The founder and CEO of Huangtaiji, a well-known Chinese fast food chain startup, on Wednesday announced publically that they have closed many of their restaurants in Beijing’s business districts. The announcement has increased public speculation about its difficult financial situation.
The founder, He Chang, posted a statement on China’s largest social network Wechat to confirm that half of its food factories were closed. He said that those factories were larger than 500 square metres, and that the running costs were too high. It doesn’t make sense to keep unprofitable assets.
“The race among food delivery platforms continues to intensify. Rumors of platforms merging are spreading every day. It is not necessary for us to be dragged into a war filled with so much uncertainty, with no strategy for success, ” he added.
Its business model operates like KFC in China, the chain name “Huangtaiji” means “extremely lucky” in Chinese. The company makes and sells a Crepe-like Chinese street food called jianbing, but the company has transformed the jianbing into a trendy snack, and the price of its products are approximately twice of that at a street stall.
Among the many startups fuelled by the internet boom, the company was founded in 2012 by He, who once worked for Google and Baidu on brand design.
As of Monday, the number of restaurants in the chain in Beijing dropped from 44 to 20. Five out of its 10 food factories were also closed, according to Chinese tech blog Huxiu.
However, He said in his statement that the business and brand still exists, and denied that there has been any fundamental change in their businesses.
Financing difficulties are the reason for the closing down of the restaurants and factories, according to speculation by business insiders. It has been almost one year since its last round of financing, and the startup hasn’t secured new capital yet. Its latest financing round was in last October, when it announced RMB 180 million (USD 27 million) in Series B financing.
Over the past four years, Huangtaiji has established stores in Beijing and Shanghai. In June 2016, the first overseas outlet was founded, in Sydney.
（Top photo from Baidu Images）