Smaller cities in China drive consumption for the foodservice sector

The sector’s value jumped to $385b in the first half of the year

China’s foodservice sector grew by 4% in 2025, reaching an estimated $385b in value, driven by rising demand in lower-tier cities and a wave of beverage innovation reshaping menus nationwide, data by Circana revealed.

Consumer confidence remained fragile, whilst retail sales have slowed; however, the real momentum in China’s eating-out market has been observed to be coming from smaller cities.

“Consumers outside the major cities, such as Beijing, Shanghai and Guangzhou, are increasingly combining affordability with the desire for branded, high-quality experiences. That shift is now redefining where and how chains expand,” Gary Wong, China Foodservice Director, Circana, said.

According to Circana’s CREST data, lower-tier cities have outperformed upper-tier cities in both traffic and average eater check, highlighting the growing contribution of China’s broader urban economy.

Leisure channels and quick-service restaurants (QSRs) continue to capture the bulk of visits, supported by the popularity of combo meals and value promotions.

Out-of-home beverage consumption also grew by 9%, a sharp rebound that a sharp rebound that reflects shifting consumer priorities and new growth opportunities for foodservice operators. This marks a significant recovery from the -4% decline seen in the same period of 2024 compared with 2023.

The strongest performance came from alcoholic beverages, which saw servings grow by +23% year-on-year, making it the fastest-growing beverage category in China’s foodservice sector.

“Consumers are returning to out-of-home spaces not just for meals, but for the social connection that comes with sharing a drink. China is one of the few markets where alcohol occasions are still climbing, as people embrace everything from BBQ and hotpot to bars. It’s a fundamentally different post-COVID recovery from Europe, driven by culture, community, and the joy of coming together,” Wong said.