US food chain brands are entering or re-entering China at the fastest pace in years, relying on franchising and local capital partners to expand in a RMB 5.8 trillion (US$833.8 billion) catering market that is growing more slowly but consolidating rapidly around chains. We examine the data behind the trend.
On 3 August 2026, American burger chain Five Guys opened its first two Beijing outlets, drawing long opening-day queues at Xidan and Chaoyang Joy City malls. Its arrival in the capital reflects a wider shift in China’s food and beverage market, where US chains including Wendy’s, Texas Chicken, Popeyes and Chili’s are entering or accelerating expansion even as competition intensifies and weaker operators are squeezed out.
Food & Beverage Market Entry in China
Dezan Shira & Associates supports foreign food and beverage brands with China market entry, franchise structuring, partner selection, tax, compliance, and expansion strategy.For foreign brands, China is again emerging as a growth market: one increasingly defined by local partnerships, rapid localisation, tighter margins and industry consolidation.
China’s food franchising market overview
According to data from the National Bureau of Statistics (NBS), national catering revenue reached approximately RMB 5.8 trillion (US$859.85 billion) in 2025, up 3.2 percent year-on-year, a third consecutive year of growth, but a slowdown from 5.3 percent in 2024.
Momentum improved in Q1 2026, with revenue up 4.2 percent to RMB 1.46 trillion (US$213.9 billion), and catering now represents some 11.5 percent of total retail sales.
Beneath the headline growth, the market is churning at extraordinary speed. China counts roughly 8 million catering outlets; a USDA analysis records 3.9 million F&B openings against 3.5 million closures in 2024 alone, while per-capita catering spending fell to RMB 34.7 (US$4.90) by the third quarter of 2025. Revenue at above-scale catering enterprises even turned briefly negative in mid-2025, a first since 2023.
Food chains are consolidating the franchising market in China
The 2026 White Paper on the Development of Restaurant Chains in China, published by the China Chain Store & Franchise Association (CCFA) and Meituan, shows the restaurant chain rate rising from 21 percent in 2023 to 25 percent in 2025, up from just 15 percent in 2020. Franchising is the engine of this consolidation: CCFA’s Commercial Franchising TOP300 ranking counted 830,000 stores among China’s top 300 franchise enterprises in 2024, up 30.7 percent year-on-year, while the number of brands operating more than 10,000 stores doubled from nine to 18.
Delivery subsidy competition reshaped restaurant economics
No 2025 development affected restaurant economics more than the delivery price competition. JD.com’s entry into food delivery in February 2025 triggered a year-long subsidy battle with Meituan and Alibaba’s Taobao Flash, with the three platforms spending an estimated RMB 80–100 billion (US$11–14 billion) on subsidies and driving Meituan to a record RMB 19.8 billion (US$2.93 billion) operating loss in Q3 2025.
For restaurants, the effects were uneven. Higher delivery volumes supported order growth, but widespread discounting placed additional pressure on merchant margins, and Meituan reported that average dine-in spending had fallen to levels last seen around a decade earlier. In June 2026, the State Administration for Market Regulation (SAMR) released draft rules seeking to curb sustained large-scale subsidies and limit practices that shift promotional costs onto merchants.
For foreign operators, the lesson is that delivery platforms remain essential to customer acquisition, while pricing strategies and cost structures must account for continued promotional intensity and margin pressure.
US food franchising expansion in China
|
Brand |
Move |
Scale |
| Wendy’s | New franchise agreement with a local operator (May 2026) | Up to 1,000 stores in 10 years |
| Texas Chicken | Entry via operator Deke Shengtang, starting in Shanghai | 600+ restaurants planned |
| Popeyes | Returned to Beijing in April 2026 | 80+ outlets in Shanghai |
| Subway | Master franchise with Shanghai-based Furuishi (2023) | Around 500 stores added in two years, matching its previous 28 years |
| Domino’s (DPC Dash) | 235 net new stores in H1 2026 | 1,550 stores |
While new entrants are betting on China’s long-term consumer market, established US brands are expanding at even greater scale. Yum China opened 1,706 new stores in 2025 and aims to reach 20,000 outlets in 2026 and more than 30,000 by 2030, using a hybrid company-owned and franchise model in which franchisees are expected to account for 40–50 percent of new openings.
McDonald’s China, which recorded 4.6 percent comparable sales growth in 2025, is opening at least two restaurants per day as it works towards its goal of 10,000 locations by 2028.
End-to-End Advisory
From new market entry to complex setups, we tailor accounting services to meet evolving needs.Meanwhile, Starbucks and Burger King have both brought in major Chinese investors, highlighting how localisation partnerships are supporting the next phase of growth. Starbucks sold a 60 percent stake in its China retail business to Boyu Capital in a deal valuing the operation at about US$4 billion, with plans to expand from around 8,000 stores to as many as 20,000 over time, while CPE Yuanfeng acquired Burger King’s China business in 2026, underscoring continued investor confidence in the consumer market.
Key takeaways for foreign F&B brands
The 2026 market rewards scale, chain discipline, and realistic pricing. Headline growth of 3–4 percent masks fierce churn at the outlet level, and the delivery platforms’ promotional intensity continues to compress margins even as it drives volume.
The brands gaining share are those expanding through franchised and locally capitalised networks into lower-tier cities, which makes partner selection, unit economics, and digital membership ecosystems the battlegrounds that matter.
Dezan Shira & Associates supports foreign F&B brands with market intelligence and entry strategy, corporate establishment, and ongoing legal, tax, and HR compliance across its China offices. Contact us to speak to our local advisors.
