On August 8, the China Securities Regulatory Commission (CSRC) published a notice requiring additional materials for overseas listing filings. Banu International Holding, operator of Banu Hotpot, was asked to address nine issues across four areas: the rationality of its ownership structure, data security, dividend decisions, and social insurance contributions.
Two months earlier, Banu submitted an application to list on the Hong Kong Stock Exchange, aiming to become the third publicly listed hotpot company after Haidilao and Xiabu Xiabu. Its pitch leaned on a premium positioning and a product-first strategy.
But while Banu’s upscale identity sets it apart, it has also triggered consumer backlash over pricing. Critics pointed to RMB 18 (USD 2.5) for five potato slices and RMB 78 (USD 10.9) for seven pieces of beef tripe. Against a backdrop of consumer spending downgrades, it is unclear whether Banu’s premium positioning will resonate with diners and investors.
Policy support has fueled a wave of mainland Chinese listings in Hong Kong this year. Yet in the long run, “the growth potential of restaurant companies is relatively limited, so valuations remain low,” said Shen Meng, director at Chanson & Co, in an interview with 36Kr. “And the financing that Hong Kong’s market can offer Banu is limited.”
The CSRC’s questions add further uncertainty to Banu’s IPO prospects.
Room for hidden upside
“Don’t eat hotpot if you earn RMB 5,000 (USD 700) a month. Stick to malatang instead.”
This remark by founder Du Zhongbing in February triggered heated online debate. Although he later apologized, it reinforced Banu’s reputation for being expensive.
Founded in Henan in 2004, Banu built its brand on beef tripe and mushroom broth. In 2012, Du rebranded the chain as “Banu Hotpot,” emphasizing ingredients over service. That strategy anchored its product-first identity.
Banu’s pricing reflects that philosophy. In the first quarter of 2025, its average ticket size was RMB 138 (USD 19.3). On its ordering app, signature tripe dishes include New Zealand chilled beef tripe at RMB 89 (USD 12.5) and classic beef tripe at RMB 78 (USD 10.9). Meats range from RMB 39–129 (USD 5.5–18.1), and vegetables from RMB 16–48 (USD 2.2–6.7).
By comparison, Haidilao’s average spend in 2024 was RMB 97.5 (USD 13.7), Xiabu Xiabu’s was RMB 54.8 (USD 7.7), while Jiumaojiu Group’s Tai Er, Hotpot Factory, and Jiumaojiu brands reported RMB 72 (USD 10.1), RMB 100 (USD 14), and RMB 56 (USD 7.8), respectively.
Premium positioning has supported Banu’s growth. Since 2022, its revenue has outpaced the industry average, though growth slowed in 2024. The first quarter of 2025 showed signs of recovery, and net profit growth remained strong.
China’s hotpot market has polarized further. According to Douyin’s lifestyle services business, budget hotpot gained share in 2024, while premium offerings edged up slightly, with only mid-tier options losing ground. Consumers want value, but many still pay for quality ingredients and dining experiences. This has fueled Banu’s expansion: 11 stores opened in 2022, 25 in 2023, and 35 in 2024. As of publication, Canyan Data counted 148 outlets across 40 cities, supported by five central kitchens and one soup base factory.
Banu’s gross margin has held steady at about 66%, higher than Haidilao’s 62% in 2024. But expenses are heavy, averaging 60% of revenue. Staff costs alone made up 61% of expenses in Q1 2025, reflecting the burden of expansion.
That left net profit margins slim: 4.8% in 2023, 5.3% in 2024, and 7.8% in Q1 2025, trailing Haidilao. Du himself once told the media:
“People complain about our prices, but our net profit margin is under 10%.”
Still, rising sales lifted net profit to RMB 123 million (USD 17.2 million) in 2024 and RMB 55 million (USD 7.7 million) in Q1 2025, up 21% and 57% year-on-year, respectively.
Banu’s table turnover rate of 3.2 times per day in 2024 exceeded Xiabu Xiabu’s 2.5 but lagged Haidilao’s 4.1. Its stable supply chain has kept raw material costs near 33% of revenue, better than Haidilao. But high labor and rental costs highlight gaps in efficiency and brand strength compared to the industry leader.
Can Banu navigate consumption downgrades?
China’s hotpot industry has endured sharp consolidation. From November 2023 to November 2024, more than 300,000 outlets closed nationwide, according to Hongcan Data. The industry’s average ticket size dropped from about RMB 90 (USD 12.6) in 2023 to RMB 60–65 (USD 8.4–9.1) in 2024.
Market leaders also felt the squeeze. Haidilao’s ticket size fell 1.6% in 2024, Tai Er declined 1.37%, Hotpot Factory dropped 13.8%, and Jiumaojiu dipped 1.75%. Banu’s average spend fell from RMB 150 (USD 21) in 2023 to RMB 138 (USD 19.3) in Q1 2025. Instead of cutting broadly, it tailored menus by city. In Xinxiang, it offered seasonal vegetables for RMB 9.9 (USD 1.4). In Luoyang, it rolled out a RMB 98 (USD 13.7) lunch set.
But discounts may not be enough. “The key is whether customers feel the value,” said Wen Zhihong, general manager of Hehong Consulting. Douyin’s data shows consumers still choose quality hotpot if it feels worth the spend.
Expansion remains central to Banu’s plan. Its prospectus outlines 40 new outlets in 2025, 50 in 2026, and 60 in 2027, focusing on Henan and nearby counties. Each store requires about RMB 5 million (USD 700,000).
That carries risks. “Lower-tier cities have weaker spending power, which clashes with Banu’s premium positioning,” said Shen of Chanson & Co. The prospectus also warns new outlets may take time to become profitable.
Wen was cautiously optimistic about densification in Henan but noted challenges elsewhere: “Its brand recognition is weak outside its home market.” Expansion into top-tier cities will also require strict cost control amid rising labor and rent, he added.
Capital will be critical. At RMB 5 million per outlet, Banu needs at least RMB 7.5 billion (USD 1.1 billion) for 150 new stores. That makes its IPO pivotal.
IPO urgency and nine questions to answer
Market reports suggest Banu’s IPO seeks to raise USD 100–200 million. Its Q1 2025 balance sheet showed RMB 273 million (USD 38.2 million) in cash and RMB 367 million (USD 51.4 million) in financial assets, much of which is tied up in operations. The gap is wide.
The CSRC’s questions highlight governance issues. After multiple restructurings, Banu’s ownership is highly concentrated. In early 2025, it paid out a RMB 70 million (USD 9.8 million) dividend despite tight finances, drawing regulatory attention.
“Strictly speaking, the dividend wasn’t illegal, but it reflects opaque governance and possible bias toward major shareholders,” said Dong Yizhi, a lawyer at Joint-Win Partners. “How Banu explains this could decide the IPO’s fate.”
Other issues include contributions to social insurance and housing funds for part-time and outsourced staff, as well as data security compliance. “These are core concerns for regulators and investors,” Shen said. “Without clarity, the IPO will be hard to push forward.” Dong agreed, noting that while the concerns may not derail the deal, they could delay approval.
Even if Banu clears these hurdles, investor appetite is uncertain. Haidilao has lost more than 80% of its market cap in four years. Xiabu Xiabu has hovered around HKD 1 (USD 0.13), effectively trading as a penny stock. Appetite for listings of hotpot chains is weak. For Banu, the question is not only whether it can list, but at what valuation, and whether the proceeds will cover its expansion needs.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Chen Sizhu for 36Kr.