Summary of Key Points
In the first half of 2026, the key terms for China's catering industry were "braking" and "restructuring": leading brands such as Zhengxin Chicken Nuggets, Wallace, and Kudi Coffee collectively slowed down or stopped their expansion efforts, with many stores closing. At the same time, the industry's focus shifted from pursuing scale and rapid growth to emphasizing the health and profitability of individual stores. Brands are adjusting their store models (e.g., adopting fresh-cooking methods and experimenting with new store formats) to improve their profitability, marking a transition from a "scale-first" to a "quality-first" approach.
I. The Big Players with Thousands of Stores Suddenly Brake: A Wave of Store Closures
Brands that once entered the "thousands-of-stores club" through low-franchise barriers and rapid expansion are now contracting:
- Zhengxin Chicken Nuggets: At its peak in 2019, it had 16,000 stores; third-party data shows only around 9,500 remaining, a decrease of nearly 3,000.
- Wallace: It surpassed 20,000 stores in 2022 but fell to 19,000 in February 2026, with its parent company experiencing its first year of negative revenue growth and delisting from the New Third Board.
- Kudi Coffee: It reached 16,000 stores in two years but closed 700 stores between March and May 2026, with 722 closures within 90 days (4.5% of its total stock).
- Even subsidiaries like "Yanqing Barbecue" (a brand of Haidilao) and Micun Banfan have paused their expansion efforts, with Micun stating that "expansion was too fast, and organizational capabilities could not keep up."
II. Why the Sudden Brake? The Aftermath of Rapid Expansion
In the past, catering brands used opening more stores as a strategy to attract franchisees, but larger scales revealed various issues:
- Management Challenges: Micun Banfan mentioned that its选址 standards and partner capabilities failed to keep up with the expansion pace, leading to poor performance at some stores.
- Declining Profits: Wallace's total debt rose to 2.1 billion yuan, and its revenue decreased for the first time.
- Brand Fragility: The scale built on low-franchise barriers lacks true brand strength, making stores vulnerable to market changes and closures.
III. More Than Just Closures: Brands are Restructuring Their Store Models
"Braking" does not mean stopping altogether; it means finding new ways to succeed. Brands are redefining what makes a store profitable:
- The Trend of Fresh Cooking: Rural Base closed its central kitchen in 2024 and adopted fresh-cooking methods, which were initially criticized but have now become an industry trend.
- New Store Formats: Laoniangcou opened a "Freshly Cooked Selection Restaurant," moving the cooking area to the customer's table with weight-based pricing (3.68 yuan per 50 grams of meat), costing only 20 yuan per person.
- Expansion Adaptations: Nancheng Xiang changed its strategy from rejecting fresh cooking to fully adopting it, resulting in a 101% increase in net profit in 2025.
- Adding Main Products and Extended Hours: Fish You Are Together added freshly cooked chicken to its sour fish dishes to meet consumer preferences for authentic restaurant experiences.
- Experimenting with New Formats: Xibe launched the "Tianbian Sandpot Braised Noodles" subsidiary, while Haidilao adjusted its subsidiary strategies, both in search of new growth points.
IV. The Industry's Logic Has Changed: From "Scale Stories" to "Healthy Stores"
Over the past decade, catering brands competed on how fast they could expand and how many stores they had. Now, the focus is on which stores are truly profitable:
- After pausing expansion, Micun Banfan eliminated its store elimination policy and adopted a more supportive management approach, seeing a 10%-15% increase in revenue per store.
- Experienced industry insiders say, "It's better to have 100 profitable stores than 1,000 struggling ones."
- Industry consensus: "Scale is not a moat; the health of individual stores is what ensures a brand's survival."
V. The Future Trend: Slowing Down Leads to Faster Growth
In 2026, speed will no longer be an advantage in the catering industry; stability will be key:
- Brands are no longer pursuing the dream of thousands of stores but focusing on the profitability of each one.
- Adjusting models and improving operational quality are more important than blind expansion.
- In summary: Opening stores wisely is better than opening many; lasting longer is better than moving quickly. Each profitable store becomes the greatest asset for a catering brand.