The last batch of "restaurant kings" is being abandoned by the times

The previous generation of dining "kings" has already accumulated too many problems!

Four months have passed in 2025, and another batch of well-known dining enterprises has fallen into bankruptcy and store closures.

For example, the former "leader of Korean barbecue," Jiang Hudong's Baidong Barbecue, has successively closed its stores in cities like Chengdu, Ningbo, and Shantou this year, with the number of stores plummeting from over a hundred at its peak to just over 30 now.

Another example is a well-known hot pot chain that once opened hundreds of stores nationwide. In the past two years, it has attempted to adjust its store format and lower its average spending per customer, but still has not seen any improvement, and the number of stores continues to decline.

A senior restaurant professional told Hongcan Network that many once-flourishing chain dining enterprises are now very anxious, with no growth in performance and facing numerous difficulties in transformation.

"From both logical deduction and actual circumstances, large chain brands must reconstruct their investment and profit models; otherwise, things will get worse. Many enterprises have not yet realized the root of the problem and are still following inertia to pursue large investments, losing money with their strength!" said Jiang Yi, founder of Haoxiachuan.

With the end of the old dining era, a batch of chain dining enterprises that have benefited from the era's dividends may face greater survival pressure. Their scale is larger, and their business models and management philosophies, which once yielded rich returns, are no longer applicable in the new cycle, and many enterprises have reached a point where they must "cut bones to heal."

1. The era creates kings, but the era has changed

There is a saying: "There are no successful enterprises, only enterprises of the era."

In the past decade, the rapid development of the dining industry, except for three years of special circumstances, has sung a high-speed growth song of over 10% annually, giving rise to a large number of sizable new chain dining enterprises, among which Haidilao has successfully ascended to the throne.

Currently, the era we are in has changed. Whether it is the unilateral growth dividend of the national economy, the demographic dividend, or the industrial structure dividend... they are gradually disappearing. This also means that the air and soil that nurtured the previous generation of dining enterprises are no longer present.

From the demand side, under the three major backgrounds of overcapacity, insufficient effective demand, and lack of consumer confidence, the characteristics of the current era are gradually shifting from the third consumption era to the fourth consumption era—consumption is gradually returning to rationality, and consumers tend to choose simple and comfortable products and services.

This change is reflected in the dining industry as a continuous decline in per capita consumption.

Data from Hongcan shows that in the past two years, per capita consumption in the dining industry has shown a continuous downward trend, with national per capita consumption in dining dropping to 39.8 yuan in 2024, a year-on-year decrease of 6.6%. Among various segments, the per capita consumption in the beverage sector has seen the most significant decline, dropping from 21.6 yuan in 2023 to 18.6 yuan in 2024, a decrease of 13.9%.

Correspondingly, the mainstream price range in the dining industry is also changing.

For example, in the full-service dining sector, the most competitive price range ten years ago was 90-120 yuan, while the current mainstream price range is 50-60 yuan; the previous mainstream price range for hot pot was 100-110 yuan, which has now shifted down to around 70 yuan; The mainstream price range for new tea beverages has gradually decreased from above 20 yuan to 10 yuan and below.

"Only with a mainstream price range can there be mainstream brands," said Shou Wenbin, founder of Zhisheng Catering Enterprise Strategic Consulting. The change in the mainstream price range means that a number of brands will be eliminated because "price determines everything."

In other words, the change in consumer trends leading to a downward shift in the mainstream price range directly impacts the pricing system of the previous generation of chain catering enterprises.

In the catering industry, pricing determines the underlying products, teams, services, store environments, marketing resources, etc. If the pricing is unreasonable, the enterprise cannot form a healthy operational closed loop.

A typical example is Pacific Coffee, which was once the second-largest coffee chain giant, positioned as high-end business coffee, with a single cup priced around 30 yuan. With the rise of new coffee forces like Luckin and Kudi, which gradually brought coffee into the 9.9 yuan era, Pacific Coffee's brand positioning could not support its price, leading to a continuous reduction of stores in mainland China over the past two years.

II. Price Determines Life and Death

So, is lowering prices feasible?

In fact, behind the nearly crazy "price wars" in the industry over the past two years, there are many successful chain catering enterprises from the previous generation. From Chinese cuisine to specialty dining, barbecue, hot pot, grilled fish, noodles... the number of stores in various sectors is overly saturated, and the competition for traffic is fierce. Almost everyone is flocking to cost-effective dining, but a small adjustment in pricing involves changes to the entire system, including channels, store models, personnel services, organizational capabilities, etc., so-called pulling one hair affects the whole body.

Take channels as an example. Many chain catering enterprises rapidly expanded during the golden period of shopping malls/centers, establishing channel advantages and brand momentum. This model had four major advantages at the time: shopping malls brought in customer flow to solve customer acquisition problems, eliminated the cost of independent site selection, unified property management reduced operational costs, and high-end scenarios enhanced brand premium.

