The encyclopedia · Strategy & Leadership · Strategic decision · 2021–2026
Zhengxin franchised to 25,000 stores — then closed 15,000 of them
China's chicken-cutlet king peaked at 25,000 doors in 2021. Five years later: 9,545 left, franchise payback doubled, and a quiet HK IPO to stop the bleeding.
Zhengxin Chicken Cutlet (正新鸡排) · 2026-06-07
What happened
For a 12-to-15-yuan slab of fried chicken, Zhengxin built China's biggest street-snack chain: low entry fees for franchisees, a supply chain the company controlled, and a store on every corner. By March 2021 the network reached 25,000 doors, the largest of China's first-generation ten-thousand-store brands, and management spoke of a hundred thousand. The engine was franchising — and the engine kept running after the road ended.
The density turned on its own franchisees. Official rules promised territory protection — no second store within 300 meters in busy districts, 500 elsewhere — but in tier-3 and tier-4 cities 30% of stores had another one inside 500 meters. Raw materials cost franchisees ¥5-6 a piece against competitors' ¥4, while the street price stayed capped at ¥12-15; breaking even needed ¥3,000 of daily sales, and some stores fell to a few hundred. Payback stretched from 8-10 months to half a year. From 2023 the company began cutting; by June 2026, 9,545 doors remained — down 61.82% from the peak.
The market moved while the menu barely did. KFC and McDonald's pushed ¥9.9 meals down into county towns; Mixue with ~60,000 stores and Luckin with 31,000 took the cheap street traffic; newer fried-skewer chains offered the variety Zhengxin's single-product menu never did. The founder who said in 2021 that listing was 'not being considered' is now reportedly preparing a Hong Kong IPO in secret — about $300 million, with China Galaxy and CICC engaged — to stop the bleeding of the chain he overbuilt.
Why it happened
- Franchising scaled past the point where one store's sales could pay its rent — every new door split an existing one's traffic, and the promised territory protection was not enforced.
- The economics were stacked on franchisees: ¥5-6 unit cost against ¥4 rivals, prices capped at ¥12-15, mandatory renovations every three years — the chain grew while its stores stopped paying.
- The product never evolved: one chicken cutlet against ¥9.9 fast-food meals, 60,000-store Mixue on the same street, and skewer chains with broader menus.
The lesson
Zhengxin's model was density: cheap franchise, controlled supply chain, a store on every corner. Every new door ate an old one. 25,000 stores was not the achievement; it was the mistake.
Aftermath
The culling continues under the banner of optimization, and the company's official line is growth — new signings of 1,200+ in Q3 2025, group performance up 30% on its own metrics — while the third-party count stands at 9,545 and falling. The Hong Kong IPO, if it lands, raises about $300 million into a business whose franchisees struggle to break even; whether public money can rebuild confidence that street-level economics broke is the open question. Zhengxin's arc — 25,000 stores, then 15,000 closures, then a prospectus — is the first-generation franchise model's whole lifecycle in six years.
Sources
- Sina Finance — 15,000 closures and out of the ten-thousand club: what will Zhengxin show the HK exchange?, 2026-06-10
- 21st Century Business Herald via Sina — After 15,000 closures, is Zhengxin chicken cutlet unsellable?, 2026-06-22
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