Core Insights - Zhengxin Chicken Steak, once a dominant player in the snack industry with a peak of 25,000 stores and an annual revenue of 7 billion, has seen a drastic decline, now operating only 14,000 stores in 2024, losing nearly 10,000 locations [1] Company Overview - At its peak, Zhengxin Chicken Steak was known for its ability to open stores in the narrowest of spaces, showcasing its aggressive expansion strategy [1] - The company is currently facing an unprecedented crisis, indicating significant operational challenges and market pressures [1] Industry Context - The decline of Zhengxin Chicken Steak reflects broader trends in the snack food industry, where competition and changing consumer preferences may be impacting traditional business models [1] - The significant reduction in store count suggests a potential shift in market dynamics, with implications for other players in the industry [1]

Core Viewpoint - Zhengxin Chicken has faced significant backlash due to repeated food safety issues, leading to a drastic reduction in its store count from 25,000 to approximately 10,000, undermining its ambitious goal of reaching 100,000 stores [2][9]. Food Safety Issues - A viral video showing maggots in a chicken leg has reignited public outrage against Zhengxin Chicken, prompting the local market supervision authority to investigate the incident [1]. - The company has a history of food safety violations, including improper food handling and the presence of pests in its stores [3][4][5]. - Complaints on consumer platforms highlight serious issues such as finding maggots and raw meat in food, indicating systemic problems in food safety management [6]. Management and Operational Challenges - Experts suggest that the frequent food safety problems reflect significant management flaws, particularly in franchise oversight and supply chain management [7]. - The company has been criticized for inadequate employee training, leading to poor hygiene practices and operational standards [7]. - Zhengxin Chicken's responses to food safety incidents have often been vague, lacking clear corrective measures communicated to the public [7]. Decline in Store Count - The number of Zhengxin Chicken stores has halved from its peak of 25,000, with current estimates around 10,695 [9]. - The decline is attributed to damage to the brand's image and increased market competition, as well as a limited product range that fails to meet diverse consumer demands [10]. Brand Positioning and Market Strategy - Zhengxin Chicken was once a leading brand with a strong market presence, leveraging low prices to drive sales [8]. - The company has faced challenges in innovating its product offerings and connecting with younger consumers, which may hinder its growth potential [10].

Core Viewpoint - The article highlights the recurring food safety issues faced by Zhengxin Chicken, which have led to a decline in consumer trust and brand reputation, despite its rapid expansion in the past. Group 1: Food Safety Issues - Zhengxin Chicken has been involved in multiple food safety controversies, including a recent incident where a customer reported finding maggots in chicken legs purchased from a store in Guizhou [2][4] - The local market supervision bureau has intervened, sealing similar products for testing, although the store claimed the video evidence was misleading [2][7] - Previous incidents include reports of unsanitary conditions, such as flies contaminating food and the use of old frying oil [4][8] - Numerous complaints have been filed against Zhengxin Chicken, citing issues like undercooked food, spoiled meat, and difficulty in obtaining refunds [8][9] Group 2: Business Performance and Challenges - Zhengxin Chicken, founded in 1995, has seen significant growth, expanding from 10,000 stores in 2017 to 25,000 by 2021, becoming a leading brand in the fast-food sector [11][12] - However, the company has faced stagnation, with the number of stores remaining at 25,000 as of March 2023, indicating no growth in franchise numbers over two years [14] - The price of chicken has increased from 10 yuan to as high as 15 yuan, which has affected consumer perception and sales [12][13] - The company has not disclosed updated store numbers since March 2023, with independent data suggesting a decline to approximately 10,695 stores by the end of 2023 [15][15] - The shift in consumer preferences towards healthier eating and increased competition in the market have further complicated Zhengxin Chicken's growth prospects [15][16]

Core Viewpoint - The incident involving a customer finding maggots in a chicken leg purchased from Zhengxin Chicken has raised significant concerns regarding food safety and quality control within the fast-food industry in China [1][3]. Group 1: Incident Details - A video surfaced on May 15, showing a customer discovering a large number of maggots in a chicken leg from Zhengxin Chicken [1]. - The staff at the involved store claimed that the customer returned the product later in the day after purchasing it in the morning and that they had reported the incident to the police [3]. - The local market supervision bureau has acknowledged the complaint and is currently investigating the matter [3]. Group 2: Company Background - Zhengxin Chicken became the first restaurant chain in China to reach a scale of 10,000 stores in 2017 [5]. - The company is associated with Shanghai Zhengxin Food Group Co., Ltd., which was established in January 2006 and has a registered capital of approximately 45.45 million RMB [5]. - The legal representative of the company is Xia Chunlei, and it has direct holdings in 15 enterprises, with 11 currently in operation [5].