China restaurants and freshly made drinks Report Interpretation

Overview

This monthly tracker examines China restaurant and freshly made drink trading trends through August 2026. Goldman Sachs finds that demand remains soft and weather was disruptive, but same-store-sales trends stabilized sequentially, with a clearer improvement among selected freshly made drink brands as difficult comparison bases eased.

Core views

Goldman Sachs characterizes August restaurant trading as still soft but sequentially steadier than July. Weather was a meaningful source of volatility: Yum China said disruption was greater than expected, especially in core markets and on weekends, while rainy weather in South China and typhoons in East China weighed on demand. The report nevertheless expects the comparison base created by delivery-subsidy support to ease after August, which contributed to sequentially better same-store-sales growth (SSSG) at several freshly made drink brands. Performance remained highly divergent by operator. Haidilao’s average table turn was down low-single-digits year on year but up mid-single-digits versus July, equivalent to 4.1x-4.2x turns and about 80% of its 2019 level. Goldman Sachs views that recovery level as sequentially stable but slightly below market expectations because the company had reported slightly positive year-on-year table turns in the first three weeks of August. Haidilao opened three company stores and three franchise stores, closed five stores, and did not yet show an acceleration in flagship-brand openings. Freshly made drinks showed improving trends as the base became less difficult. Guming’s SSSG turned positive in July-August, slightly ahead of management's original flat year-on-year expectation, driven principally by dine-in; franchisee profitability also improved meaningfully after May. Goldman Sachs considers this ahead of market expectations and an idiosyncratic result of new-product success and category expansion, including coffee. Improving store economics could support next year's expansion, although current franchisee cash-flow constraints have slowed openings this year. Chagee’s August average GMV also turned positive year on year after a low-single-digit decline in July, exceeding market expectations. Goldman Sachs attributes the improvement to faster product launches and promotional activity; Geelato had reached about 200 stores and contributed low-single-digits to SSSG in its calculation. The report cautions that promotions could pressure gross profit margin and that the durability of product momentum needs monitoring. Mixue, in contrast, remained cautious because its third-quarter comparison base was even higher. The 2Q26 reporting season reinforced the distinction between broad demand softness and company-specific execution. Yum China delivered slight SSSG acceleration despite the weak environment. In freshly made drinks, Guming reported +3% per-store GMV growth in 1H26 and Luckin's SSSG was slightly better than expected despite fast expansion, while Mixue China and Chagee recorded double-digit same-store-sales declines in 2Q26 that were below market expectations. Input costs generally remained favorable and price competition was described as rational, though individual margins differed with cost control, operating leverage and investment choices. Mixue's margin disappointed because lower operating leverage coincided with investment in supply chain, quality, digitalization, store operations and IP; Goldman Sachs expects margin pressure to persist longer into 2H26. Haidilao's plans to accelerate store and new-brand rollouts may also lift depreciation and amortization expense after several years of savings. Store-opening trends similarly diverged by model. Franchise-skewed Mixue and Guming expanded more slowly than last year because franchisee cash flow and tough SSSG comparisons constrained willingness to open stores. Conversely, direct-to-consumer-skewed Luckin maintained rapid expansion, though Goldman Sachs expects 1,500 net additions in 3Q26 versus about 2,700 in 2Q26, consistent with normal seasonality. Yum China's 2Q opening pace also exceeded Goldman Sachs estimates. Mixue, Lucky Cup and Cotti had net store closures in recent months according to Hongcan, while Chagee accelerated opening in August, supporting its SSSG recovery. Promotional activity increased seasonally around the "first cup of milk tea in Autumn" campaign but was generally rational in Goldman Sachs' assessment. Guming continued emphasizing coffee and dine-in while narrowing certain promotions, whereas Mixue used more coupons to acquire customers and encourage mini-program orders. In quick-service restaurants, DPC reported that average transaction price recovered from April's trough in July-August and planned to reduce company-funded discounts as platform subsidies normalized. Pizza Hut, however, launched a two-week buffet campaign, longer than comparable June and prior-September promotions. For Juewei, Goldman Sachs reported a 2Q26 EBIT miss versus its estimates, with gross margin down 3.2 percentage points year on year and 1.3 percentage points quarter on quarter. Stronger investment gains and a lower-than-expected tax rate supported net profit, but adjusted net profit was 86% below Goldman Sachs estimates. The institution cut its 2026-28 estimated net profit by 7%-10% to reflect a lower gross-margin profile, partly offset by higher investment gains. It maintained Sell and lowered the 12-month target price to Rmb6 from Rmb7, retaining a 14x 2026E P/E valuation multiple based on the historical minus-one-standard-deviation level.

Analysis framework

The report combines company disclosures and 2Q26 results with high-frequency indicators such as SSSG, table turns, store openings, app activity, weather, domestic flight capacity, commodity prices, promotion activity and new-product launches. It compares trends sequentially and year on year, then links demand, comparison bases, pricing, store economics, expansion models, costs and shareholder returns to company-level implications.

Methodology notes

• Industry AnalysisVolume-price decomposition

  Same-store-sales, table-turn, transaction-price, promotion and store-opening tracking

  The report uses operating-volume and pricing indicators to distinguish demand conditions, traffic recovery, promotional intensity and store-network expansion across restaurant brands.

