand standardized management and supply chain capabilities

Behind Lao Xiang Ji’s three IPO attempts are capital market concerns about its expansion model:

1. Growth doubts
   : Standardized replication capability has not been fully verified
2. Insufficient replicability
   : The model is not “lightweight enough”, with great cross-regional operational challenges
3. Declining profit quality
   : Gross profit margin continues to decline, and franchise store efficiency is lower than that of direct-operated stores

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Dimension	Assessment	Explanation
Expansion Speed	⚠️ Relatively Fast	The 6-fold growth in franchise stores in 3 years far exceeds the industry average
Profit Quality	❌ Declining	Gross profit margin and store efficiency are both on a downward trend
Management Capability	⚠️ Under Pressure	Independent franchisees account for over 50%, posing great standardized management challenges
National Expansion Progress	⚠️ Lagging	East China still accounts for over 85% of stores

1. Lengthened franchisee profit cycle
   : Referring to the industry average investment payback period of 24-30 months, if it cannot be shortened to within 18 months, it may affect franchise willingness
2. Brand consistency risk
   : Rapid expansion may dilute brand standards and customer experience
3. Supply chain stress test
   : Expanding from East China to the whole country will test cold chain logistics capabilities
4. Intensified competition
   : Emerging brands like Fish You Together (2,400+ stores) and Micun Bibimbap (1,800+ stores) are rising rapidly with small-store models

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[0] Sina Finance - “Lao Xiang Ji’s Four IPO Attempts in Three Years: Sustained Revenue Growth, Hidden Concerns Behind 6-Fold Store Expansion in Three Years” (https://finance.sina.com.cn/stock/hkstock/ggipo/2025-07-21/doc-infheytw3222731.shtml)

[1] Forbes China - “Lao Xiang Ji’s Third IPO Attempt: 6-Fold Surge in Franchise Stores in 3 Years, Founding Family Controls 92% of Equity” (https://www.forbeschina.com/delicacies/70101)

[2] Catering Industry News - “Lao Xiang Ji’s Prospectus ‘Changes Face’: Independent Franchisees Account for Over Half, Capital Landscape of Chinese Fast Food Shifts?” (https://canyinj.com/news/23387.html)

[3] 36Kr - “Lao Xiang Ji Continues to Chase ‘First Chinese Fast Food Stock’, Store Count Reaches 1,658” (https://m.36kr.com/p/3631493377311749)

[4] CBNData - “Capital Can No Longer ‘Appetize’ for Lao Xiang Ji” (https://www.cbndata.com/information/293546)