Xibei Won’t Back Down

Recently, the topic “#Xibei waiter payslip#” trended again, and the claim that some Xibei frontline staff take home RMB 8,000–9,000 per month genuinely surprised many people.

It’s honestly hard to count how many times Xibei has landed on the trending list in the past three months. From publicly acknowledging mistakes in a year-end interview, to handing out pillows to employees around New Year’s, to a wave of “comeback” coverage after the holiday, Xibei has quickly become one of the most visible—and most discussed—brands of this season.

According to reporting that included on-site visits by journalists, Xibei drew roughly 500,000 customer visits nationwide during the New Year period. Traffic across its stores reportedly held steady even as certain subsidies ended, and in Beijing, multiple locations still saw peak-hour queues during the holiday.

On the surface, Xibei’s much-talked-about “100-day reform” appears to be working. Public sentiment seems to be climbing from a low point, and founder Jia Guolong no longer has to worry—at least rhetorically—about “going back to the grasslands to raise sheep.”

But beneath the heat and the optimism, a more practical question remains: how does Xibei solve its next set of survival challenges?

A 5% profit margin, a 20% price cut—how does this work long term?

Jia Guolong’s recent interviews have been filled with apologies, corrections, and commitments to change, including the dramatic line that if he can’t make Xibei work, he’ll “go home and raise sheep.” The sincerity is clear—but the numbers raise new doubts about the business model.

He said Xibei’s average spend per customer is now around RMB 75, down roughly 20% from before, and that once prices have been reduced, they won’t be raised back—the change is positioned as long-term.

Customers have felt that shift in real terms. Several dishes have been repriced downward—for example, items like grilled fish and desserts saw noticeable reductions. Price cuts are not a slogan here; they’ve been implemented across the menu.

The dilemma is what happens next. Jia has also stated that Xibei’s average profit margin in the first half of 2025 was no more than 5%, and that the books can be checked.

Food service is a classic “high gross margin, low net margin” industry. Even strong-growing chains can operate on slim net profit rates. So a “no more than 5%” claim is plausible—and if true, it creates a real tension: if your margin is already that thin, what supports profitability after a 20% price cut?

Many people initially assumed discounts and coupons were temporary tactics. If prices are now locked in at the lower level, then without major improvements in efficiency, product structure, or throughput, Xibei risks drifting into a situation where income fails to cover costs.

There are plenty of internet-era stories about “lose money first, survive first, profit later”—but those usually happen in land-grab tech cycles or venture-scaled innovation plays. Restaurants don’t get the same runway. The last two years have been brutal in food and beverage, with some operators forced into extreme measures just to stay afloat. A large chain like Xibei has much less room to run unprofitably without consequences.

And that’s before we get to the next cost pressure: labor.

Rising labor costs: “being good to employees” isn’t free

One of Xibei’s major public messages during this period has been that it treats staff well. After the prepared-food controversy, Xibei announced pay increases for frontline employees and introduced compensation mechanisms such as “grievance” subsidies.

Jia does appear genuinely committed to improving employee welfare. But it’s also worth noting that wage increases have been an industry-wide trend—labor is getting more expensive everywhere.

Industry data cited by Chinese media suggests that service and kitchen wages have been climbing, and that labor costs as a share of revenue have already become a heavy burden for many restaurant operators. With minimum wage standards rising in multiple regions and compliance becoming more rigorous, “fully compliant” employment costs are expected to take an even bigger share of operating expenses.

Jia has even spoken about learning from Haidilao by cultivating “happiness ambassadors” who can create a festive experience—think magic tricks and birthday celebrations—framing it as “Magic birthday parties, happiness at Xibei.”

He has said he calculated that this could raise labor costs by around 5 percentage points, pushing labor share from roughly 30% to 35%.

That’s a meaningful jump. And it brings a second-order challenge: capability.

“Freshly made” reforms require skills—and skills cost money

Historically, Xibei has not always required highly specialized culinary talent for every role. Some past reports even pointed out gaps such as kitchen managers lacking formal credentials—fueling online sarcasm that “there may not even be chefs in the kitchen.”

Now, as Xibei introduces more dine-in, freshly prepared processes, the operational requirements inevitably rise.

Xibei has reportedly adjusted multiple items to be prepared on-site—skewers to be assembled and grilled in-store, chicken dishes to be cooked from raw ingredients in the restaurant, porridge components to be simmered with fresh produce rather than added as pre-made bases.

That shift changes the staffing equation. Employees who previously handled simpler reheating or assembly tasks may now need real culinary training. Chefs also cost more than general service roles, and beyond wages, Xibei may face additional spending on recruitment, training, quality control, and new kitchen workflows—not to mention the complexity added to supply chain and menu development.

And when operational changes move fast, execution errors become more likely. Some investigative reports have described store-level inconsistencies and ingredient handling disputes that—regardless of the full facts—create reputational risk when the public is already watching closely.

