The country's catering sector is experiencing sustained acceleration in chain store development, driven by market consolidation and operational quality upgrades, according to the 2026 White Paper on the Development of Restaurant Chains in China released by the China Chain Store & Franchise Association and Meituan.

The report shows that the percentage of restaurants in the country that are part of a chain rose from 21 percent in 2023 to 25 percent in 2025, an average annual increase of 2 percent. This growth highlights the sector's resilience in adapting to evolving consumer preferences and operational challenges. Across segments — including beverages, fast foods, snacks and marinated flavors — leading chain enterprises with national influence have emerged in every category.

"This is exactly why we upgraded the 'Top 100 Catering Franchises' to the 'Top 300 Chain Restaurants' this year," said Peng Jianzhen, CCFA director. "With the chain rate rising, more brands are emerging, and as niche categories diversify, benchmark chains are appearing across every sector — Chinese, Western, casual dining, fast food, beverages and baking."

The white paper identified a clear divergence among brands of different sizes, according to the Meituan Research Institute. Top-tier brands with over 10,000 outlets continue to consolidate leadership through standardized operations and strong brand influence.

Chains with between 101 and 500 stores increased store count in 2025 by 28.3 percent year-on-year, while chains boasting between 501 and 1,000 outlets also expanded rapidly, increasing store numbers by 32.6 percent year-on-year. The smallest chains, typically with three to 10 outlets, shrank sharply, with an 18.5 percent year-on-year reduction, largely due to limited risk resilience and underdeveloped supply chains.

Xiaocaiyuan, a "Top 300" Chinese chain restaurant brand, stands as a prime example of high-quality growth. Founded in 2013, Xiaocaiyuan has expanded to over 800 directly operated stores. According to its first interim report following its public listing in August 2025, the company achieved revenue of 2.71 billion yuan ($397.5 million) during the reporting period, a year-on-year increase of 6.5 percent, with the growth driven by the steady expansion of its store network. Net profit reached 382 million yuan, representing a surge of 35.7 percent compared to the same period in 2024.

Overall, the total number of catering outlets in the country remained largely stable, with 7.47 million stores nationwide by the end of 2025 — a 0.1 percent decline from the previous year.

Category differentiation is a defining feature of the market.

Beverage chains, in particular, have become the primary growth engine, with a chain rate of 54 percent, far above the industry average. These brands benefited from high platform subsidies and booming takeaway demand, allowing rapid replication of standardized operations.

Top-tier brands, leveraging mature operating systems and strong management, are the backbone of China's chain development.

Luckin Coffee is an example of this trend. Its 2025 financial report shows a net addition of 8,708 stores, bringing the total to 31,048 — a 39 percent year-on-year increase. Self-operated stores alone exceeded 20,000. Luckin also prioritized product innovation, launching over 140 new items in 2025, driving a 39 percent increase in freshly prepared beverage sales to 4.1 billion cups.

Other segments, including Chinese and Western cuisine, face more complex operational challenges, said the report. High unit costs, intricate supply chains, and difficulties in standardization have prompted operators to focus on service quality and menu innovation rather than rapid expansion. Consumer demand for value and quality favors standardized, cost-effective categories.

The consumer market remains robust. Total retail sales of consumer goods reached 50.12 trillion yuan in 2025, up 3.7 percent year-on-year, while catering revenue totaled 5.79 trillion yuan, up 3.2 percent. Although slightly below overall retail growth, this demonstrates the sector's resilience amid intensified competition and evolving consumer expectations.

Macroeconomic indicators provide additional context: GDP growth reached 5 percent in 2025, disposable income rose by 5 percent, and the service industry producer index increased by 5.5 percent. Catering revenue could have grown around 5 percent without subsidy-driven "takeaway battles", indicating that competitive pricing pressures slightly suppressed revenue, though market fundamentals remain strong, said the report.

While competition has intensified, operational quality is improving. Meituan and Dianping data show a decline in low-rated outlets in 2025, while mid-tier scores rose, reflecting enhanced service stability and operational excellence. Market shakeouts have accelerated improvements in management standards, menu consistency and customer experience, laying the foundation for sustainable medium-term growth.

Technology adoption is also increasing. The 2026 white paper on the Development of China's Catering Ingredients, released by catering research unit NCBD and Expo Finefood Shanghai, reported that the cooking robot market exceeded 3.5 billion yuan in 2025 and is projected to surpass 12 billion yuan by 2030. These robots are being deployed in group meals, fast food and regional cuisines, helping restaurants standardize operations and improve efficiency.

Chain penetration is higher in major cities. First-tier cities such as Beijing; Shanghai; Guangzhou and Shenzhen of Guangdong province, have a chain rate of 33.2 percent. Lower-tier cities are catching up, with fifth-tier cities reaching 21 percent, reflecting accelerated chain expansion into less developed markets, said the report. But a rising number of catering brands is shifting to lower-tier markets with localized strategies.

Taking Miss Xiaogu, a brand which focuses on three core categories — spicy hotpot, malatang (numbing, spicy and hot) and malaxiangguo (numbing, spicy and fragrant pot) — as a prime example, the brand has now surpassed 1,200 stores globally.

Targeting the lower-tier market, Miss Xiaogu has specifically engineered a profitable single-store model characterized by low costs and high repurchase rates, deeply aligning with community consumption needs. By leveraging the core advantage of low rental costs in these markets, the brand practices deep community-based operations. It has precisely anchored two core positioning strategies: as the "family backup kitchen" and as a "convenient canteen for young people". This approach has allowed it to rapidly gain a foothold in smaller cities, establishing itself as a benchmark case for the downward expansion of restaurant chains.

Peng of CCFA suggested key priorities for the industry should include trade-in subsidies for catering equipment. He said catering equipment should be included after automobiles and home appliances in trade-in policies.

Expanding subsidies would facilitate digital and intelligent transformation, improving equipment standards and productivity, he added.

Peng also suggested in the report ideas for opening domestic listing channels, allowing catering companies to access domestic capital markets. Additionally, he called for specific policies to support the international expansion of Chinese cuisine in order to enhance global influence and market share.