The hot pot chain, Xiabu Xiabu, saw its stock price on the Hong Kong exchange plummet 12 percent after a video of the incident went viral, wiping out more than $190 million of its market value. (Shares have since recovered somewhat but are still down about 8 percent from pre-Ratgate levels.)
China is no stranger to food-safety scandals, and this was just the latest hot pot horror, coming days after a prominent Chinese TV station reported a woman finding maggots in her soup.
Variations of hot pot are popular throughout Asia, from Vietnam to Mongolia to Japan (Xiabu Xiabu comes from the Japanese word for hot pot: shabu shabu). Down-market hot pot joints in China sometimes have the stigma of uncleanliness attached to them, mostly because the ingredients used in such meals are often inexpensive, and poor quality can be masked by the intense flavors and cooking process.
But the bubbling, communal meals, with their assortments of dipping sauces and dazzling spreads of raw ingredients, remain among the most popular meals in China. Overseas, too, the hot pot is having a moment in hip foodie centers, particularly in cities with large Chinese diasporas, and Chinese chains are hoping to capitalize on that burgeoning popularity to grow into global brands.
Viral videos of dead rats aren’t helping.
Haidilao, a rival chain that has opened locations in New York in recent years, is on the verge of holding a $1 billion initial public offering in Hong Kong to continue expanding internationally, including in Britain and Australia. In a preliminary IPO prospectus, it informed investors about its past food-safety incidents and noted the measures it has taken in response. (The chain last year started piping surveillance-video feeds from its kitchens to TV screens installed in customer areas after another viral video showed rats in its kitchen.)
Another international chain, Xiaolongkan, which has locations in Singapore and Australia, was dinged this summer in media reports showing that cooking oil was being reused at its restaurants.
After the rat video surfaced, local authorities in the city of Weifang shut down the Xiabu Xiabu restaurant in Shandong pending necessary improvements.