Business cools for hotpot chain as its customers flock to competitors

By Huang Ge Source:Global Times Published: 2016-1-7 20:53:01

The leading domestic hotpot restaurant chain, Little Sheep Group, is losing its dominance in the sector as customer interest dwindles and outlets shut down, a former senior employee said Thursday, adding that the slide reflects the slowing growth of the industry and the consolidation of the company.

The employee, who declined to be identified, told the Global Times that, "Little Sheep had great success in its early years. The turning point came in 2012 when it was acquired by Yum."

Little Sheep was founded in 1999 in Baotou in North China's Inner Mongolia Autonomous Region. From April 2000, the company began to expand quickly in the domestic market, and it got listed on the Hong Kong bourse in June 2008, the first such mainland company to do so.

US-based restaurant operator Yum Brands Inc acquired Little Sheep in February 2012. The next day, the hotpot chain delisted from the Hong Kong bourse and became a subsidiary of Yum.

The following year, Yum sought to raise operating standards and refresh the brand by improving the dining environment and food and service quality, its website showed.

But since then, the founding team has drifted away and there's no clear information on how Little Sheep's business has been going, domestic news portal reported Wednesday.

When reached by the Global Times on Thursday, Yum declined to give details about changes within the chain or its outlook.

One of Yum's post-acquisition strategic goals was to raise the average transaction value, but that actually led to a decline in overall performance and a halt to its expansion in China, Wang Danqing, a partner at Beijing-based ACME Consultancy, told the Global Times on Thursday.

With China's dining market becoming more diversified, Little Sheep needs to find its niche and fully develop its advantages, Wang noted.

But as the business of Little Sheep has slowed in recent years, sales of its domestic competitors have risen. For example, Xiao Wei Yang hotpot, also based in Baotou, is now No.1 on the top 50 list of hotpot companies in China with more than 600 outlets, overtaking Little Sheep, which only runs 202, according to the report from

"Little Sheep needs to adapt to survive," said Zhao Jingqiao, an expert specializing in the catering industry at the Chinese Academy of Social Sciences.

Little Sheep might do better by putting its restaurants in major malls to capture more customers," Zhao told the Global Times on Thursday.

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