Boiled Rat Wipes $190 Million Off Xiabu Xiabu Hotpot Chain Market Value
Xiabu Xiabu, a famous hotpot restaurant in Shandong province in China, has lost about $190 million in market value after a pregnant customer discovered a boiled rat in her soup. The restaurant's stock plummeted to its lowest level in nearly a year after photos of the boiled rat clipped between chopsticks went viral last week.
Local authorities have already shut down the restaurant until it complies with required improvements.
The incident pushed the stock price of Xiabuxiabu Catering Management initially at 12.5 percent low, at one point dropping to their lowest in nearly a year by the close of trading on Sept. 11, The New York Times reported. Xiabu Xiabu is publicly traded in Hong Kong.
The discovery of a boiled gelatinous small rat in the soup happened at a time when the hotpot business is booming in the country. In fact, Xiabu Xiabu and its competition, Haidilao, have been enjoying soaring revenues and in the middle of diversification plans.
Haidilao has opened branches in New York in the past years and on its way of holding a $1 billion initial public offering in Hong Kong. After this, the chain's next move is to set up shops in the United Kingdom and Australia. The company is aiming for a market valuation of between $10 billion and $12 billion. The funds it will acquire from publicly listing will be used for expansion and automation.
Forbes said Haidialo's owner, Zhang Yong, is also on his way to becoming one of China's most affluent and the country's wealthiest restaurant operator if the IPO pushed through. The co-founder of Haidilao International Holding could have an additional wealth of about $7 billion to $8.3 billion once the company goes public.
Xiabu Xiabu, meanwhile, is not the only hotpot chain embroiled in questionable sanitary conditions. Another rival, Xiaolongkan, was found to have been reusing its cooking oil multiple times.
As for Xiabu Xiabu, the local market supervision bureau in China said in a statement that it did not found any traces of rats in the restaurants. The chain, however, had committed other food hygiene violations like using stagnant water and purchasing supplies from unlicensed businesses.
There unverified reports saying that the restaurant had allegedly offered cash for the pregnant woman to abort her baby if she was extremely concerned about her health.
Hotpot is popular all throughout Asia. Vietnam and Mongolia have their own versions of the popular soup. Xiabu Xiabu's name, in fact, may have been derived from Japan's word for the dish, the "shabu shabu."