The festive atmosphere of the 2026 Spring Festival has not yet faded. Countless young people rushing from counties to cities often encounter the familiar red sign of Wallace on street corners at the crossroads of their return trips home.

A $1 burger, three for $3, and all-you-can-eat meal sets for $20—this fast-food weed rooted deep in China's lower-tier markets was once the first burger for countless small-town youths. Over 20 years, it opened 20,000 stores, and at one point, its number of outlets surpassed the combined total of KFC and McDonald's in China, making it the undisputed king of Chinese burgers.

But no one expected that just after the New Year, this legend would face a major turning point.

On February 12, Wallace’s parent company, Huashi Food Co., Ltd., announced the official delisting from the New Third Board, bringing an end to a decade-long capital journey under the guise of aligning with the company's long-term strategic planning, improving operational efficiency, and reducing costs.

The capital market is cold-hearted. When you choose to exit, no one believes it’s a victorious stance.

By the first half of 2025, Huashi Food’s total liabilities had reached 2.108 billion yuan, with the debt-to-asset ratio climbing to 73.73%. In the first half of 2025, the company even experienced its first revenue decline since its founding.

A generation of burger kings is undergoing a silent retreat.

1⃣ The Myth of Low Prices
The story of Wallace began in 2001 on the streets of Fuzhou. Brothers Hu Huaiqing and Hu Huaiyu opened the first Wallace burger shop near Fuzhou Normal University. At that time, China’s Western fast-food market was dominated by the two giants, KFC and McDonald's, which held core commercial districts in first- and second-tier cities. A burger costing over 10 or 20 yuan was a luxury for ordinary people in counties and towns, a rare treat.

Initially, the Hu brothers mimicked Western fast-food pricing and models, but their 20-plus yuan fast food offerings lacked cost-effectiveness and went unnoticed. Facing desperation, they launched a revolutionary pricing strategy—123: Coca-Cola for 1 yuan, chicken leg for 2 yuan, burger for 3 yuan—that rewrote China’s fast-food landscape.

This near-suicidal pricing, seen as a nuclear-level blow in today’s terms, caused long queues to form at school gates in Fuzhou, day and night.

It must be said that Wallace’s rise shares similarities with Mixue Bingcheng. Both precisely targeted the lowest tier of China’s consumer market: under absolute low prices, brand halo, dining environment, and even taste differences all had to give way to the wallet.

Over the next 20 years, while KFC and McDonald's fought fiercely over prime locations in CBDs of first-tier cities, Wallace, holding onto the word “low price,” quietly infiltrated counties, towns, urban villages, and campuses—areas often dismissed by Western fast-food chains.

This was a complete rural encirclement of cities. During China’s nascent era of county-town commerce, Wallace capitalized on two core era dividends: first, the explosive consumer demand driven by urbanization; second, the blank space in domestic chain restaurants—markets overlooked by giants—becoming Wallace’s blue ocean.

What truly enabled Wallace to achieve exponential growth was its innovative “store crowdfunding and employee partnership” model.

This model is arguably the most covert expansion secret in China’s restaurant industry. It does not accept external individual franchisees; all new store equity is split into three parts: about 30% held by the headquarters, responsible for supply chain, quality control, and brand management; most shares held by store managers and veteran employees, responsible for store operations; the remaining shares are open to regional partners.

This approach fully binds the interests of employees and stores, solving both funding and management issues for expansion.

Thanks to this model, Wallace opened over 14,000 new stores from 2019 to 2022, and by 2023, its store count exceeded 20,000, making it China’s first Western fast-food brand to enter the 20,000-store club.

In that era of rapid growth, Wallace leveraged extreme low prices to scale, used economies of scale to reduce supply chain costs, employed partnership systems for low-cost expansion, and relied on store fission to feed back profits into the supply chain—forming a seemingly invincible business cycle.

Over 20 years, it transformed Western fast food from a luxury consumption for urban youth into a ubiquitous livelihood dining option in counties and towns, rewriting China’s Western fast-food industry landscape.

2⃣ The Truth Behind Delisting
From peak to decline, Wallace’s glorious 20,000 stores faded into a somber delisting in less than four years, due to three long-standing, yet insurmountable, death lines.

The first line is the complete loss of the low-price moat.

Wallace’s core for two decades was extreme low prices. But this once invincible logic no longer works in today’s market. The price advantage it relied on is now under full siege from competitors.

Ahead are the Western fast-food giants lowering their prices:
As first- and second-tier markets plateau, KFC and McDonald's are aggressively penetrating lower-tier markets. By 2025, KFC added 1,349 new stores, nearing 13,000 total; McDonald's launched the 13.9 yuan “1+1” combo meal, pushing prices into Wallace’s core territory.

Behind are emerging domestic challengers:
Tastin’s founder, Wei Youchun, was once a Wallace franchisee. He understands Wallace’s strengths and weaknesses better than anyone. With China’s burger differentiation, hand-made freshly baked buns, and comparable affordable prices, Tastin rapidly grew to over 10,000 stores by November 2025, ranking just behind Wallace and KFC, capturing Wallace’s core customer base.

On one side, international giants dropping prices; on the other, new domestic brands employing differentiated, lower-tier strategies—Wallace’s low-price advantage has vanished. To defend its market, Wallace had to push prices to the limit, at the cost of continuous profit deterioration.

Wallace’s long-term gross profit margin remained extremely low at 6%–7%. After deducting rent, labor, and marketing expenses, net profit margins were razor-thin. Without profits, there’s no money for product innovation, brand upgrades, or quality control improvements. Ultimately, it fell into a death cycle: the lower the prices, the less money, and the less money, the more it had to rely on low prices.