Closing 15,000 stores in a year! From guaranteed profit to increasing losses, a major retreat in mall dining.

(Source: Finance Gossip)

Author | Zeng Youwei

In the past, shopping malls fueled the growth of the catering industry; now, catering finds itself in a dilemma within shopping malls.

Nowadays, visiting shopping malls often reveals polarized scenes.

Walking into the B1 level, you’ll see milk tea shops, casual dining spots, and snack bars crowded with people; it’s common to see young people queuing up for check-ins; netizens even joke: it’s not that you can’t go to the 5th floor, but that B1 offers better value.

But once you reach the main dining area on higher floors, the scene changes.

Some popular stores attract large crowds of young people with their beautiful decor, trending topics, and marketing, waiting outside just to enjoy a “pretty meal.”

Meanwhile, the more down-to-earth restaurants that focus on reputation and taste are somewhat quiet and dull; most tables and chairs inside are neatly arranged, and visibly, there are more staff than customers.

Many stores have turned off their lights, posting notices of “upgrades and adjustments,” but in reality, they have quietly closed down.

Once, shopping malls were the “dream destination” for food brands, as if moving in guaranteed foot traffic; brands rushed to enter, hoping to exchange mall traffic for revenue.

But times have changed. Currently, the competition in mall catering is especially tough; casual dining areas see scattered customers, and delivery personnel outnumber dine-in diners.

Only on weekends and holidays does the scene become lively, giving merchants some hope.

Public industry data clearly shows that the outlook for mall catering is not optimistic.

According to incomplete statistics from Ying Shang Wang, by 2025, over 15,000 mall restaurants will have closed, with an average brand lifespan of only 15 months—far below the level ten years ago.

High rent, low foot traffic, impact from food delivery, changing consumer habits… under layered pressures, once-glorious mall catering is undergoing a silent but intense structural reshuffle.

The problem isn’t with any single store or mall; it’s with the entire model supporting mall catering, which is being redefined by the times.

Changing Identity of Mall Catering

From Traffic Driver to Traffic Tool

Today’s mall dining no longer has the confidence of “immediate profit upon entry,” and the survival logic of the industry has changed significantly.

In the past, it was about long-term operation and mutual prosperity; now, it’s short-term arbitrage—quick in, quick out; mall leasing no longer emphasizes complementary formats but treats catering as a convenient traffic tool.

The value of catering in malls is increasingly like a disposable “one-time consumable.”

According to Nestlé’s “2026 China Chinese Cuisine White Paper,” by 2025, the annual closure rate of mall catering will exceed 30%, with an average lifespan of only 15 months—almost halving compared to 25 months in 2015.

This means a restaurant’s journey from renovation to closure in a mall is rarely more than a year and a half, similar to fast-moving consumer goods, and shorter than many restaurant lifecycles.

This is largely due to factors like consumer downgrade, soaring costs, and declining foot traffic.

Add to that the approximately 20% commission on food delivery platforms, along with rising ingredient and labor costs, leading to 74% of stores seeing declining average check sizes.

Moreover, with high rent, expensive decor, and many staff inside malls, fixed monthly costs can reach hundreds of thousands, and once foot traffic halves, losses are inevitable.

In 2026, Xibei will close 102 mall stores, mainly because the high fixed costs cannot be sustained once foot traffic drops sharply.

In this brutal reshuffle, restaurant brands tend to split into two styles, each with different survival strategies.

One is “fast in, fast out”—for example, Ouji Dapao, which quickly entered Chaoyang Joy City, relying on trendy products and eye-catching marketing to rapidly grow; they can recoup investment in 3-6 months and then immediately move to the next mall.

This type of brand focuses on short-term traffic, harvesting mall flow for quick cash.

The other is steady community-based operation. For example, Dongfang Yichuan, with 60% of its stores located in communities, targeting local customers, maintaining relatively stable daily foot traffic, and with a lower closure rate.

These brands don’t rely on mall traffic but depend on product quality and repeat purchases to survive, allowing them to stay more stable during the industry downturn.

Furthermore, the mall leasing logic has shifted from “format complementarity” to “traffic tool”—as long as they can bring in visitors and generate buzz, the category doesn’t matter much; brands are recruited first, regardless of whether they are similar or sustainable long-term.

