May Restaurant Trends Soften, Brand Performance Diverges, Fresh Beverage Sector Faces High Base Pressure

Overview

This report is Goldman Sachs' monthly tracker update on the China restaurant industry, covering May 2026 data. The core conclusion is that May industry trends softened sequentially vs. April, with moderate demand during the Labor Day holiday, weak consumer sentiment, and adverse weather acting as headwinds. Performance varied significantly across brands: Haidilao's table turnover rate was slightly negative year-over-year, Tai Er remained relatively robust, and fresh beverage brands faced普遍的 high base pressure. The report maintains Buy ratings for certain leading brands, citing category expansion and new product strategies as support, though the overall consumption environment requires close monitoring.

Core views

Industry Trend: Same-store sales growth in May weakened sequentially vs. April. Moderate demand during the Labor Day holiday, coupled with weak consumer sentiment and adverse weather, were the main drag factors. Multiple brands reported sequential and/or year-over-year declines in takeaway ratios, which is a positive signal indicating recovery in dine-in traffic. Performance showed clear divergence. Haidilao's average table turnover rate in May turned slightly negative year-over-year (vs. mid-single-digit % positive growth in April). Management attributed this to the Lunar calendar shift for Dragon Boat Festival (May 2025 had one day falling in the festival period), acting as a headwind. Table turnover recovered to low-to-mid 80% of 2019 levels, slightly above ~80% in April, but still below Q1 levels. In May, Haidilao opened 4 company-operated stores and 1 franchise store, while closing 4 company-operated stores. Tai Er recorded low double-digit % same-store sales growth in Mainland China, slightly lower than April but higher than Q1 levels (Q1 Mainland China SSSG was 10.9%). This indicates post-holiday acceleration, as rainy weather in South China during the Labor Day holiday acted as a headwind (Labor Day period saw mid-single-digit % to high-single-digit % same-store growth). New model stores continue to drive growth, while old model stores also posted positive same-store growth, ranging from mid-single-digit % to mid-single-digit %. However, Jiutaijiu and Song brands face continued pressure, with same-store sales trends similar to Q1 (Song/Jitutaijiu at -20%/-11%). Fresh Beverage Sector faces high base effects. Brands in May generally faced pressure on same-store sales growth. Nayuki expanded its single-store sales decline to -24% year-over-year (vs. -11% in April), while leading brands demonstrated more resilience supported by category expansion/new products. Regarding pricing, fresh tea brands launched more pricing promotions in the coffee category (e.g., Gongyu introduced weekly CNY 9.9 coffee coupons; Mixue Bingcheng introduced buy-one-get-one-free coupons for stores equipped with coffee machines). Luckin Coffee also offered daily CNY 9.9 discounts on selected SKUs from June 8-21. However, the report suggests that promotional intensity and scale remain restrained, mainly targeting off-peak hours and dine-in sales.

Analysis framework

Goldman Sachs employs a high-frequency data tracking methodology for the restaurant industry, focusing on the following key pillars: First, tracking operational metrics such as same-store sales growth (SSSG) and table turnover rates, comparing sequential month and year-over-year changes to identify trend inflection points. Second, analyzing performance during holidays (e.g., Labor Day), examining calendar effects and external factors like weather on results. Third, monitoring store expansion rhythms for each brand, including new openings, closures, and net additions to assess growth sustainability. Fourth, observing changes in pricing and promotional strategies to judge competitive landscape and margin pressure. Fifth, referencing macro high-frequency indicators such as domestic flight recovery rates as proxies for consumption activity. Finally, combining valuation comparisons (P/E, EV/EBITDA) and implied upside from target prices to provide rating recommendations. This approach allows investors to capture marginal industry changes timely, rather than relying solely on quarterly financial reports.

Methodology notes

• Industry Analysis FrameworkVolume-price decomposition

  Same-Store Sales Growth (SSSG) Analysis

  Same-store sales growth is a core metric in the restaurant industry, excluding the impact of store expansion to purely reflect single-store operating capability. The report tracks monthly changes in SSSG across brands to identify which brands can maintain growth amidst weak consumption, thereby judging brand competitiveness and share trends.

• Industry Analysis FrameworkSupply-demand framework

  High-Frequency Data Tracking (Table Turnover, Flight Numbers, etc.)

  The report uses high-frequency indicators like table turnover rates and domestic flight numbers as leading indicators for industry prosperity. Table turnover directly reflects customer footfall and operational efficiency, while flight numbers reflect business and tourism travel activity. Together, they help predict changes in restaurant demand in advance, rather than waiting for quarterly financial reports.

• Valuation MethodologyPE/PEG valuation

  P/E Multiple Comparison

  The report compares valuations of various restaurant names using 2026 expected P/E multiples (e.g., Mixue Bingcheng 24x, Gongyu 23x, Haidilao 10x EV/EBITDA). By comparing against historical valuation ranges and peer levels, it judges whether current stock prices are reasonable and sets target prices.

• Valuation MethodologyEV/EBITDA valuation

  EV/EBITDA Valuation Multiple

  For capital-intensive or high-depreciation restaurant enterprises, the report uses EV/EBITDA as a supplementary valuation metric (e.g., Haidilao 10x, Jiutaijiu 7x, Master Ding 5x). This metric excludes capital structure and depreciation policy impacts, making it more suitable for cross-company comparisons.

