Zhongtai Securities: Rising Franchising Rate of Dining Brands Favors Market Share Expansion of Leading Enterprises

China Securities Journal released a research report stating that, influenced by macroeconomic factors, combined with ongoing changes in market demand, further adjustments in market structure, and the rapid reshuffling of the catering industry, after stabilizing and rebounding in Q4 2025, it is expected to promote an increase in the chainization rate of restaurant brands, benefiting leading companies’ market share expansion. Recommendations to watch: 1) Fast food: leading Western fast food chains with large store scale, complete supply chain systems, excellent R&D innovation capabilities, and multiple store models; 2) Hotpot supply chain; 3) Convenience foods / semi-finished pre-made ingredients.

China Securities Journal’s main points are as follows:

Entering a new cycle of quality improvement and efficiency enhancement, with differentiated performance across categories

After nearly three years of adjustment, the catering industry has entered a new cycle of “refined operation + stock consolidation + diversified risk resistance.” Since October 2025, the year-on-year growth rate of social retail catering revenue has continued to outpace overall social retail growth. Benefiting from the longest Spring Festival holiday and the recovery of consumption scenarios, the industry shows a clear warming trend, with fundamentals improving marginally. From a demand perspective, consumers tend to favor high-frequency, highly experiential, and socially engaging categories, with hotpot, barbecue, and Western fast food categories growing faster than the industry average.

Policy support strengthened, and lower-tier markets are worth attention

On the policy front, reviewing the past three years shows continuous reinforcement of policies supporting consumption. The 2026 Government Work Report explicitly proposes implementing income-increasing plans for urban and rural residents, activating offline consumption, and stimulating the vitality of lower-tier market consumption. The bank believes that the catering industry may benefit from policy stimulation, and leading chain companies expanding into lower-tier markets could drive market share growth.

Risk warnings: Weak consumer demand, significant increases in raw material costs, underperformance of new product sales, delayed research report updates, distortion of third-party data, and deviations in market size estimates.