New cycle in the catering market: incremental dividends are accelerating toward lower-tier cities and the coffee sector, "more professional players are needed"

Ask AI · How does the professional transformation of the catering industry affect the survival space of small shops?

Everyday Economic News Reporter: Zheng Xinwei Everyday Editor: Chen Junjie

“The catering industry has entered a new cycle, which will have new characteristics, requiring more professional players. The industry is no longer very friendly to non-professional players.” At the “2026 China Chain Catering Summit” held on April 7, during the parallel forum on “Data, Digital, Intelligence, Helping Catering Operate Efficiently,” Gao Yan Technology General Manager and Managing Partner Yang Shun shared this.

Yang Shun shared the “2026 China Catering Market Blue Paper” Image source: Organizer

Yang Shun’s view is based on the “2026 China Catering Market Blue Paper” (hereinafter referred to as the Blue Paper), jointly released by Gao Yan Technology and the Consumer Big Data Laboratory of the Ministry of Commerce—Fudan University.

According to the Blue Paper, in 2025, the restaurant opening rate and closing rate both hit new highs in the past five years, reaching 48.2% and 49.1% respectively, with the total number of stores decreasing net to about 8.2 million.

Yang Shun believes that behind this is a qualitative change in the structure of Chinese catering practitioners: most new stores are opened by professionals, including chain brands, professional operators, and super franchisees; closures are mostly small shops, unprofessional players, and outsiders with capital passionate about entrepreneurship. Although the catering industry seems to have low barriers to entry, it has actually become a highly professional track.

The Daily Economic News reporter noticed on-site that the Blue Paper shows that in 2025, the national catering market revenue increased by 3.2% year-on-year, reaching 5.8 trillion yuan. This growth is mainly driven by increased consumption frequency: the number of transactions surged by 8.3%, but the average spending per transaction decreased by 4.7% year-on-year. “Volume up, price down” has become the core feature, reflecting consumers’ increasing rationality, and merchants are forced to seek a balance between price cuts for traffic and cost control.

Yang Shun further pointed out when interpreting the Blue Paper that China’s catering industry is undergoing structural adjustments under multiple external shocks, with an expected market growth rate of 4% to 5% in 2026. The industry is shifting from “scale dividends” to “efficiency and quality-driven stock restructuring.”

Image source: “2026 China Catering Market Blue Paper”

“China’s catering industry shows extreme market segmentation and track misalignment: stock competition is stuck in high-tier cities, while incremental dividends are accelerating towards lower-tier cities and the coffee track. The development of efficient store formats is significantly higher than that of full-service dining formats.” The chart Yang Shun displayed shows that catering growth in first-tier and new first-tier cities has already shown a “red” sluggish state, while third-, fourth-, and fifth-tier cities still maintain active growth. In terms of categories, Chinese full-service dining and fast food have generally declined in Tier 1 and Tier 2 cities, but the coffee track has surged nearly 30% against the trend, becoming the most eye-catching growth pole.

He also said that the chain rate is becoming a key survival factor through cycles. “The catering industry is responding to the downward consumption trend with chain development. Currently, only Chinese full-service dining, Chinese fast food, and beverage and dessert markets are maintaining store growth, while other channels are generally shrinking.” The Blue Paper shows that chain rates for beverages and desserts represented by coffee and tea drinks have approached 50%, with the leading brands’ pattern becoming solidified. However, the overall chain rate in Chinese catering, including full-service, casual dining, and fast food, remains relatively low, below the industry-wide 32% chain rate.

Facing the new cycle of catering, Yang Shun recommends that catering companies strategically reconstruct around “breakfast efficiency, afternoon tea socialization, late-night light meals, and full-service scene-based formats,” driving new growth through non-full-service periods and stabilizing the basic market with scene resilience.

Image source: “2026 China Catering Market Blue Paper”

“In the next five years, China’s catering market will maintain about 4% compound growth, reaching a scale of 7 trillion yuan by 2030. 80% of the market increment will be contributed by eight high-growth sub-formats.” Yang Shun summarized: “In the future, more choices in the catering industry can be made within these formats.”

Daily Economic News