As a result, malls have become testing grounds for internet-famous stores—first inviting a trendy hotpot shop, then a popular dessert shop; with serious homogenization, consumers are experiencing aesthetic fatigue.

To capture traffic, malls increase rent subsidies for internet-famous stores; this squeezes the survival space for regular dining brands.

The final result is that mall catering is becoming more “internet-famous,” but with short lifespans and a high tendency for store closures.

In Beijing’s Super Heshenghui, over 30 restaurants closed within half a year of opening; after Xi’an Yuehui Plaza’s CGV closed, only a few brands like Xu Ji Seafood remained, with a floor vacancy rate of 60%.

This heavy toll is also reflected in the second-hand equipment market, where the ongoing wave of restaurant closures is evident.

According to Red Restaurant Network, in the first half of 2025, the recovery volume of second-hand restaurant equipment nearly doubled year-on-year, with large quantities of kitchen equipment being hauled away daily—many used for only a few months.

Behind this are countless stories of hardship in the restaurant industry. Equipment bought at high prices during renovation may be abandoned in less than a year, sold at low prices.

The booming second-hand equipment market just confirms the “fast in, fast out” nature of mall catering.

Reversal of Mall Floor Popularity

B1 Level Turns into the Top Tier

As mall catering shifts from “long-term symbiosis” to “short-term arbitrage,” the value segments of the entire mall also change; naturally, the value of different floors shifts as well.

Once overlooked, the B1/LG floors have now become the most competitive “golden floors.”

Conversely, the once-dominant main dining areas on higher floors are gradually becoming less crowded, with high vacancy rates, and their presence diminishes.

Today’s malls, especially those at subway hubs, see large crowds gathering, making B1/LG floors the true “first floors.”

Because subway exits lead directly to B1, consumers can shop immediately after getting off; plus, B1 mainly features “light dining, retail, and experiences,” which better meet the current young people’s demand for “fast consumption and fragmented experiences,” naturally becoming a hub of foot traffic.

In the past, B1 was mostly fast food and supermarkets, with limited formats and low space efficiency.

Now, B1 has transformed into a mix of trendy restaurants, retail, and IP experiences; milk tea shops, casual dining, trendy toys, beauty, and cultural creative brands cluster here, enriching the formats and boosting attractiveness.

Data shows that in 2025, the number of stores adjusting on B1/B2 floors in benchmark malls accounts for over 22% of total adjustments, making these floors the highest turnover; B1 restaurants account for 45%, with retail and cultural entertainment rising to 35%.

In Nanjing Gaochun Ba Baitan, Hema’s “Super Hema” opened with an average daily foot traffic of 20k in its first month, boosting overall mall traffic by 98% and significantly increasing sales.

As B1 becomes a “hot spot,” rents are bound to rise; some subway malls’ B1 rents already surpass those of the 2nd and 3rd floors.

This creates a vicious cycle: high foot traffic and high rent on B1 make it difficult for small and medium-sized restaurants to survive; while higher floors have lower rent but less traffic, making profits hard to achieve.

Thus, B1 is increasingly occupied by chain internet-famous brands and leading retail brands, pushing out small and medium restaurants, which can only retreat to higher floors or leave the mall.

As foot traffic on higher floors diminishes, vacancy rates increase, forming a negative cycle of poor traffic, falling rents, weaker brands, and even less traffic.

Dual Losses

Profit margins for mall restaurants are being squeezed dry

The more popular B1 becomes, the more it highlights the profitability dilemma of mall catering.

When the value of floors is inverted and foot traffic is diverted, the core contradiction of mall catering becomes apparent: a complete imbalance between costs and models.

High rent, high labor, high decor costs, combined with delivery diversion and declining dine-in traffic, turn mall restaurants from “cash flow pillars” into “loss-making ventures,” forcing many brands to withdraw.

First, costs are a huge mountain. Rent accounts for 20%-30% of revenue in mall stores, but only about 10% in community stores;

Mall stores require more staff—waiters and chefs—whose labor costs take up 25%-35% of revenue, while community stores can keep it around 15%.

