'Although we do not see major food safety issues [in this event], the bad press has already damaged the brand,' Lucy Yu, an analyst with Merrill Lynch (Hong Kong), said in a research note yesterday.

She said, in the near term, the restaurant chain could face headwinds from weak single store sales growth, slower expansion, limited pricing power and extra advertising and promotional costs.

'It will take some time to rebuild consumer confidence and get business returns to normal,' she said.

Mainland media reported last month that Ajisen made false claims about the cooking process of its 'pig-bone soup base' and exaggerated its calcium content. The Shanghai Administration for Industry and Commerce began an investigation on July 28 for 'allegedly misleading advertising behaviour'.

Ajisen's share price plunged almost 45 per cent since July 22.

Ajisen (China), operator of 590 restaurants on the mainland and Hong Kong, disclosed the production process and supply chain for its soup last Friday, clarifying that it was made from pig-bone concentrate and was not freshly cooked.

It also apologised for citing a China Agricultural University report in its nutritional claims.

The company closed a processing plant earlier this month in Xiamen and shifted production facilities to Dongguan in Guangdong.

The fast-food industry on the mainland has been plagued by a series of products quality scandals.

Earlier this month, big fast-food chains and rivals of Ajisen on the mainland - KFC, Yon Ho Soya and Zhen Gongfu - were found to be using liquid concentrate or soya bean powder to make soy milk. Although none claimed the soy milk was fresh, consumers said they felt cheated by the restaurants' advertisements.