This is an English adaptation of a FoodBud historical article originally published on August 31, 2022.
Hydrogen Consumption reported on how Beijing restaurant brands are revisiting community-based foodservice formats, using Donglaishun, Ziguangyuan and Nanchengxiang as case studies. The common lesson is that neighborhood dining is not won by novelty, speed or SKU expansion alone; it depends on fit between format, pricing, repeat traffic, site selection and supply-chain depth.
Baozi, meat pies, lamb soup, prepared dishes and hot-pot ingredients may look like separate categories, but Donglaishun has put them inside one neighborhood store.
The century-old Beijing hot-pot brand opened a small-format shop near Dongsi called Donglaishun Jiefangpu. The store is only a few dozen square meters, carved out beside an existing Donglaishun restaurant. Prepared dishes and hot-pot ingredients take up nearly one-third of the space, leaving limited dine-in seating: three tables plus a row of seats along the wall.
Its main food items include baozi, meat pies and lamb soup, available a la carte or in six set meals such as lamb-offal soup with shaobing and a drink, or lamb soup with mending meat pies and a drink. Other staples include shredded-chicken cold noodles, shaobing with meat and wontons. During breakfast it also sells soy milk, youtiao, sugar-oil pancakes and tofu pudding.
Prices are higher than many neighborhood or breakfast shops. Halal beef baozi sell for RMB 5 each; lamb-offal soup reaches RMB 32 per bowl; the six set meals run from RMB 41 to RMB 56. One set of premium lamb soup, two mending meat pies and a bottled drink is RMB 56.
The retail shelf is all Donglaishun-branded: frozen dumplings and wontons, lamb and beef skewers, sliced beef and lamb, plus hot-pot and barbecue ingredients. Prepared dishes include kung pao chicken, sliced pork with egg, braised beef and braised beef tendon. At 300 grams per pack, kung pao chicken is RMB 58 and braised beef tendon is RMB 116.
Ziguangyuan, founded in 1912 and known in Beijing for chaogeda, has already expanded across multiple formats: snacks and breakfast, full-service dining, halal noodle shops, roast duck and takeaway counters.
Its counter model has evolved into several variants: standalone counters, counter plus noodles, counter plus fast food, counter plus breakfast and full meals, and e-commerce.
At Ziguangyuan counter stores, queues are common in the morning and evening. Products include halal roast duck, signature snacks such as beef-filled shaobing and sesame-paste shaobing, sauced and braised items such as lemon chicken feet, spicy duck heads and hand-shredded chicken, plus fried foods, pastries and drinks.
Ziguangyuan Xiaoguan, its counter-plus-restaurant format, adds homestyle hot dishes and staple foods to the counter snacks.
The company previously cited several expansion figures: during the 2020 Covid period, it opened more than 70 stores in half a year, all in community locations, and its revenue exceeded the same period in 2019. Over two years, it reached 500 Beijing communities and 120,000 people. It also stated an ambition to open 500 stores in three years and ultimately reach “1,000 stores in one city” in Beijing.
Nanchengxiang has been compared with Uniqlo because both focus on limited SKUs, accessible pricing and classic products. The brand has 23 years of operating history, over 100 directly operated stores in Beijing, and average daily single-store sales above RMB 35,000, said to be five times the national fast-food-store average.
Its model differs from Donglaishun and Ziguangyuan. Rather than combining many categories or spinning out one format, Nanchengxiang runs all-day neighborhood dining across breakfast, lunch and dinner, extending trading hours to 16 hours. Each daypart centers on one differentiated hero product.
For breakfast, it sells shrimp wontons made with a whole shrimp in each wonton rather than minced shrimp. At lunch, it focuses on beef rice, benchmarking Yoshinoya and reportedly using imported Angus beef from more than one supplier. At dinner, skewers are a core product, backed by founder Wang Guoyu’s early experience selling electric-grilled skewers and by stable sourcing, quality control and purchasing leverage.
Nanchengxiang follows a decentralized site strategy, opening in lower-rent neighborhoods rather than prime commercial centers. Wang has argued publicly that small restaurants in shopping malls are disadvantaged because mall foodservice is capital-backed and difficult to compete against.
The company also learned from earlier SKU sprawl and later simplified its product range. Eight years before the article, when many restaurant companies were moving into shopping centers, Nanchengxiang proposed the idea of all-day community dining. That model became particularly useful during the special operating conditions of the pandemic period.
Foodservice veteran Sun Xu was skeptical of Donglaishun’s community-store experiment. His concerns were operational rather than emotional.
First, he argued that a restructured state-owned restaurant company needs system-wide support to transform, while the halo around old brands has already been heavily consumed.
Second, he saw a mismatch in operating DNA. Moving from full-service hot pot to a roughly 30-square-meter neighborhood shop crosses into a different format with a different unit model.
Third, neighborhood shops rely on residents, repeat visits, good taste and accessible pricing. That logic is almost opposite to high-ticket hot pot. Profit comes from traffic volume, cost control and small efficiencies. Sun questioned whether the current high pricing showed that preparation.
