Chinese fast-food chains eye Hong Kong listing
They are using the city as a testbed for further expansion overseas.
Chinese food and beverage companies (F&B) are going public in Hong Kong as part of their global expansion push, in line with a resurgence in initial public offerings (IPO) in the city and the bigger Asian region.
The city’s bigger stock market offers better liquidity to Chinese F&B brands that seek a secondary listing, Lei Yang, China Equity Research at China Galaxy International Financial Holdings Ltd., told QSR Media.
The Hong Kong Stock Exchange had a market capitalisation of HK$35.4t ($4.55t) as of January compared with $650.97m for the Singapore Exchange.
“Besides Hong Kong market sentiment, a company’s fundamentals are also important,” Yang said in an emailed reply to questions.
She cited Chinese appliance maker Midea Group Co.’s $4.6b (HK$35.8b) Hong Kong IPO in September — the city’s biggest listing since early 2021 — amidst market expectations that it would benefit significantly from the Chinese government's trade-in program.
The program encourages Chinese consumers to upgrade old appliances with new ones through rebates, leading to a noticeable increase in Midea’s sales.
Chinese F&B brands might also prefer Hong Kong over New York or London because it offers better data security and financial risk management, said Gary Wong, director for China food service at market research firm Circana, Inc.
The rising number of Chinese quick-service restaurants (QSR) listed in Hong Kong is also tied to their rapid domestic expansion and ambitions for international growth, he added, noting how companies like Cha Bai Dao and Xiaocaiyuan used their IPO funding to fast-track franchise expansion.
“Once they build a solid base of traffic and establish consumer habits, they want to go public to get further investment for future expansion,” he told QSR Media.
Cha Bai Dao, a bubble tea brand that operates more than 8,000 ChaPanda stores, raised $331.7m in its IPO on 23 April 2024. Meanwhile, Xiaocaiyuan, which operates more than 600 restaurants, raised $110m from its IPO on 20 December 2024.
In Southeast Asia alone, Chinese food and beverage companies have opened more than 6,100 stores from 2021 to 2023, according to data from Singapore-based research firm Momentum Works.
However, many of them need to overcome a perception that they mainly rely on China-based supply chains for ingredients and labour, Pete Wang, a senior analyst at Euromonitor, told QSR Media.
‘Strategic testbed’
"In Southeast Asia, for instance, consumers tend to favour brands that visibly support local economies, whether through sourcing, employment, or community engagement,” he said in an emailed reply to questions.
Several upcoming IPOs reinforce the view that investors are still interested in Chinese F&B. Guming, Home Original Chicken, Green Tea, and Mixue Ice Cream & Tea are amongst the latest Chinese QSR brands preparing to list in Hong Kong, signalling strong investor interest in the sector, Wong said.
Beyond financing, going public gives them market credibility and a platform for global expansion. Hong Kong acts as a strategic “testbed” for brands looking to expand overseas, particularly to Southeast Asia, said Joceline Yong, a senior behavioral analyst at Canvas8.
“Hong Kong is strategically positioned as a global launchpad,” she pointed out. “The city has many tourists from Southeast Asia, which is often the next region that Chinese F&B brands hope to expand to after Hong Kong.”
Chinese QSRs are benefiting from the market’s renewed focus on affordable and solo dining, Wong said. Coffee shops and drink stations have been among the fastest-growing segments, he added, citing Chinese coffee chain Luckin Coffee, Inc.’s expansion to more than 20,000 stores in China as of July.
Yong said Hong Kong’s dining culture is deeply embedded in daily life, making it ideal for F&B brands. “Despite a slight 0.1% decline in total restaurant receipts in 2024, demand for QSR remains strong as consumers prioritise convenience and value.”
