Impact of Economic Winter: 3.39 Million Restaurants Closed Last Year

In 2025, over 3 million restaurants in mainland China closed, leaving once-bustling eateries and popular dining areas eerily quiet. (Video Screenshot)

[People News] Spring 2026 has arrived, but the gradually warming temperatures have not brought the expected revival to China's restaurant industry. Instead, an unprecedented wave of restaurant closures has swept through, plunging countless business owners into a harsh winter.

The Data is Disheartening

According to the "2026 White Paper on the Development of Chain Restaurants in China" recently released by the China Chain Management Association in collaboration with Meituan, the number of businesses marked as closed in the Meituan system reached 3.39 million in 2025, a 9.4% increase from 2024. The industry is undergoing a new round of brutal market reshuffling, meaning that nearly 10,000 restaurants are disappearing or ceasing operations each day on average.

The white paper also indicates that by the end of 2025, there were approximately 7.47 million restaurants still in operation nationwide, reflecting a trend of increasing elimination in the restaurant market.

Among the closed businesses in 2025, 23.8% were new establishments that opened that year, while 41.3% had opened in 2024, together accounting for 65.1%. This suggests that nearly two-thirds of the businesses that closed had been operating for less than two years and were eliminated from the market due to insufficient competitiveness.

Additionally, according to the Hongcan Network's "2026 China Catering Industry Ecological White Paper" and the "China Chain Franchise Business Development White Paper 2026", the homogenization and internal competition within China's catering industry have intensified, resulting in fierce price competition that continually squeezes the profit margins of individual restaurants and lengthens the payback period. The rate of store openings and closures has surged significantly, exhibiting a clear trend of "fast opening and fast closing", which continues to shorten the lifespan of catering establishments.

Can't hold on any longer, closed down.

Before the festive red decorations for the Chinese New Year were fully removed from the windows, a wave of struggling restaurants began shutting down, posting transfer notices on their doors.

Online, many restaurant owners have shared videos, tearfully stating, "I can't hold on anymore," and "We've closed down."

One owner lamented, "I invested a million a year, and now I’ve lost my car and my house."

A distressed owner remarked, "Look, brothers, after the New Year, our entire restaurant, the whole hall, is empty, not a single table of customers. Now, it’s 8 PM during the dinner rush; how can we possibly do business like this?"

Two female owners expressed: "Closed down, closed down, closed down; we need to cry it out. We may have been overly confident, often wanting to prove our capabilities, but in the end, (crying) I really don’t want to say anything more."

A young owner shared: "We’ve been closed for three months, and all my life savings are gone. I’ve truly learned a harsh lesson from the Huaihua catering market; it’s not that I didn’t try hard, but it’s just too competitive. In just three months, I lost half a lifetime of savings, and what worries me most is how to explain this to my parents."

A netizen shared: "On a street that is five hundred meters long, there are seven Hunan restaurants, five of which have closed down, leaving only two struggling to survive. The owner, a fifty-eight-year-old man, has been a chef for half his life. He opened the restaurant himself, but in less than six months, he lost over three hundred thousand of his retirement savings." 

A male blogger commented: "This restaurant lost eighty thousand in just two months; this one lost one hundred twenty thousand; another lost two hundred fifty thousand; and over there, two more restaurants lost over three hundred thousand in the same period. This used to be a highly sought-after location, but now the landlord is directly renting it out, and it has been vacant for three months already." 

A female blogger stated in a video: "Have you all noticed? This year, the restaurant business is completely abnormal. Many seasoned restaurateurs are utterly confused. I have many friends in the industry, and they all feel that since last October, business has been plummeting. Regular customers have vanished, while competition has increased. It’s frustrating; you say the restaurant business is easy? Every month, someone is closing down; yet you say it’s hard? Every day, new restaurants are opening. It really feels like a besieged city." 

Clearly, this downturn in the restaurant industry began last year. 

Chinese netizens believe that physical restaurant establishments have entered their darkest period, with numerous time-honoured brands shutting down. (Video screenshot) 

Time-honoured businesses are also facing closures. 

This wave of closures has not only affected newer businesses with less established foundations but has also impacted many time-honoured brands. For instance, Shunfeng Restaurant, Mingguo Hong Mansion, and Shanghai Old Hotel, which hold historical significance, are also unable to escape this fate.

