Shanghai Zhengxin Food Group Co. is reportedly planning a $300 million initial public offering (IPO) in Hong Kong, even as its store count has contracted significantly from 25,000 to 9,545 over the last five years. The potential listing comes despite the company's shrinking domestic footprint, raising questions about the financial health and future strategy of China's largest homegrown fried chicken chain. The reported IPO target highlights the company's ambition to secure capital for renewed expansion amidst a rapidly evolving market landscape.

According to a Bloomberg report, Zhengxin is working with Galaxy Securities and CICC as advisors for the deal. Although the company quickly denied the report, the rumor persists regarding founder Chen Chuanwu's plans. Zhengxin joins other chicken chains such as LXJ International and Ting-Qiao, operator of the Dicos chain, in pursuing Hong Kong listings, though neither has debuted yet. KFC, operated by Yum China, remains the market leader with over 13,000 restaurants nationwide.

The contraction in store count represents a 60% drop in five years, according to Narrow Gate Group. Zhengxin attributes this decline to a strategic downsizing initiated in 2023, phasing out older stores with outdated décor and poor food safety standards. The company states that sales by stores under its "strong control" increased by 13% year-over-year last year, while supply chain capacity grew by 28% and overall performance increased by 30%.

Strategic Shifts and Global Expansion

Zhengxin's shifting business profile stems from a "forest project" launched in 2018 to develop new sub-brands, according to Zhengxin President Jin Jian. The company is also pursuing an international growth strategy, aiming to open 4,000 overseas stores within three years. Following a global franchise recruitment conference in February 2023, Zhengxin signed 49 agreements for stores in countries including Vietnam, Thailand, Laos, Malaysia, Indonesia, Japan, the U.S., Australia, and New Zealand. The first U.S. store opened in March 2024 in Milpitas, near San Francisco.

Market Context and Competition

The Chinese fried chicken market grew from 60 billion yuan ($8.85 billion) in 2019 to an estimated 105 billion yuan in 2025, with the category growing at 11.7% annually. However, Zhengxin faces intense competition from new entrants. Mixue, which operates over 50,000 stores in China, and Haidilao, which launched a separate fried chicken brand, are piling into the crowded market. Critics point to Zhengxin's lack of new products and frequent complaints over food safety and franchisee relations as ongoing challenges.