Sinolink Securities released a research report stating that in H1 2025, the restaurant industry's revenue showed an "overall pressure with internal differentiation" trend. Since 2025, the year-over-year growth rates of retail catering and above-scale catering have fluctuated, with above-scale catering showing negative growth in July. On the policy front, initiatives such as Shanghai's "Enjoy Shanghai" consumption vouchers and Shaoxing's tiered banquet subsidies (up to 5,000 yuan) directly stimulate demand and effectively alleviate operational pressure on enterprises. H1 2025 same-store performance showed significant differentiation, with value-oriented categories demonstrating strong resilience while high-ticket hotpot categories faced obvious pressure. Most enterprises saw narrowing same-store decline rates, with fundamentals entering a bottoming-out recovery phase. The firm remains optimistic about the value-oriented dining track, which performs excellently in store expansion and same-store performance under the current consumption environment.
The main views from Sinolink Securities are as follows:
**Recovery Logic Shifts from Low Base Repair to Genuine Supply-Side Recovery**
Unlike 2023's reliance on "low base + revenge consumption" for short-term demand release, current restaurant recovery stems from deep supply-side adjustments—gradual clearance of inefficient capacity, with leading brands improving overall operational efficiency through optimized business models and refined single-store models. Enterprises with sophisticated management capabilities have demonstrated clear competitive advantages. In June 2025, the national restaurant industry prosperity index reached 104.1 (slightly down 0.1% from May). While overall prosperity showed some fluctuation, graduation season banquets and summer night market economy drove consumption peaks in categories like barbecue and beverages, highlighting resilient demand in specific scenarios.
**Policy Support for Service Consumption Strengthens, Company Performance Differentiates with Value-Oriented Restaurants as Key Recovery Support**
From H1 2025 perspective, the restaurant industry's revenue showed an "overall pressure with internal differentiation" trend. Since 2025, year-over-year growth rates of retail catering and above-scale catering have fluctuated, with above-scale catering showing negative growth in July. Policy-wise, Shanghai's "Enjoy Shanghai" consumption vouchers and Shaoxing's tiered banquet subsidies (up to 5,000 yuan) directly stimulate demand and effectively alleviate enterprise operational pressure. H1 2025 same-store performance showed significant differentiation, with value-oriented categories (tea drinks: GUMING same-store +20.6%, MIXUE GROUP +11.5%; fast food: KFC flat, Pizza Hut +1%) demonstrating strong resilience, while high-ticket hotpot categories (Xiabuxiabu -15.6%) faced obvious pressure. Most enterprises saw narrowing same-store decline rates, with fundamentals entering a bottoming-out recovery phase.
**Enterprises Focus on Store Format Adjustments and Single-Store Efficiency Improvements, Prioritizing Profit Growth over Revenue Growth**
Leading brands optimize store formats around "cost reduction and efficiency improvement, scenario adaptation, and localization transformation" (such as KFC mini stores, XIAOCAIYUAN reducing single-store area to 220㎡, HAIDILAO community stores adding convenience categories). On the revenue side, industry differentiation occurs with strong brands (GUMING, DPC DASH) achieving substantial growth while some enterprises face short-term pressure. On the profit side, enterprises with supply chain advantages or sophisticated operational capabilities (YUM CHINA, GUMING, XIAOCAIYUAN) maintain stable profitability, with targets showing upward operating leverage (such as GUMING's net profit +121.5% year-over-year) performing better. "Profit growth > revenue growth" has become a prevalent industry phenomenon.
**Single-Store Profitability and Replicability Increasingly Influence Store Expansion Certainty**
Sinolink Securities believes that good single-store profitability is the core logic supporting store expansion, while same-store growth is not a core decision factor for opening stores. XIAOCAIYUAN (H1 2025 net addition of 55 stores, profit margin 23.8%) achieved a virtuous cycle of "store expansion + profit growth." Single-store profitability can be achieved through two paths: "same-store growth to dilute costs" or "sophisticated operations to offset revenue pressure." As long as the logic of "new store profits + existing store profits > original profits" is satisfied, expansion can still drive profit increments.
**Investment Recommendations**
The firm remains optimistic about the value-oriented dining track, which performs excellently in store expansion and same-store performance under the current consumption environment. It recommends focusing on value-oriented dining leader XIAOCAIYUAN, which targets the value-oriented dining track with accelerated store opening in the second half and recovery to positive same-store growth. The company stands out in the current restaurant market environment, with strong supply chain capabilities driving procurement cost optimization and performance expected to continue exceeding expectations.
**Risk Warnings**
Intensifying industry competition; store expansion below expectations; same-store performance below expectations; consumption recovery below expectations.