• Valuation methodsP/E and PEG Valuation

  Juewei 12-month target price based on 14x 2026E P/E

  Goldman Sachs values Juewei at a forward price-to-earnings multiple of 14x, selected from its historical minus-one-standard-deviation level, to derive the Rmb6 target price.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Yum China target-price methodology using separate EV/EBITDA multiples for KFC China and Pizza Hut China

  The report's valuation table shows a sum-of-the-parts approach that values Yum China's major restaurant businesses separately.

Asset mapping & comparison

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

• Guming (1364.HK)

  Covered freshly made drink operator with improving trading momentum

  Strengths

  July-August SSSG turned positive; dine-in drove growth; franchisee profitability improved; successful product and category expansion supported outperformance.

  Weaknesses

  Store expansion has slowed this year because existing franchisees' cash flow constrains openings.

  Comparison

  Goldman Sachs views performance as ahead of market expectations and stronger than leading freshly made drink brands still posting negative SSSG.

  Risks

  Competition, store-network management, store productivity, expansion execution, cost pressures and food safety are listed risks.

• Haidilao (6862.HK)

  Covered restaurant operator with stable but below-expected table-turn recovery

  Strengths

  Table turns held around 80% of the 2019 level; average selling price was relatively stable; dividend payout was close to 100%.

  Weaknesses

  August table-turn performance was slightly behind market expectations and flagship-brand openings had not accelerated.

  Comparison

  Sequential recovery was stable versus June-July, but weaker than implied by slightly positive year-on-year table turns in early August.

  Risks

  Table-turn recovery, expansion pace, new-business execution, cost inflation, food safety and major-shareholder share disposal concerns.

• Chagee (CHA)

  Covered freshly made drink operator showing an August GMV recovery

  Strengths

  August average GMV turned positive year on year; faster product launches and Geelato rollout supported SSSG.

  Weaknesses

  Product promotions may be a gross-margin headwind.

  Comparison

  August performance was ahead of market expectations after a low-single-digit decline in July.

  Risks

  Sustainability of new-product performance, margin and profitability, store-network expansion, delivery subsidies, brand reputation and food safety.

• Mixue Group (2097.HK)

  Covered freshly made drink operator in a transition and investment cycle

  Strengths

  Announced its first dividend; continued investment in supply chain, quality, digitalization and operations.

  Weaknesses

  2Q same-store-sales declined by double digits; margin was a negative surprise and the third-quarter comparison base remained high.

  Comparison

  Opening pace slowed versus the previous year alongside franchisee cash-flow constraints, unlike rapid direct-to-consumer expansion at Luckin.

  Risks

  Store-network management, competition, food and operating-cost inflation, food safety and overseas expansion.

• Juewei Food (603517.SH)

  Covered restaurant operator with reduced earnings estimates and a Sell rating

  Strengths

  Investment gains and a lower-than-expected tax ratio supported reported net profit.

  Weaknesses

  2Q EBIT missed Goldman Sachs estimates, gross margin declined, and adjusted net profit was 86% below Goldman Sachs estimates.

  Comparison

  2026-28 estimated net profit was reduced by 7%-10% from prior estimates.

  Risks

  Stronger-than-expected store-productivity recovery, investment gains, easier raw-material-price movements and faster dining braised-food ramp-up.

Key data

• Haidilao August table turn4.1x-4.2xAbout 80% of the 2019 level; down low-single-digits year on year and up mid-single-digits versus July.
• Guming 1H26 per-store GMV growth+3%Cited as outperforming other freshly made drink operators amid a difficult demand backdrop.
• Domestic flight capacity+2% year on yearLatest reported domestic flight-capacity indicator.
• Luckin 3Q26 net store-addition estimate1,500Goldman Sachs estimate, compared with about 2,700 net additions in 2Q26.
• Juewei gross-margin change in 2Q26-3.2pp year on year; -1.3pp quarter on quarterPrimary driver of the EBIT miss versus Goldman Sachs estimates.
• Juewei adjusted net profit versus Goldman Sachs estimate86% below GSeReported despite support to net profit from investment gains and a lower-than-expected tax rate.
• Juewei 2026-28 estimated net-profit revision-7% to -10%Reflects a lower gross-margin profile, partly offset by higher investment gains.
• Juewei target priceRmb6Lowered from Rmb7; based on unchanged 14x 2026E P/E.

Impact & implications

Goldman Sachs sees a sector where stabilization is emerging but demand is not yet broad-based. Easier comparison bases, new products and improving store economics can create company-specific upside, while weather, uneven consumer demand, franchisee cash flow, margin investment and promotional sustainability remain important differentiators. The report also highlights increasing shareholder returns at several companies, alongside concern about Haidilao's major-shareholder sell-off.

Risks

• Weather disruption and continued soft restaurant demand could impede sales recovery.
• For Chagee, promotions supporting new products may pressure gross profit margin, and Goldman Sachs is monitoring whether product momentum can be sustained.
• Mixue's investment cycle and weaker operating leverage could extend margin pressure into 2H26.
• For Juewei, risks include stronger store-productivity recovery, higher equity-investment gains, easier raw-material-price movements and faster ramp-up of its dining braised-food business.

What to watch

• Whether the easing delivery-subsidy comparison base supports broader SSSG improvement after August.
• Weather conditions and their effects on restaurant demand, particularly in core markets and weekends.
• Guming's franchisee profitability and whether improving unit economics support store expansion next year.
• The sustainability and margin effect of Chagee's product launches and promotions.
• Store-opening pace across franchise-led and direct-to-consumer models.
• Juewei's gross-margin recovery, investment gains and development of its dining braised-food business.