Fourth, he criticized making prepared dishes a major part of such a small shop. In his view, selling only the brand’s own prepared dishes is too narrow, and hot-pot soup bases are not enough to support the store.
Sun contrasted this with Ziguangyuan and Nanchengxiang, which have spent decades in community markets. Their breakfast, takeaway-friendly products and retail-style items already have market competitiveness, and Ziguangyuan’s retail expansion is based on demand and product strength.
Ziguangyuan’s retail competitiveness comes from a more developed supply chain.
Its first upstream supply-chain factory was a beef and lamb cutting facility in Alashankou, Xinjiang. Ziguangyuan president Liu Zheng said the goal was precision cutting and customization for Ziguangyuan and other restaurant companies.
The company also said it would put into operation a 13,000-square-meter combined supply-chain and central-kitchen factory in Pinggu, Beijing. The factory was described as having digital and information-based MES systems to trace procurement sources, processing and distribution, supporting food safety.
Products such as hand-shredded chicken, shaobing, zenggao and other old-Beijing foods are prepackaged after initial processing, moved through Ziguangyuan’s own logistics system, and then finished in stores before sale.
That model is difficult. Prepackaged foods must still appear freshly made on site, preserve restoration quality, and maintain taste and ingredient standards. If execution slips, the “fresh-made” impression can quickly backfire.
Supply-chain capability is a familiar theme across restaurants, apparel and fresh-food e-commerce, but in community dining it is central. It supports a healthier operating loop and can extend the brand into e-commerce channels. At the time of the article, Ziguangyuan’s prepackaged products had only reached Beijing, Tianjin and Hebei, but supply-chain depth gave it a route from neighborhood stores to broader consumer-facing retail.
Community dining competition is not only about positioning, products, average ticket and traffic. It is also a system-level contest in supply chain and store density.
Both Ziguangyuan and Nanchengxiang were still concentrated in Beijing at the time. Foodservice, convenience stores and fresh-food retail are highly local businesses, making store-opening strategy especially important.
Wang Guoyu explained why Nanchengxiang had not expanded beyond Beijing: with about 130 stores at the time, its density in Beijing was still insufficient. He believed Beijing could support about 500 stores, which would further reduce costs.
His broader logic was that large restaurants can expand nationally, but small stores need to open in clusters, not one by one. Otherwise costs cannot fall. The target is to become a regional leader: once a brand dominates a county or district market, competitiveness rises and costs decline.
Another hot community format at the time was street-stall-style barbecue. The author observed three barbecue restaurants opening near home; traffic fluctuated, but weekend queues stretched outside.
Community dining is always refreshing itself: self-service stir-fry, small-bowl dishes, chuan chuan and malatang, jianghu-style cooking and regional concepts all appear in waves. Many survive less than half a year.
Compared with shopping-mall dining, where impulse consumption is more common, community dining is harder because repeat customers matter more. Sun Xu argued that assembly-line execution does not work well in neighborhoods. The pace is slower, so operators still need careful on-site preparation, warmth, visible freshness, good taste and reasonable pricing.
Ren Jinghua, founder of Renyiwan, which had nearly 100 stores in Shenzhen, said the hardest part of community dining is site selection. Unlike work meals, white-collar lunch or commercial complexes, community locations have many movement routes, exits, sun-facing and shaded sides, and questions of whether the store is on residents’ natural path.
Ren believes community sites should be in areas with both commercial and daily-life atmosphere. Even inside a neighborhood, the best location is often a street with strong pedestrian flow, complete daily services and some small-business activity. He warned against purely residential locations because positioning becomes difficult.
He also argued that operators need enough menu flexibility to recover from site mistakes. A community store may need to work on both sides: noodles and rice. If noodles fail at a specific site, rice dishes may compensate.
A community braised-food operator said store performance improved during the pandemic, so the company raised the share of community stores to more than 80%. Commercial-street or shopping-center rents had become hard for many foodservice operators to absorb, while community sites retained some cost advantages.
The operator said a commercial-street store previously required about RMB 200,000 of investment, while a community store could be opened for RMB 50,000 to RMB 100,000. But community stores have a pattern: traffic is strong in the first three months, then declines after novelty fades.
The company then adjusted its model. Braised products were moved fully into a central kitchen, while stores added small dine-in areas. The product line expanded from traditional braised items to braised-food rice noodles and braised-meat rice, helping activate delivery.
Sun Xu’s view was that community restaurants must be fully equipped. Dine-in alone is not enough; operators need takeaway, retail-ready products and a delivery approach. Relying only on third-party delivery platforms leaves little profit.
Community dining is rational, repeat-driven consumption. A single poor visit can eliminate tomorrow’s return. But the market space is large. With a scientifically matched unit model and operational discipline, the article argued, future leading Chinese restaurant companies could emerge from this field.
Note: store-count targets and other forward-looking expansion figures are historical statements from the 2022 source article.