China's Top Restaurant Chains Pivot From Growth to Survival

China's Restaurant Giants Hit the Brakes on Expansion

China's leading restaurant enterprises are abandoning aggressive growth strategies in favor of painful but necessary course corrections. At the 2026 China Catering Industry Festival, executives from 5 major food service companies shared how they are 'hitting the brakes, cutting losses, and starting over' to survive an increasingly unforgiving market.

The roundtable, hosted by Jiabin Business School founder Wu Ting, brought together heavyweights including Quanjude Group General Manager Zhou Yanlong, Shandong Kairi Commercial Group Chairman Zhao Xiaoguo, and Babi Food founder Liu Huiping. Their consensus: the era of growth-at-all-costs is over.

From 'Scale Big' to 'Choose Right'

The strategic pivot across China's $700+ billion food service industry reflects a fundamental shift in competitive dynamics. Companies that once measured success by store count and revenue growth are now focused on unit economics and business model refinement.

Key challenges driving this transformation include:

• Shrinking growth dividends as consumer spending tightens across China
• Narrower margins for error in an oversaturated market
• Rising operational costs squeezing profitability at the store level
• Intensified competition from new entrants and digital-native brands
• Changing consumer preferences demanding higher value propositions

As one panelist framed it, the industry's core question has shifted from 'how fast can we grow' to 'are we making the right choices.'

Three Survival Playbooks Emerge

The discussion revealed 3 distinct strategic approaches that China's top restaurant brands are deploying. Each carries significant risk but reflects the urgency of the current environment.

Hitting the Brakes

Several chains are deliberately slowing expansion to focus on operational excellence. Rather than opening new locations, they are investing in optimizing existing stores, renegotiating leases, and improving per-store profitability. This approach prioritizes sustainable margins over top-line growth.

Cutting Losses

Other companies are taking a more aggressive approach — closing underperforming locations and exiting markets where they lack competitive advantage. Quanjude, the iconic 160-year-old Peking duck brand, has been notably transparent about its restructuring efforts under Zhou Yanlong's leadership.

Starting Over

The most radical strategy involves completely rebuilding business models from the ground up. Babi Food founder Liu Huiping discussed how some brands must abandon legacy approaches entirely when incremental optimization is insufficient.

Technology's Role in the Reset

The presence of Beijing Shitongda Technology Development Co. at the roundtable underscored technology's growing importance in restaurant operations. Data-driven decision-making, supply chain optimization, and digital ordering systems are becoming essential tools for the industry's restructuring.

Restaurant chains that previously invested in rapid physical expansion are now redirecting capital toward tech infrastructure — from AI-powered demand forecasting to automated kitchen systems that reduce labor costs and improve consistency.

What This Means for Global Food Service

China's restaurant industry restructuring offers a preview of trends likely to affect food service companies worldwide. The shift from growth-oriented metrics to profitability-focused strategies mirrors patterns already emerging among U.S. and European quick-service chains facing similar margin pressures.

For Western companies operating in or sourcing from China, the consolidation wave creates both risks and opportunities. Weaker players exiting the market could open space for partnerships, while surviving Chinese brands may emerge as stronger international competitors.

The message from Beijing is clear: in 2025's restaurant industry, survival belongs not to the biggest, but to the most disciplined.