Famed hot-pot chain King Crab Shabu-Shabu (
The chain's headquarters in Taichung has been shut down and calls made to the office yesterday were not answered. Shocked franchisees complained that they could not contact Shen or headquarters staff.
King Crab, established three years ago, was quick to build a name with its all-you-can-eat buffet stocked with expensive seafood, such as king crab and lobster.
But the high costs of seafood and the company's fast expansion led to cash flow problems. Shen bounced checks last month but continued to absorb franchisees in Taoyuan, the Chinese-language Economic Daily News reported yesterday.
The report said King Crab had opened eight restaurants run directly by its headquarters and 20 franchise restaurants within the past three years, although the company's Web site only showed 23 locations.
Despite the sudden closing of King Crab's headquarters, most of its franchise restaurants decided to maintain normal operations, as their financial structures are independent.
"Compared with the directly run stores, we franchisees are less affected. But it's a shame that the hard-won reputation of the chain has been marred by this news," the owner of Tainan's Fuchien (
She said franchisees needed to invest more than NT$5 million to open a King Crab restaurant, including royalties of NT$800,000 and the cost of decorations.
She expected her store, which opened in late September, could start pulling in profits within one year.
"We do think the corporate system is not in very good shape and there are some problems with the business model as the headquarters only shirked responsibilities when we asked for their help to boost flagging business over the past several months," Huang said.
Franchisees stressed that gift coupons were still valid but that restaurants would only accept vouchers sold by themselves.