Summary of Key Points
The "10,000-store club" in the catering industry is at a turning point: on one hand, brands such as Zhengxin Chicken Sandwiches and Juewei Food are closing stores (Zhengxin has reduced from 16,000 to 12,000 stores, while Juewei has lost 5,000 stores in two years); on the other hand, beverage brands like Mixue Ice City (with 50,000 stores) and Luckin Coffee (with 31,000 stores) are still expanding. The reasons for this divergence include the end of the industry's growth period, differences in category profitability, and the strength of franchise models and supply chain capabilities. The closure of some brands may also be a sign of a shift from "scale first" to "quality first."
1. The End of the Growth Period: From "Competing for Territory" to "Competing for Existing Customers"
In the past, the catering industry could grow simply by opening new stores as market demand was expanding (such as in the early days of Mixue and Luckin). However, things have changed:
- Slower Overall Growth: Catering revenue only increased by 2.8% year-on-year in the first half of 2026, 1.5 percentage points slower than in 2025, and lagging behind the total retail sales of consumer goods. The growth rate of leading companies (with annual revenues over 2 million yuan) is even lower (1.8%), indicating that scale no longer provides a competitive advantage.
- Decrease in the Total Number of Businesses: The number of catering businesses nationwide has dropped from 8.4 million to less than 8 million, a reduction of 400,000. Opening new stores is now about competing for customers from nearby businesses rather than attracting new ones.
- Delivery Drags on Revenue: In 2025, delivery prices decreased, leading to lower prices for in-person dining as well, resulting in more orders but less revenue, which has become a stumbling block for industry growth.
Only the chainization rate is still increasing (from 21% to 25%), especially in the beverage sector (54%), due to the high standardization and ease of managing supply chains, making it suitable for expansion.
2. Different Fates for Different Categories: Some Benefits Have Ended, While Others Are Still Flourishing
Even among brands with thousands of stores, their fates vary significantly depending on the category:
- Decline in Traditional Category Profitability: Categories like fried chicken (Zhengxin), marinated meat (Juewei), and affordable fast food (Wallace) that were popular from 2015 to 2020 are now highly competitive and facing competition from new entrants (e.g., "fresh snacks" that are more modern and healthier).
- Beverage Categories Still Profitable: Milk tea and coffee are consumed frequently and in various scenarios (work, shopping), and their standardization makes them easy to replicate, allowing brands like Mixue, Luckin, and Guming to continue expanding.
Kudi Coffee is an exception: although it operates in the beverage category, it relied on subsidies to expand its scale early on and failed to achieve profitability per store (60% of its stores were losing money in the spring of 2026), so its growth has slowed or even stopped.
3. The Critical Issue of Franchise Models: Do Franchises Make Money?
Most brands with thousands of stores rely on franchises for revenue, but their sustainability depends on whether the interests of the headquarters and franchisees align:
- Franchise Models That Harm Franchises: Brands like Zhengxin and Wallace had weak control over their supply chains and acted as mere intermediaries (profiting from price differences in raw materials). In a competitive market, the headquarters may make money, but franchisees suffer (e.g., low investment in fried chicken stores leads to longer payback periods). Insufficient profits force franchisees to compromise on food safety and service quality, damaging the brand's reputation.
- Win-Win Models: Brands like Mixue Ice City build their own lemon production bases and tea plantations, while Luckin Coffee owns coffee roasting facilities, directly controlling upstream costs and leaving more profit for franchisees. For example, if franchisees can make money, they are motivated to open new stores.
Kudi Coffee is a prime example of a failed franchise model: it relied on subsidies to attract franchisees, and without them, its stores became unprofitable, leading to closures.
4. Contraction Is Not Necessarily Bad: A Shift from "Scale" to "Quality"
The closure of some brands is not a sign of failure but the beginning of a transformation:
- Optimizing Store Layouts: Over 80% of Zhengxin Chicken Sandwiches' stores are now profitable, with only 5% losing money. These closures are part of a normal adjustment process.
- Expanding into New Categories: Brands are diversifying by introducing new products (e.g., Zhengxin selling hamburger sets for 12 yuan, Wallace offering monthly coffee subscription cards, Juewei opening "fresh snack" and claypot dishes) to offset declining sales in traditional categories.
- Upgrading Franchise Models: Zhengxin has introduced a "strong franchise" model with no initial franchise fee and headquarters covering the cost of renovations and equipment; Wallace has acquired upstream chicken suppliers to reduce material costs, sharing profits with franchisees.
These efforts reflect a shift from competing on sheer scale to focusing on store profitability and innovation. After all, large numbers of stores without profitability are merely nominal figures.
In Conclusion
The differentiation among the catering brands with thousands of stores indicates that the industry is transitioning from rapid growth to more focused development. In the past, success relied on opening new stores; now, it requires better supply chains, profitable individual stores, and innovative products. Contraction is not a sign of defeat but a step toward a healthier, more sustainable path forward.