Can Jia Guolong Save Xibei by Stepping Back?

Why It Matters

The leadership shake‑up and massive downsizing signal a critical inflection point for Xibei, highlighting broader challenges in China’s mid‑tier restaurant sector amid waning consumer spending.

Key Takeaways

• Jia steps down; Dong Junyi reinstated as CEO
• Headquarters staff cut from 500 to ~200
• 102 stores slated for closure; ~150 already closed
• Cash flow must turn positive by April
• New funding round includes employee equity incentives

Pulse Analysis

Xibei’s rapid ascent in the late 2010s, driven by a premium hot‑pot concept and aggressive store roll‑outs, masked underlying cost imbalances. The chain’s 300‑square‑meter flagship model, once a mall magnet, relied on high‑margin ingredients and above‑market wages, delivering gross margins near 70 % but net margins of only 3‑5 %. The pandemic exposed this fragility, compressing foot traffic and forcing lease renewals at higher rates, while the brand’s expansion into experimental formats consumed over RMB 1 billion without sustainable returns.

In early 2025 Jia Guolong attempted a rescue by re‑centralising control, lowering ticket prices by 20 % and refocusing on children’s meals. Yet the turnaround proved insufficient, prompting a dramatic leadership swap and a sweeping layoff campaign that reduced head‑office headcount by more than 60 %. Store closures accelerated, with 102 locations earmarked for shutdown and roughly 150 already closed, trimming the network from about 350 outlets to a potentially viable core. Simultaneously, Xibei pursued a Series A round, inviting primary‑market investors and offering staff equity stakes to shore up liquidity, while also offering modest dividend guarantees to retain morale.

The Xibei saga underscores a broader shift in China’s dining landscape: brands must balance premium experiences with price sensitivity, streamline operations, and maintain flexible capital structures. For investors, the case illustrates the risks of over‑expansion and the importance of disciplined cost management. Whether Xibei can reverse its cash‑flow trajectory by April will determine if it emerges as a leaner, more resilient player or becomes a cautionary tale of unchecked ambition.