A recent report from the Beijing Business Daily reveals that Shunfeng Restaurant, known for its high-end Cantonese cuisine and seafood, has completely exited the Beijing market, closing all its locations in the city. The main store at the Agricultural Exhibition Centre is now vacant, and the Asian Games Village outlet is in the process of being demolished. Adding to the woes, the restaurant's parent company has been designated by the court as a high-risk entity, leaving consumers with prepaid cards that hold balances of up to 60,000 yuan unable to be redeemed. This year alone, the company has recorded 29 new judicial cases, primarily involving disputes over sales contracts, rental agreements, and labour issues, including unpaid supplier bills, property rents, and employee wages.

Shunfeng Restaurant made its debut in the Beijing market in 1993 and, at its height, boasted several locations in the city, gaining fame for its high-end Cantonese dishes and seafood. However, searches on platforms like Dianping and Meituan indicate that Shunfeng has no operational stores in major historical cities such as Guangzhou, Shenzhen, and Shanghai. Once a prominent Cantonese brand with 38 branches nationwide and a brand asset valuation of 966 million yuan in 2006, it is now facing near-total collapse.

Blogger 'Cai Xiaoxia' suggests that Shunfeng's exit is not a sudden downfall but rather a gradual 'chronic haemorrhage' that has unfolded over several years. This situation reflects the failure of an entire generation of high-end dining models in the current consumer landscape.

Historically, a significant portion of high-end dining relied on business banquets and 'face consumption,' but this demand has noticeably diminished. Concurrently, a surge of mid-to-high-end dining brands has entered the market, leading to rapid upgrades in product offerings, dining environments, and service quality, while prices continue to drop.

High rents, labour costs, and wastage in the high-end dining sector mean that when the average customer spending drops, profit margins are quickly squeezed. This pressure ultimately shifts from operations to finances, resulting in a surge of issues such as overdue payments to suppliers, disputes over employee wages, and difficulties in refunding stored-value cards. When cash flow breaks down, store closures become inevitable.

The collapse of the Chinese catering industry began even before the economic downturn hit. (Video screenshot)

Three main factors have contributed to this significant collapse in the catering sector, fundamentally reflecting the emptiness of the public's pockets.

1. 'Ascetic consumption' amid shrinking wealth

With the complete disintegration of the real estate myth, the balance sheets of the middle class have experienced a dramatic decline. As mortgage pressures persist while housing prices continue to fall, the business owners and white-collar workers who once supported high-end dining have turned to 'ascetic consumption.' The closures of Shunfeng in Beijing and the Old Hotel in Shanghai symbolise the systemic collapse of business networking and the consumption power of the middle class. The fact that even budget-friendly restaurants are shutting down indicates that the public can no longer afford to dine out, highlighting how the prolonged economic slump has drained the savings of ordinary citizens.

2. The collapse of the 'employment refuge' behind internal competition

Why does the catering industry display the absurd trend of 'quick openings and quick closures'?

This phenomenon is directly linked to China's alarming unemployment rate. Following massive layoffs in sectors such as education and training, the internet, foreign trade, and manufacturing, many of those laid off have funnelled their last severance payments into the catering industry, which has the lowest barriers to entry, in a bid to find a final employment refuge.

However, in an environment characterised by shrinking purchasing power, the influx of capital is quickly consumed by homogenised price wars. Statistics indicate that nearly two-thirds of closed businesses have been in operation for less than two years. This suggests that the restaurant industry is no longer a pathway to wealth, but rather a vast pit that incinerates the last savings of countless families.

3. Chain Reaction: From 'Rice Bowl' to 'Livelihood'

The wave of restaurant closures is creating a severe 'domino effect,' directly affecting the fundamental aspects of people's livelihoods. For instance, as unemployment rises, each restaurant that shuts down leads to the job loss of several, or even dozens, of waitstaff, chefs, and dishwashers. This group of low-wage workers often lacks job security, and with '3.39 million stores' in the mix, the number of affected lower-income individuals reaches into the tens of millions.

This situation has caused disruptions in the supply chain: from upstream agricultural wholesalers and meat retailers to downstream cleaning and logistics companies, all are facing challenges with payments and closures.

Moreover, there is the emergence of ghost towns in commercial real estate: shopping malls have lost the 'customer-attracting engine' of dining establishments, leading to further neglect of physical stores and intensifying the sense of desolation in urban commercial districts.

Some analysts have noted that after a period of rapid growth, China's restaurant industry has entered a phase of stagnation and even decline in recent years. By the first half of this year, the industry may experience an even more severe wave of closures.

https://www.ganjingworld.com/s/WqlOnZ23WY

△