Salvia Struggles in China While Pizza Hut Expands Aggressively

At the start of 2026, Salvia released its quarterly results. While business in Japan showed strong growth, the Asia segment, mainly China, struggled with “revenue growth without profit increase.” In Q1 FY2026 (Sep–Nov 2025), Asia revenue grew 7.1% year-on-year to ¥23.288 billion, but operating profit fell 6.1% to ¥3.086 billion.

In China, Salvia’s main markets are concentrated in Beijing, Shanghai, and Guangzhou, with dense store networks. Weak consumption has put pressure on profitability. In FY2025, comparable-store sales in these cities declined by approximately 18%-19%, and operating profits dropped sharply. To seek growth, Salvia has begun expanding into lower-tier cities such as Zhanjiang, Jiangyin, and Taizhou, and opened its first Wuhan store on January 15, with strong opening-day traffic.

In sharp contrast, Pizza Hut is expanding aggressively in China. By introducing the “WOW” affordable store format and spin-off brands like Pizza Hut Grilled Skewers and Pizza Hut Burgers, the brand now operates over 4,000 stores in China, including more than 250 WOW outlets. With innovative store formats and value-oriented strategies, Pizza Hut is securing a second growth curve and demonstrating strong market adaptability.

Overall, China’s Western dining market is slowing, and consumers are becoming more selective. Salvia faces challenges from market saturation and sluggish demand, while Pizza Hut leverages diversified formats and spin-offs to maintain momentum, highlighting the contrast in strategy and performance.