Fast Food Enterprises Face Survival Crisis, Wallace Experiences Major Capital Retreat

Due to an inability to meet customers’ diverse needs, the once-large “King of Downstream Dining” Wallace has initiated delisting and is also experiencing a survival crisis.

Earlier this month, Wallace invested 100 million yuan to acquire all shares of Shandong New Food State Food Co., Ltd. Meanwhile, a month earlier, its parent company, Huashi Food, officially delisted from the National Equities Exchange and Quotations System.

Latest data shows that as of February 2026, Wallace’s operating store count has fallen to approximately 19,494, a significant reduction from its peak. Amid rising total liabilities of 2.108 billion yuan and rare negative growth in revenue, store partners caught in the squeeze are bearing the costs of retreat for this “King of the Downstream Market.”

Regarding the reasons for delisting, the official statement cites comprehensive considerations of current operations, market environment, and long-term strategic development plans, aiming to improve decision-making efficiency and reduce operating costs. This shift reflects a strategic adjustment in response to changing market competition.

Since its listing on the New Third Board in April 2016, Wallace has raised only 10 million yuan over nearly a decade, providing little substantive support for store expansion and business development. Conversely, listing incurs significant costs such as compliance audits, financial disclosures, and regulatory oversight. When the costs outweigh the benefits, quietly withdrawing from the NEEQ may be a pragmatic choice for Wallace’s next phase of development.

Founded in 2001, Wallace’s first store opened near Fujian Normal University. Brothers Huaiyu and Huaiqing from Wenzhou, who operated shoe stores in Fuzhou, seized the fast-food boom and invested 80,000 yuan to open the first “Wallace.” Initially, imitation of industry giants led to poor performance, but after launching the “Special Price 123” promotion, sales doubled. From then on, Wallace adopted a “low-price” strategy, targeting the downstream market.

Between 2019 and 2023, Huashi Food’s revenue skyrocketed from 2.5 billion to over 8.8 billion yuan. Its innovative “store crowdfunding, employee partnership, direct management” expansion model tied interests together, motivating employees and laying a system foundation for rapid growth.

In 2022, Wallace’s store count surpassed 20,000, exceeding the combined total of KFC, McDonald’s, and Dicos at the same time, becoming China’s first truly large-scale fast-food giant. Its vast store network gave Wallace strong bargaining power in upstream supply chains, enabling cost control through supply chain integration and supporting its core competitiveness of “low prices.”

However, this rapid expansion based on “cost squeezing + decentralization” also planted hidden risks. As scale grew, management issues surfaced, and food safety became a pain point. In recent years, Wallace has been mocked online as a “Jet Fighter” due to food safety concerns.

In response to frequent safety doubts, Wallace has periodically published restaurant inspection results since 2022 and has undertaken brand image rebuilding efforts, including launching a new logo, upgrading flagship stores, and opening themed stores. Its product focus shifted toward differentiated innovations like “whole chicken burgers” and regional specialties. Marketing efforts included sponsoring variety shows, signing celebrity endorsers, and collaborating with national comic IPs.

But Wallace faces more challenges. The Chinese Western fast-food market is highly competitive, with new Chinese burger brands like Tasting rapidly rising, surpassing 8,000 stores by 2025 and surrounding Wallace. Major brands like KFC and McDonald’s have introduced low-price combo meals, squeezing Wallace’s market space and diminishing the effectiveness of its low-price strategy. To find new growth points, Wallace attempted to launch a 9.9 yuan monthly coffee subscription in late 2025, but market response remains to be seen.

In recent years, competition in the foodservice industry has intensified. International fast-food giants continue deepening their presence in China with localized products and promotions, while emerging domestic brands, tea drinks, and delivery platforms have greatly diverted customer flow and changed consumer habits. Despite its large store network, Wallace faces increasing challenges in brand upgrading, product innovation, digital operations, and food safety management.

Financial data shows a complex picture. According to Huashi Food’s 2025 semi-annual report, the company’s revenue in the first half of 2025 was about 4.625 billion yuan, with a net profit attributable to shareholders of over 121 million yuan, up 35.32% year-on-year. However, behind this seemingly stable base, turbulence exists. Although revenue in the first half of 2025 was similar to the previous year, it marked the first negative growth period. Over a longer timeframe, growth has slowed from 24.36% in 2022 to 13.31% in 2024.

Wallace’s delisting also reflects the broader difficulties faced by the traditional fast-food sector. Rising costs, diversified consumer demands, increased health awareness, and rapid marketing model changes have made growth relying solely on scale and price advantages unsustainable. Brands need to focus more on enhancing product quality, service experience, and supply chain resilience to build long-term core competitiveness.

(Author: Li Qiang)