• Event Arbitrage and Behavioral FinanceExpectation Gap/Management

  Actual Performance vs. Market Expectations Comparison

  The report compares actual operational data for each brand against Goldman Sachs expectations (GSe). For example, Tai Er/Jiutaijiu largely met expectations, Song lagged behind, and Master Ding's China mainland operations lagged expectations while the US market slightly beat them. This expectation gap analysis helps investors gauge potential stock catalysts or risks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Haidilao (6862.HK)

  Neutral Rating; table turnover recovered to low-to-mid 80% of 2019 levels, but May saw slightly negative YoY growth

  Strengths

  High brand awareness; table turnover recovery level slightly higher than April

  Weaknesses

  May table turnover turned negative YoY; recovery level still below Q1; slow net store additions

  Comparison

  Weaker performance compared to Tai Er's low double-digit % same-store sales growth

  Risks

  Table turnover recovery below expectations; expansion speed slower than expected; uncertainty in new businesses (e.g., franchise model); cost inflation; food safety issues

• Jiutaijiu (9922.HK)

  Buy Rating; Tai Er remains robust, but Jiutaijiu and Song brands face pressure

  Strengths

  New model stores driven growth for Tai Er; post-holiday acceleration shows momentum; old model stores still posting positive growth

  Weaknesses

  Jiutaijiu and Song brands saw same-store sales of -11%/-20%; pressure continues

  Comparison

  Tai Er roughly in line with GS expectations; Song lagged behind 2026 H1 expectations

  Risks

  Demand weaker than expected; uncertainty regarding sustainability of new store models; competition and pricing risks; margin risks; food safety

• Master Ding (2723.TW)

  Neutral Rating; significant contraction in China mainland, but acceleration in US market

  Strengths

  US market sales accelerated to +4%/+8% YoY in Apr-May; store expansion in line with expectations

  Weaknesses

  China mainland sales down -46% YoY; implied store count declined >30% YoY; transitioning to franchise model

  Comparison

  China mainland performance lagged GS expectations (~-40%); US market slightly exceeded expectations

  Risks

  Intensified competition in China mainland and Taiwan; uncertain store expansion speed; food safety; exchange rate volatility

• Mixue Bingcheng (2097.HK)

  Buy Rating; Target Price HKD 450, implying approx. 71% upside

  Strengths

  Rapid expansion of store network; coffee machine subsidy strategy drives category expansion; IP marketing ('Snow King') enhances brand power

  Weaknesses

  High complexity in managing store network; execution risk in overseas expansion

  Comparison

  Relatively resilient in the fresh beverage sector, receiving Buy rating

  Risks

  Store network management; competition; food cost/inflation operating costs; food safety; overseas expansion

• Gongyu (1364.HK)

  Buy Rating; Target Price HKD 36, implying approx. 61% upside

  Strengths

  Dine-in experience and store network quality improvement are strategic priorities; continuous category expansion

  Weaknesses

  Capacity to manage large store networks; store expansion speed may be below expectations

  Comparison

  Shares Buy rating with Mixue Bingcheng; valued at 23x 2026 expected P/E

  Risks

  Store network management; store expansion below expectations; poor store productivity; intensifying competition/price wars; rising store costs; unexpected franchise subsidies; insufficient economies of scale in geographic expansion; food safety

Key data

• Haidilao Table Turnover Recovery LevelLow-to-Mid 80% vs. 2019Slightly higher than April's ~80% in May, but still below Q1 levels
• Tai Er China Mainland Same-Store Sales GrowthLow Double-Digit %Slightly lower than April in May but higher than Q1's 10.9%
• Master Ding China Mainland Sales-46% YoYApril was -48%; store count stable at 290-300
• Nayuki Single-Store Sales-24% YoYApril was -11%; decline widened
• Master Ding US Market Sales+4%/+8% YoY (Apr-May)Local currency basis; accelerated after Q1 weather headwinds
• Haidilao May Store ChangesOpen 5, Close 4Includes opening of 4 company-operated and 1 franchise store; closed 4 company-operated stores
• Domestic Flights vs. 2019Approx. +0% to +20%May 2026 data, reflecting travel recovery status

Impact & implications

The report posits that the current restaurant industry operates in an environment of weak consumer sentiment and adverse weather, with overall trends softening but divergence across brands intensifying. For investors, this means focusing on selective stock picking rather than seeking industry beta opportunities. Leading brands, supported by category expansion, new product strategies, and more efficient store models, maintained relatively robust performance despite headwinds (e.g., Tai Er post-holiday acceleration, Buy ratings for Mixue Bingcheng and Gongyu). The fresh beverage sector faces high base pressure, but the decline in takeaway ratio is a positive signal indicating dine-in recovery. Regarding pricing, although coffee promotions have increased, the overall intensity remains manageable, mainly targeting off-peak hours, unlikely to cause significant margin pressure. The report highlights the need to monitor stabilization of consumer sentiment and cost risks, particularly food cost inflation which could erode margins.

Risks

• Continued weak consumer sentiment affecting dine-in and takeaway demand
• Adverse weather (e.g., rain) impacting holiday foot traffic
• Intensified competition leading to price wars, eroding margins
• Food cost inflation (fluctuations in wholesale prices for pork, beef, chicken, etc.)
• Food safety incidents triggering brand reputation risks
• Store expansion speed below expectations or increasing management complexity
• Exchange rate volatility affecting multi-national operators (e.g., Master Ding)
• High base effect putting pressure on growth in the fresh beverage sector

What to watch

• Whether consumer sentiment stabilizes and pricing趋于 stability
• Trends in same-store sales growth for all brands in June and Q2
• Whether takeaway ratio continues to decline and progress in dine-in recovery
• Whether promotional intensity escalates and its impact on margins
• Whether Haidilao's table turnover recovery returns to positive growth
• Sustainable performance of Tai Er's new model stores
• When the high base effect for fresh beverage brands will be absorbed
• Trend in food cost inflation (wholesale prices for pork, chicken, etc.)
• Recovery progress of macro high-frequency indicators such as domestic flight numbers