However, as more shopping centers opened and dining establishments became increasingly similar, this path has also become ineffective.

In recent years, the number of shopping centers has surged. According to the "2024 China Commercial Real Estate Market Annual Report," by the end of 2024, there will be nearly 6,700 shopping centers with an area of over 30,000 square meters nationwide. The increase in the number of malls has diluted customer flow, leading to a decline in business for dining establishments.

On the other hand, mall rents have not decreased, and even the once-coveted "Starbucks" are no longer offered more "favorable terms" by malls, which has also kept the costs of dining establishments high. Additionally, the severe homogenization of dining establishments in shopping centers and intensified competition among peers have continuously increased the difficulty and cost of operating catering brands in malls.

Furthermore, regarding store models, the golden period of mall dining has fostered the prosperity of "large stores," resulting in these chain catering brands generally having larger store areas, higher decoration investments, and a significant proportion of fixed costs.

If prices are simply lowered, the high rents of malls, the initial decoration costs of large stores, heavier labor services, and even SKU structures will instead trap these chain giants in a vicious cycle of "shrinking profits—declining quality—customer loss." In the past two years, many chain restaurants have faced continuous price drops, yet their table turnover rates have struggled to improve, leading to shrinking profits and even losses. This is particularly true for large chain enterprises that have developed into having hundreds or thousands of stores, where the vast number of locations and personnel further intensify the pressure for transformation and adjustment.

"Many businesses founded around 2000 have developed to a certain scale after more than 20 years, but they remain in a state of being large yet not strong. Even with a large number of people at headquarters and significant investments in the supply chain, the front-end stores have become quite outdated, revenue has not increased, while the costs and labor expenses at headquarters are particularly high," said Zhao Zhiqiang, founder of Big Pizza.

Moreover, many dining enterprises that have enjoyed the dividends of the era have become accustomed to extensive management. During the market boom, their turnover and revenue were high, and fluctuations in costs of a few percentage points were inconsequential. However, in the current situation, the previously overlooked costs have become a heavy "historical burden."

Li Yang, founding partner of Zhu Guangyu Hot Pot & Taistuo Barbecue brand, also pointed out that after the changes in the market environment, restaurant owners have truly realized the importance of cost control—such as how to optimize labor efficiency by improving the store's job coverage rate? How to simplify the store's SOP processes through supply chain optimization? These are key points that need to be rethought.

3. Where is the way out?

Overall, the predicament of the previous generation of chain dining enterprises essentially reflects "diseconomies of scale," rooted in inefficient resource allocation that has failed to convert resources into sustainable competitive advantages.

Large chain dining enterprises need to reconstruct their single-store models and improve resource allocation efficiency.

The cost model of most dining enterprises in China still consists of 30% food costs, 30% labor costs, and 20% rent costs. In contrast, Japanese dining enterprises can achieve food costs accounting for 50% to 60%, with labor and rent both at 10%. There is significant room for improvement in both cost structure control and efficiency enhancement.

In terms of optimizing cost structures, dining enterprises need to calculate every investment, including store rent, store area, decoration, seating capacity, and personnel configuration, thinking about how to maximize benefits with the smallest area, least time, and minimal labor.

A seasoned restaurateur once shared a case illustrating the significant cost differences between different single-store models.

Taking a full-service restaurant as an example, a restaurant with a monthly turnover of around 600,000 yuan.

In a shopping mall, the store would require an area of about 200 to 300 square meters, with corresponding rent of about 70,000 to 80,000 yuan per month, and construction costs ranging from 1 million to 1.5 million yuan.

In contrast, a street-side store could control the area to about 100 square meters by utilizing outdoor seating, with rent of 20,000 to 30,000 yuan per month, and total investment, including transfer fees, at around 500,000 to 600,000 yuan.

This calculation only considers rent and construction costs.

Furthermore, by implementing more streamlined process management, efficiency can be improved, and labor costs controlled.

Li Yang previously stated: "If we cannot solve the high rent issue in a short time, and gross profit fluctuates, the first thing we need to address is labor efficiency, and the best way to enhance labor efficiency is still through lean management." A typical example is SaLiYa, which has established a department dedicated to researching and optimizing workflows, enabling employees to complete the maximum service volume in the shortest time. For instance, most dishes are prepared, seasoned, and packaged in a central kitchen, so kitchen staff do not need to use knives during food preparation; employees only need to follow the process to heat and serve the dishes. Waitstaff can simultaneously collect empty plates along the way, improving the efficiency of clearing tables; using automatic water-dispensing mops and dragging the floor in a fixed order, etc., enhances work efficiency and service quality.

In addition to controlling costs, the previous generation of chain restaurants could also expand their profit models based on existing resource advantages, such as expanding product lines to cover more operating hours; increasing revenue sources through business operations like takeout and retail.

This article is sourced from: Hongcanwang, original title: "The Last Batch of 'Restaurant Kings' is Being Abandoned by the Times."

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