People eat at a restaurant in Shanghai, China, 30 October 2025 (issued 31 October 2025). File. Photo by ALEX PLAVEVSKI / EPA
China’s restaurant industry, long seen as resilient in the world’s largest consumer market, is facing mounting bankruptcies as domestic demand weakens and deflationary pressures persist.
Chinese media outlets including the Beijing News reported that several well-known dining chains have recently shut down or entered bankruptcy proceedings, underscoring the depth of the downturn.
Among them is Shanghai Xiaonan Guo, once listed on the Hong Kong stock exchange and operating more than 80 outlets nationwide. The company previously posted annual revenue exceeding 2 billion yuan, about $280 million. However, prolonged weak sales and rising debt since 2018 pushed the firm into insolvency. It closed earlier this month after more than 40 years in business, with reports that employee wages were left unpaid.
Zhuhai Guo, which had been seen as a potential rival to global hot pot chain Haidilao, has also reportedly collapsed amid sluggish consumption. Industry sources say its debt ratio approached 500%.
Media reports indicate that more than 3 million restaurants closed nationwide last year, reflecting the strain on small and large operators alike. Industry rumors have also suggested that Haidilao, one of China’s most prominent hot pot brands, is facing growing financial pressure, though the company has not announced bankruptcy.
The downturn comes despite a long-held Chinese saying that “people regard food as heaven,” reflecting the cultural importance of dining. For years, the restaurant sector was considered one of the most stable businesses in China’s fast-growing economy.
However, analysts say weak domestic consumption, deflation and shifting spending patterns among younger consumers have weighed heavily on the sector. Many younger consumers are adopting more frugal spending habits, further dampening demand for dining out.
With China’s economic recovery still uncertain, observers say additional closures in the restaurant industry may follow.
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260211010004167