Plus, mall decor standards are higher, with investments reaching hundreds of thousands per store, compared to tens of thousands for community stores. These pressures can crush a single store.

Second, the impact of food delivery. With the rise of delivery, dine-in traffic is being stolen; in 2025, China’s total catering revenue will reach 5.8 trillion yuan, with nearly 2 trillion yuan from delivery—accounting for nearly 30% of total catering revenue.

More young consumers prefer ordering delivery at home rather than queuing in malls.

To survive, mall stores have no choice but to focus on delivery; but with about 20% commission, plus costs for ingredients and packaging, profits are squeezed tight.

Moreover, mall stores’ delivery services compete with nearby community stores, offering little price advantage.

Many mall restaurants have become “delivery kitchens”; with few dine-in customers, they rely solely on delivery, which often doesn’t even cover rent and labor costs.

However, facing these difficulties, malls and brands are trying new models.

Some malls are experimenting with “rent + commission” sharing models; for example, Beijing Heshenghui charges a base rent plus 5% of delivery revenue, sharing risks with brands and easing initial pressure.

Brands are also adopting “all-day operation,” filling gaps for breakfast, late-night snacks, and afternoon tea;

Haidilao’s Beijing Changping community store offers all-day services—breakfast, hot dishes, hotpot—attracting repeat customers.

Additionally, brands are shifting from mall stores to community stores, reducing investment and costs.

Pei Jie Hotpot, for example, has focused on community stores since 2025, leveraging lightweight operations; each store can generate a monthly profit of 70k yuan after opening.

When the profitability of mall stores becomes unsustainable, lowering rent, operating all day, and returning to community-based models are becoming common strategies for survival.

Between Malls and Catering

From Mutual Achievement to Mutual Independence

The profitability of mall restaurants has cooled significantly, and the long-standing connection between malls and catering is gradually loosening.

Both sides, once in symbiosis, are gradually moving apart.

Some malls are shrinking their catering areas, introducing other experience-based stores, shifting toward higher space efficiency, and implementing “de-catering.”

In Q2 2025, high-end malls saw 30% of new restaurant openings, with some actively reducing catering space by 15%-20%.

In Guangzhou Tianhe City’s renovation of B1, 34 new brands and 10 first stores were introduced; focusing on trendy retail and leisure dining, foot traffic increased by over 20%, and overall space efficiency improved significantly.

Many malls are converting catering areas into cinemas, escape rooms, KTVs, and other experience formats to retain visitors.

Meanwhile, catering brands are “diverging” from malls, moving into communities and streets, practicing “de-malling.”

Hey Tea’s mall stores dropped from 80%-90% in 2019 to nearly 40% in 2025; Haidilao is also exploring community stores.

The reason is simple: community stores require less investment, have lower rent and labor costs, and can quickly recoup their investment—perfect for the current “light assets, high turnover” catering trend.

Plus, community stores are closer to consumers, with higher repurchase rates, and don’t rely on mall traffic, making them more resilient.

However, the relationship isn’t entirely severed; top-tier commercial districts and flagship malls still serve as high ground for brands.

In Sanlitun Taikoo Li, Amah Handmade Beijing’s first store is located here; as a gateway to the northern market, it attracts queues upon opening, increasing nearby foot traffic.

Many leading brands still maintain 1-2 flagship stores in core commercial districts to showcase their image, attract young customers, and boost brand awareness.

For top brands, mall stores are “windows” for the brand; for top districts, they are “traffic guides.” Both sides still hold value in their connection.

Final Words

The mutual departure of malls and catering isn’t accidental but an inevitable trend of industry development.

Under the pressures of consumer downgrade, soaring costs, delivery diversion, and format restructuring, mall catering is shifting from “structural prosperity” to “structural adjustment”; but after adjustment, it’s not retreat but a new beginning.

Malls are transforming into “experience-oriented and retail-focused” spaces, while catering brands are moving toward “community-based and lightweight” models to break through.

In the future, mall catering will not disappear but will evolve into “light dining and experiential” formats; meanwhile, the main battlefield for catering will shift back from malls to communities, returning to everyday life.

The golden age of mall catering may have ended, but a new era is dawning.