Revenue and profit both grew, and casual Chinese dining found the right growth path.

How can Xiaocai Garden enhance profit growth through a quality-price ratio strategy?

Author | Restaurant Owner Insight Qi Fan

Revenue and profit growth,

Leisure Chinese cuisine seems to have found the right growth path

Net profit of 715 million yuan, an increase of over 23% year-on-year, Xiaocai Garden delivered impressive results for 2025.

Recently, Xiaocai Garden announced its annual performance for the year ending December 31, 2025, with a net profit attributable to shareholders of 715 million yuan, a year-on-year increase of 23.16%; group revenue of 5.345 billion yuan, a year-on-year increase of 2.6%.

Compared to the 5.21 billion yuan in revenue for 2024, the increase for 2025 is modest, but net profit has seen substantial growth compared to the 581 million yuan in 2024.

Specifically, the proportion of raw materials and consumables to revenue decreased from 31.9% to 29.6%, and employee costs as a percentage of revenue dropped from 27.3% to 25.7%. A gross profit margin of 70.4% is leading in the Chinese full-service restaurant industry.

During the same period, the Green Tea Group released its annual performance announcement: it expects to achieve revenue of 4.76 billion yuan in 2025, a year-on-year increase of 24.1%; adjusted net profit of 509 million yuan, a year-on-year increase of 41%. Both revenue and profit have achieved growth.

From 2022 to 2024, the Green Tea Group’s revenue was 2.375 billion, 3.589 billion, and 3.838 billion yuan, respectively; during the same period, its net profit was 17 million, 296 million, and 350 million yuan, respectively.

The dual growth of revenue and profit, especially the substantial increase in net profit, indicates that Xiaocai Garden and Green Tea are exploring an effective growth path for leisure Chinese cuisine, which also represents the future development direction of this category.

Price Reduction: Exchanging Quality-Price Ratio for Repurchase Rate

In 2025, Xiaocai Garden’s dine-in revenue was 3.261 billion yuan, accounting for 61.0% of total revenue; takeaway revenue was 2.065 billion yuan, accounting for 38.6%. The business proportions of dine-in and takeaway remained largely unchanged compared to 2024.

The adjustment was more significant in per capita consumption for dine-in customers, which fell from 59.2 yuan to 56.1 yuan. The average order value for 2024 dropped from 65.2 yuan in 2023 to 59.2 yuan.

In response, Xiaocai Garden stated that this was not a passive price reduction, but rather the result of the company’s proactive adjustment of dish pricing strategy, using a higher quality-price ratio to achieve stronger consumer stickiness and repurchase rates.

The average order value for the Green Tea Group dropped below 60 yuan as early as 2024, with 2025’s per capita consumption at 54.6 yuan, a year-on-year decrease of 3%, with dine-in per capita consumption remaining stable at 58.0 yuan.

The Green Tea Group is supporting its “high value, low average order” extreme quality-price ratio positioning through deepening the supply chain and continuously optimizing the profitability model of single stores, continuously attracting consumers. Overall, the strategic direction of both brands is quite similar.

The proactive price reduction to solidify the quality-price ratio is driven by changes in consumer habits and a more intense competitive landscape for Chinese cuisine.

On the consumer side, people are spending more cautiously, and the demand for a “quality-price ratio” has reached unprecedented heights. On the other hand, regional cuisines such as Hunan, Yunnan-Guizhou, and Jiangxi cuisine are rising strongly, quickly capturing the hearts of young consumers with their unique flavors and “stir-fried over high heat,” challenging the “older peers” in the Chinese cuisine category.

Scale: Releasing Scale Effects to Reduce Costs and Increase Efficiency

In terms of brand scale, Xiaocai Garden has 807 stores, covering 14 provinces across the country, with a total of 819 stores including other brands. Furthermore, all Xiaocai Garden stores are directly operated.

The lower-tier market remains a development focus for Xiaocai Garden, with 42.5% of its stores located in third-tier cities and below. The aforementioned “proactive price reduction to solidify the quality-price ratio” strategy has shown good results in these lower-tier markets.

In contrast to the steadily developing Xiaocai Garden, the Green Tea Group is aggressively opening stores in 2025, with a net increase of 157 stores, a growth rate of about 30%, surpassing 600 operating stores by 2025. Green Tea Group has stores in first-tier cities, lower-tier markets, and overseas markets.

Behind this accelerated expansion is a change in the store model, as the Green Tea Group has initiated a “small store type + high efficiency” encryption strategy.

In recent years, the Green Tea Group has focused on developing small restaurants with a built area of 300 to 350 square meters or less, with new store efficiency increasing by 48.4% compared to older stores. The payback period for single stores has also significantly shortened, from 18 months to 12.6 months, with new store investment returns increasing to 73.1%.

Scale remains a priority for brand development, helping brands release scale effects on the cost side to lower procurement and operating costs, even amidst high cost pressures. During the expansion process, more brands are choosing a more stable single-store model like the Green Tea Group, which allows for rapid capital recovery, resulting in healthier cash flow and higher risk resistance.

Moreover, both financial reports mention the development of the supply chain.

Xiaocai Garden’s chairman, Wang Shugang, stated that its Anhui Ma’anshan central factory is expected to begin operations in the first half of 2026, covering the entire supply chain from procurement, production, warehousing, logistics to quality control, further strengthening cost advantages and quality stability, providing capacity support for future store expansion.

The Green Tea Group attributed its dual growth in revenue and profit to the “third-generation supply chain,” which solidifies the quality-price ratio advantage through the supply chain. The third-generation supply chain model can be simply summarized as “top suppliers + digital cold chain + smart kitchen.”

Deep cooperation with top suppliers ensures the quality and supply of ingredients, while large-scale centralized procurement can reduce costs and gain more support for research and development, achieving deep resource integration.

Both financial reports highlight that from expanding brand scale to building a robust store model, and then deepening the supply chain, reducing costs and increasing efficiency is an essential task. Brands are breaking through various obstacles in current restaurant operations through more refined management.

Overseas: Seeking New Growth Spaces

In its financial report, Xiaocai Garden mentioned that its overseas company would steadily advance international layout, starting with Hong Kong. The Hong Kong and overseas markets will open new growth spaces for the brand.

The Green Tea Group’s overseas expansion is proceeding more rapidly, with 14 stores established by the end of 2025, distributed in Singapore, Thailand, Malaysia, and Hong Kong, with overseas market revenue increasing 16 times year-on-year.

In the future, market growth from overseas business will significantly supplement and even enhance group revenue.

Overall, Xiaocai Garden and the Green Tea Group demonstrated a resilient growth path for leisure Chinese cuisine brands in the competition for existing market share.

Both brands achieved significantly better profit growth than revenue growth through proactive adjustments in average order value, optimizing store models, and deepening supply chain capabilities. Scale expansion is no longer the sole objective; refined operations and extreme quality-price ratios have become central. Meanwhile, preliminary layouts in overseas markets have opened new incremental spaces for the brand.

Both financial reports also send a clear signal: leisure Chinese cuisine is transitioning to a sustainable phase of endogenous growth, with future competition increasingly revolving around efficiency, supply chains, and brand repurchase rates.

Rotating Editor-in-Chief | Xiao Feng

Visuals, Illustrations | Quan Zijun

Operations | Quan Zijun