Diners were eating hot pot, raw meat and vegetables cooked in boiling soup at the table, when they found an unexpected ingredient - a boiled rat.
Xiabu Xiabu's market value dropped to its lowest level in nearly a year as pictures of the dead rat being fished out of a broth were circulated on social media. Video circulated widely on social media in China, to the shock and disgust of viewers, shows the man in the eastern city of Weifang fishing the boiled rodent out of the murky broth with chopsticks.
A video of a rat found in a hotpot at a Chinese restaurant angered the nation.
On 11 September, the company's share price hit its lowest level since October past year.
After the incident, Xiabu Xiabu's market value fell by 11 per cent(S$291 million) on Tuesday (Sept 11). Traditionally eaten as a family meal in winter, hotpot is a national favourite, and chains selling it are growing in popularity.
The restaurant initially put out a statement on Saturday saying that it had "ruled out" the possibility that a lack of hygiene had caused the rat to end up in the hotpot, but later deleted it.
"We have set up a task force to carry out an in-depth investigation into this incident, and will also invite third-party authorities to help us clarify the truth", she wrote in an email.
In a statement released to the South China Morning Post, Xiabu Xiabu said it had always placed great emphasis on food security and would make any necessary improvements.
Health officials investigated the restaurant and found no traces of rats, but shut down the location for other violations, including pooled water in the food processing areas and using produce suppliers without full qualifications. That's what one customer discovered last week while dining out at a popular Chinese restaurant chain, local media reported.