XIAOCAIYUAN is trading short-term profitability for stronger dine-in foot traffic, as a deliberate strategic shift takes shape. On August 14, the company released its unaudited interim results for the six months ended June 30, 2026. For the first half of the year, revenue reached RMB 2.903 billion, a year-on-year increase of 7.0%. However, net profit fell 24.3% to RMB 289 million, and the net profit margin dropped to approximately 10.0% from 14.1% in the same period last year.

Revenue growth was primarily driven by store expansion and the dine-in segment. As of the end of June, XIAOCAIYUAN operated 824 stores, an increase of 152 stores from the previous year, representing a growth of about 22.6%. Of these, 351 stores are located in third-tier cities and below, contributing nearly 40% of the company's total store revenue.

XIAOCAIYUAN is a fully direct-operated, mass-market Chinese casual dining chain, known for its home-style cooking and New Anhui cuisine. Its business model is characterized by affordable pricing, direct-store expansion, and standardized supply chains. Delivery had previously been a key growth channel for the company. In 2025, delivery revenue grew 3.0% year-on-year to RMB 2.065 billion, accounting for 38.6% of total revenue. Delivery orders increased from 29 million to 34.3 million.

In the first half of this year, XIAOCAIYUAN's delivery revenue fell 10.6% year-on-year to RMB 945 million, with its share of total revenue dropping from 39.0% to 32.6%. Delivery orders declined from 16.8 million to 14.7 million. The company stated this was due to a proactive realignment of business priorities and a renewed focus on quality delivery. Concurrently, it has employed a strategy of "exchanging lower prices for higher volume" to drive dine-in traffic and improve table turnover rates. The rise in raw material costs as a percentage of revenue is linked to a dine-in price adjustment at the end of 2025, the launch of an 88VIP membership system, and proactive price concessions to consumers.

During the first half, XIAOCAIYUAN's dine-in revenue grew 18.1% year-on-year to RMB 1.945 billion, with its share of total revenue rising from 60.7% to 67%. The overall table turnover rate increased from 3.1 times per day to 3.5 times. However, the higher turnover has not yet offset the impact of price cuts and the delivery contraction on per-store revenue. The average dine-in spending per customer fell from RMB 57.1 to RMB 50.5, and sales at 617 comparable stores dropped 12.5% year-on-year to RMB 2.211 billion.

From a cost structure perspective, reducing the weight of delivery should have lowered platform fulfillment and promotional expenses. In the first half, XIAOCAIYUAN's delivery service fees and advertising and promotional expenses decreased by a combined RMB 26 million year-on-year. However, this saving was not enough to improve overall profitability, as raw material and employee costs increased by a combined RMB 297 million during the same period. Price cuts have compressed per-capita spending and comparable-store sales, while store expansion and increased dine-in traffic have driven up costs for ingredients, labor, and store operations. Consequently, the cost benefits from the channel adjustment have been offset by the costs of the price concessions and expansion. Whether newly matured stores can improve per-store revenue and whether supply chain efficiencies can absorb the pressure from rising labor and raw material costs remain to be validated by future data.