On 15–16 January 2026 Xibei, one of China’s better-known casual-dining chains, became the centre of a drama that mixed reputation, regulation and raw economics. Founder Jia Guolong announced a plan to close 102 stores—about 30% of the chain—while publicly accusing outspoken influencer Luo Yonghao of launching a campaign that damaged the brand’s business. The pair’s online confrontation escalated until both of their Weibo accounts were muted by the platform, and the debate migrated into private circle chats and media coverage.
The closures come against a stark operating backdrop. Jia has said same-store sales in January fell by roughly 50% year‑on‑year, and Xibei employs about 17,000 people, with some 4,000 directly affected by the planned shutdowns. For a full-service chain with high labour and ingredient intensity, a sudden collapse in customer traffic quickly translates into store-level losses because fixed or semi‑fixed costs—staff wages, utilities, depreciation—cannot be trimmed at the same pace as revenue.
The row traces back to September 2025, when Luo questioned whether Xibei was using pre‑prepared or “pre-made” ingredients and whether the chain’s pricing still matched its value proposition as a proper sit‑down restaurant. That challenge struck at the brand’s premium justification: if consumers begin to compare menu prices with the lower cost of packaged meal components, Xibei’s pricing power will be squeezed. Jia’s public rage and invitations to confront Luo were part reputation defence, part attempt to stem an erosion of consumer trust.
Social-media heat has real balance‑sheet consequences. Jia has alleged that the online storm led to staff being abused and humiliated in stores, elevating personnel-management costs and harming customer experience. Xibei also recently saw a turnover among PR leadership, raising questions about whether the company can mount a coherent external communications strategy at a delicate moment.
The company’s New Year period traffic figures—widely reported as about 500,000 visits—offer a partial and contested picture. Footfall does not equal profitability: in a market where discounting and subsidies have distorted consumer behaviour, rising order counts can coincide with falling average spend. In practice, sustaining margins in casual full‑service dining requires both steady transaction numbers and a high‑quality mix of orders at price points that absorb labour and supply inflation.
Closing 102 outlets is a blunt instrument intended to stop losses, but it carries strategic risks. The hoped‑for effect is to rebalance supply‑chain utilisation and concentrate profitable volumes into fewer outlets. The danger is that closures simply concentrate fixed costs, erode brand presence, and shift the financial burden onto remaining stores while leaving unresolved questions about customer loyalty and product positioning.
The dispute also touches on a broader policy and industry trend: demand for clearer rules on pre‑prepared food disclosure and labelling. Luo has signalled he will defer to stronger regulations, and Beijing’s appetite for consumer‑protection measures could shape how chains source and market their ingredients. For operators, regulatory clarity could be a double‑edged sword—improving consumer trust while increasing compliance and supply‑chain costs.
Xibei’s predicament reflects a wider inflection point for Chinese restaurant chains. The industry’s chain penetration is approaching the low twenties percent, and the next stage of consolidation depends on whether operators can stabilise single‑store economics without relying on heavy subsidies or relentless expansion. For investors and managers, the lesson is unpalatable but simple: brand resilience in the age of social media rests on authentic product claims, predictable service, and a supply model that can sustain margins when traffic softens.