China restaurant sales likely slowed amidst spending crackdown: report
Yum China tops the sector for its strong franchise model and management.
China restaurant sales growth likely slowed to 4% in 2025 due to the impact of the government’s crackdown on extravagant dining, according to Morningstar’s report.
Looking ahead, it is anticipated that the rollout of a new child-care subsidy could lift restaurant spending in the fourth quarter of 2025 and into early 2026.
Wage inflation in the sector has remained below the national average of roughly 7%, slowing to 4% in 2024.
Labour costs are expected to remain a steady share of restaurant expenses through 2025.
Quick-service restaurants, where wages make up about a quarter of costs, are better positioned to manage labour costs.
Innovations such as automation, AI-assisted scheduling, and cross-unit employee sharing have improved operational efficiency and helped control labour expenses.
Yum China is the top pick in the Chinese restaurant sector, citing its dominant franchise network, strong supply chain, and strong management.
These advantages, the report said, support rapid expansion and consistent shareholder returns.
