Xibei, one of China’s better‑known casual dining chains, has announced the closure of roughly 120 stores and the loss of thousands of jobs, a dramatic contraction that company founders initially and awkwardly tried to pin on a single viral social‑media post. The closures leave the chain with about 260 outlets nationwide and follow a reputation crisis that began with a public dispute over the use of pre‑prepared ingredients in its kitchens. Financially the pain is evident: same‑store sales collapsed, and losses since September 2025 have exceeded 500 million yuan.
The flashpoint came in September 2025 when internet personality Luo Yonghao publicly mocked Xibei’s practice of using pre‑made components in dishes marketed as freshly prepared. Xibei responded with an aggressive defence, legal threats and a series of operational fixes — steep discounts, vouchers, replacing some pre‑made items in children’s meals, salary increases for staff and promises of greater transparency. Those measures have so far proved insufficient to reverse a steep fall in customer traffic or to repair the brand’s damaged trust.
Xibei’s plight is not unique. China’s dine‑in market has been under sustained pressure: customers are spending less, competition from delivery and lower‑cost fast food is intense, and rents and wages remain elevated in the first‑ and second‑tier city locations where Xibei concentrates its outlets. Industry analysts estimate the average survival time for new restaurants has fallen sharply, and senior industry figures have noted that per‑meal spending in some segments has slipped back to a level last seen a decade ago.
The public debate about blame has been polarised. Some commentators and citizens have accused Luo of ruining livelihoods with a single scathing post; others hold Xibei’s leadership responsible for strategic missteps and a failure to listen to customers. Founder Jia Guolong has conceded mistakes — from choosing a combative legal stance and opening up kitchen operations that highlighted inconsistencies, to using intemperate language in private chats — and has admitted to long‑standing shortcomings in heeding consumer feedback.
Objectively, the closures reflect accumulated structural problems rather than a single decisive act. The pre‑made ingredient controversy was a catalyst that exposed a fragile brand proposition: high fixed costs from prime retail locations, a product and labour model that cannot easily emulate the cost efficiencies of quick‑service operators, and a gap between marketing promises of “made‑to‑order” food and the customer experience.
Xibei has moved to contain immediate fallout by pledging to settle wages for departing staff, honour existing banquet orders and properly handle stored‑value cards. These steps aim to shield former employees and customers from the worst short‑term effects, but they do little to erase the reputational damage or the loss of market share in crowded urban food courts and malls.
The wider implications extend beyond one chain. The episode demonstrates the asymmetric power of influencers to act as accelerants in reputational crises, the fragile economics of mid‑market casual dining in modern China, and the speed with which consumer trust — once broken — can drive rapid consolidation. Policymakers and regulators may also take note: large‑scale closures that affect employment and local tax revenues tend to invite closer scrutiny.
For Xibei to survive as a scaled operator it will need more than damage control. Repositioning toward clearer value propositions, shifting outlet layouts away from the highest‑cost retail footprints, simplifying menus to regain operational control, and rebuilding trust through transparent sourcing and consistent in‑store practice are prerequisites. The chain’s future will hinge on whether it can translate these lessons into credible, observable changes before competitors and changing consumer habits make recovery impossible.