Even if certain controversial ingredients were used only for staff meals (and not for customers), that still risks conflicting with the brand’s public stance of “caring for employees,” because the message consumers hear is about values, not technicalities.

So the core question sharpens: Can Xibei sustain a model where prices fall significantly while labor and operational complexity rise—especially if profit margins were already thin?

Financing and the IPO question: what story does Xibei tell next?

Corporate data platforms show that Xibei has completed multiple financing rounds since 2017, with the most recent reported financing occurring in early 2025. Capital injection can help, but it’s rarely a permanent solution for a large restaurant chain if unit economics don’t stabilize.

That leads to a tough fork in the road:

If Xibei can truly operate at under 5% profit margin and still cut prices by 20%, then either

1. the “5%” figure isn’t reflecting the whole picture, or
2. earlier pricing may have been higher than the market could comfortably accept.

This matters because Xibei has spoken publicly about IPO ambitions. In a past New Year message, Jia mentioned plans to build stronger financial statements in the 2023–2025 window to prepare for a possible 2026 listing.

Where things stand now, an IPO timeline becomes harder to read. The more urgent priority is rebuilding trust and restoring a healthier profit structure—otherwise the market story becomes unstable.

Why so much exposure? The children’s-meal strategy may be the reason

Since the prepared-food controversy began, Xibei has rarely left the public stage. Instead of “cooling down” after apologizing and reforming, the brand stayed highly active, repeatedly showing up on trending lists.

It’s reasonable to ask: is this continuous exposure partly strategic?

In many crisis playbooks, brands apologize, fix the issue, then deliberately reduce visibility to avoid fresh sparks. Xibei has done the opposite—persistently active, frequently newsworthy, and constantly narrating change.

Some moments were clearly unplanned and risky, including incidents where external voices reignited debate. But interestingly, those episodes also shifted attention in ways that sometimes made Xibei look more like a “party pulled into the storm” than the storm’s creator—giving the company room to reframe itself through actions like wage increases, lower prices, and visible queues.

So why take that risk?

A strong answer may be: children’s meals.

Xibei’s growth has long been tightly connected to family dining and kids’ meals. It cannot afford for a phrase like “two-year-old broccoli served to a one-and-a-half-year-old” to become the permanent internet shorthand for its children’s offerings.

For many families, adults can compromise on their own meals, but parents often refuse to compromise on what their children eat. That consumer psychology has historically supported Xibei’s premium positioning.

If the core audience for children’s meals is now largely parents born in the 1990s and 2000s—highly online, highly vocal, and highly influenced by social media narratives—then simply “putting out the fire” isn’t enough. Xibei may feel it must make its improvements travel just as far as the controversy did.

In that sense, Xibei isn’t just clearing rubble from a road; it’s trying to rebuild the road itself—because the route it wants to drive in the future is family dining, especially children’s meals.

Premium positioning + kids’ meals demands extra sincerity and precision

To be fair, the broccoli controversy itself is not as black-and-white as viral phrasing makes it sound. Modern cold-chain and rapid-freezing methods are widely used in food logistics. But as Jia has acknowledged, arguing “technical correctness” against public intuition often backfires.

Most people’s instinct is simple: fresh must be better than frozen. And while that isn’t always scientifically absolute, public perception is reality in branding. Trying to “out-explain” customers rarely ends well.

What Xibei needs is not just operational change, but communication discipline—especially because some critics point to gaps between marketing narratives and what they believe happens in-store.

For example, if a brand heavily promotes “organic supply bases” and filmed origin stories, but consumers later discover suppliers or origins that don’t match the narrative, the damage isn’t about whether the ingredient is “still good.” It’s about whether the brand feels consistent and trustworthy.

The same applies to pricing communications. Some customers have suggested that while prices dropped, portion sizes also changed. If that’s true, then it’s not inherently wrong—many businesses adjust price and portion together to protect margins—but the messaging must be transparent. Celebrating only “price cuts” while avoiding the “portion adjustment” conversation invites a new wave of skepticism.

And skepticism is exactly what Xibei cannot afford—because it is actively asking families to trust it again.

The real test: turning attention into a stable, credible new normal

Right now, Xibei is enjoying the upside of attention: renewed foot traffic, strong conversation volume, and a visible narrative of reform.

But attention cuts both ways. If execution errors, ingredient controversies, or messaging mismatches reappear, the next wave of backlash could arrive faster than the last.

Xibei’s opportunity is real—but it requires a steady hand: honest operational improvement, tighter quality control, and more grounded, verifiable storytelling. If it can find a “sincere path” that fits its positioning—neither bargain-chain low price nor luxury pricing—then it may not only survive this cycle, but come out with stronger trust from families.

The spotlight is bright. What matters most is that the foundation underneath it stays clean, consistent, and worthy of the trust Xibei is trying to earn back.