The current recovery in the catering industry, which began in early 2023, is determined in magnitude by demand and in pace by supply. Leading beverage brands have gradually warmed up in Q1 2025, and it is projected that leading Western fast-food chains and leading full-service restaurants achieved flat or positive same-store sales growth in Q2 and Q3 2025, respectively. Regarding customer traffic, with the normalization of year-on-year comparables, the vast majority of leading restaurant brands are expected to achieve a turnaround to positive customer traffic growth in the second half of 2025. In terms of average spending per customer, as the competitive landscape improves, more leading brands are seeing their average ticket prices stabilize or rise. The restaurant and beverage sector is the preferred choice within the service consumption recovery. The main views of Zheshang Securities are as follows:
Industry trends: Survival of the fittest is underway, with leading brands growing stronger. The pace of recovery varies by segment; due to differences in the rhythm of supply-side adjustments, the beverage segment is leading Western fast-food and full-service restaurant segments by approximately 1 to 2 quarters. Leading beverage brands have already shown gradual recovery in Q1 2025, while leading Western fast-food and full-service restaurant chains are expected to have achieved flat or positive same-store sales growth in Q2 and Q3 2025, respectively. From a net store opening perspective, an improvement in the overall competitive landscape of the catering sector has already begun. According to data from Narrow Door Eye, the overall catering sector showed a net year-on-year decrease in store count as of November 2025. On a year-on-year basis, only sub-sectors such as coffee, buffets, light meals, Jiangxi cuisine, and Yunnan cuisine exhibited net store openings. Looking at specific brands, as of November 2025, beverage chains like Mixue Bingcheng and Guming, coffee chains like Lucky Cup and Luckin Coffee, Western fast-food chains like KFC, Pizza Hut, and Domino's, and hot pot chains like Haidilao and Banu all demonstrated net store opening speeds superior to their peers, highlighting brand resilience. Although disruptions from major food delivery platform battles in Q2-Q3 2025 delayed the pace of supply rationalization in some segments, the ultimate outcome remains the same. As delivery subsidies recede, a process of survival of the fittest is occurring on the supply side, and an improvement in the competitive landscape has commenced.
From a single-store performance perspective, the majority of leading brands are expected to achieve flat or positive same-store sales growth starting from H2 2025. In terms of customer traffic, with the normalization of year-on-year comparables, most leading brands are forecast to achieve a positive turnaround in customer traffic in H2 2025. Regarding average spending per customer, alongside the improving competitive landscape, average ticket prices for more leading brands are stabilizing or increasing. Data from Narrow Door Eye shows that as of November 2025, the average spending per customer for leading brands like Haidilao, McDonald's, Heytea, and Lucky Cup had increased year-on-year. Other leading brands, including Guming, Starbucks, KFC, Haidilao, and Tai Er, saw a sequential increase in average ticket price. After approximately two years of market self-adjustment, the downward pressure on average spending per customer has gradually converged or ended. The average ticket price for leading restaurant brands is expected to stabilize or rise in H2 2025.
Performance outlook: Full-service restaurants bottoming out, beverage sector showing differentiation. The restaurant and beverage sector is the preferred choice within the service consumption recovery. The restaurant sector currently represents a relatively scarce valuation洼地; once consumption recovery expectations emerge, brands show strong potential for a rebound when benchmarked against 2019 levels. Brands possessing offline scarcity deserve particular attention. Restaurant and beverage brands like Guming, which emphasizes freshness, and Haidilao, which focuses on emotional value, possess an offline experiential attribute that cannot be fully replaced by online alternatives, granting them brand scarcity. 1) Full-service restaurants and fast food: Average spending per customer and single-store performance for leading brands have bottomed out. Continuous attention should be paid to the progress and sustainability of positive year-on-year same-store sales growth for various leading brands. Brands like Yum China, Haidilao, and Green Tea Group are expected to have led the recovery in same-store sales. Haidilao (06862): The brand possesses "emotional value" attributes, and management efficiency improvements are gradually becoming apparent. Driven by a sequential improvement in table turnover rate, revenue growth is expected to show sequential improvement in H2 2025; high dividend payouts are anticipated to continue, with a dividend yield of approximately 5%, promising shareholder returns. Yum China (09987): Accelerated expansion is timely, with high and sustainable shareholder returns. Driven by accelerated store openings, system sales growth is expected to reach mid-single digits in H2 2025; supported by management capabilities, the core operating profit margin is expected to be flat or improve year-on-year; total shareholder returns for 2025-26 are projected to be around $3 billion, corresponding to an annualized dividend yield (including buybacks) of approximately 9%. Super Hi (09658): The sole listed player focused on global expansion of Chinese cuisine, with vast store opening potential, currently in a growth phase. The company has achieved consecutive profits after excluding exchange rate effects, and economies of scale are gradually emerging. Driven by accelerated store openings synergized with improved table turnover, revenue growth is expected to be in the high-single to low-double digits in H2 2025; as operational adjustments are gradually finalized, the net profit margin is expected to continue improving. Green Tea Group (06831): A leading brand in casual Chinese dining, actively expanding in second- and third-tier cities. According to company plans, store opening growth is expected to maintain around 30% in H2 2025; driven by rapid expansion, performance is expected to continue high growth. Domino's Pizza Enterprises Ltd. (01405): Both store efficiency and store openings are trending upwards, currently in a growth phase. Driven by rapid store expansion, revenue growth is expected to continue around 25% in H2 2025, with the net profit margin anticipated to keep improving.
2) Beverages: Undeterred by transient clouds, net store openings are the best indicator of brand momentum. Based on current net store opening growth rates, Guming and Mixue Group remain the preferred choices. Guming (01364): A leading beverage brand with significant expectation variance. Performance in H2 2025 is expected to accelerate sequentially, aided by high same-store sales growth and accelerated store openings. Mixue Group (02097): A global beverage leader, with solid barriers built on affordable pricing and high quality. Performance in H2 2025 is expected to continue high growth, supported by strong same-store sales growth and accelerated expansion for both the Mixue and Lucky Cup brands.
Risks include macroeconomic fluctuations, food safety issues, and store expansion falling short of expectations.
