--- title: "The closure rate of dining establishments in shopping malls exceeds 30%. Can \"downward expansion\" become a lifeline for the industry?" type: "News" locale: "en" url: "https://longbridge.com/en/news/238881168.md" description: "The closure rate of restaurants in shopping malls exceeds 30%. Due to a decline in foot traffic and high rental difficulties, many dining establishments are accelerating their exit from malls. Restaurant operators like Xiao Zhao and Pei Li have chosen to close or relocate to commercial streets due to operational difficulties. Experts point out that the survival of mall dining will be challenging in the next two years, requiring a collective experience of reshuffling and value reconstruction. In 2024, 34.9% of newly opened stores in shopping centers will be fewer than the closed stores, indicating increasing vacancies in malls" datetime: "2025-05-06T09:58:16.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/238881168.md) - [en](https://longbridge.com/en/news/238881168.md) - [zh-HK](https://longbridge.com/zh-HK/news/238881168.md) --- # The closure rate of dining establishments in shopping malls exceeds 30%. Can "downward expansion" become a lifeline for the industry? A large number of restaurants are still accelerating their "escape" from shopping malls. "Investing nearly 3 million, after holding on for a year and a half, I still have to close the store." Xiao Zhao (pseudonym), who opened a hot pot restaurant in Chengdu's Da Mo Fang, feels that business in the mall is becoming increasingly difficult. He joined Da Mo Fang in 2023, and since opening, the popularity has been low, remaining in a state of long-term losses, and he is preparing to close the store next month. Pei Li (pseudonym), who opened a children's restaurant in Heilongjiang's CapitaLand Plaza, proactively moved out of the mall last month and reopened in a nearby commercial street. The reason is that the mall wanted her to open a second store in another CapitaLand Plaza, "Opening it would be like throwing money away; the foot traffic in this mall is not what it used to be, and after several unsuccessful negotiations, I decided to withdraw." In addition, the Southeast Asian food stall "Nice Coconut" in Beijing has announced that it will not renew its lease with the Wukesong Wanda Plaza and will withdraw from the mall on February 15; the creative fusion cuisine brand Yintang·New Chinese Cuisine in Qingdao has also closed three stores, including those in Qingdao Laoshan Jinshi Plaza and Jinding Liqun; the Korean barbecue brand "Kuanlu Barbecue" in Xi'an has successively withdrawn from malls such as Joy City, MixC, He Shenghui, and Dadu Hui... In October last year, Hongcan.com reported that due to a decline in mall foot traffic, persistently high rents, and an increasing number of hidden requirements, a group of restaurateurs chose to leave the malls. Looking at it now, this trend shows no signs of abating, and many experienced restaurateurs assert that it will take at least another two years before this wave of withdrawal reaches a turning point. Behind this, both malls and restaurants may have to undergo a brutal reshuffling and reconstruction of their value systems! ### **Declining foot traffic and unchanged rents make opening stores in malls increasingly unprofitable** The "2022-2024 Shopping Center Opening and Closing Research Report" shows that in 2024, 34.9% of newly opened shops in shopping centers will be fewer than those that closed. In other words, more than one-third of malls are becoming increasingly empty. Shou Wenbin, founder of Zhisheng Restaurant Brand Strategy Consulting, stated that mall traffic has long peaked, and currently, apart from large chain restaurant brands like HAIDILAO that still have some bargaining power, it is not a good choice for small and medium-sized restaurant businesses to open stores in malls. In his view, the survival situation of restaurant stores in malls will remain difficult for the next two years, and any recovery will be at least two years away. As a large number of restaurant businesses accelerate their withdrawal from malls, both malls and restaurants will have to undergo a brutal reshuffling and reconstruction of their value systems. Image source: Tuchong Creative For restaurant businesses, malls serve as offline traffic entry points, and a series of costs such as rent represent customer acquisition costs, which are becoming increasingly difficult to calculate. From a traffic perspective, on one hand, the overall number of malls is excessively surplus, inevitably diverting traffic, leading to a common problem of declining foot traffic for restaurant stores in malls. The "2024 China Commercial Real Estate Market Annual Report" shows that last year, 370 concentrated commercial spaces of over 30,000 square meters opened nationwide. By the end of 2024, there will be nearly 6,700 shopping centers of over 30,000 square meters across the country In the past, there might have been only one shopping mall within a 3-kilometer radius, but now there could be three. The foot traffic in shopping malls has significantly diluted due to the increase in the number of malls, and naturally, the customer flow in restaurants has not improved much. Moreover, since the rise of shopping malls in the 1990s, their one-stop shopping, entertainment, and dining integrated model has had a strong appeal to consumers, leading to a large influx of people into malls. However, as various commercial formats have diversified, shopping malls are no longer particularly unique. According to a report by Xiangcai Renweibao, a large shopping mall in Hunan stated that by the end of 2024, the total annual foot traffic had decreased by nearly 40% compared to 2023, with a closure rate of over 30% for dining establishments in the mall. On the other hand, many malls are outdated and poorly designed. In today's trend of increasingly valuing self-pleasure and emotional value consumption, their appeal to customers has declined, which ultimately affects the foot traffic of restaurants, especially those located on higher floors. Currently, many malls still follow the old model, with the first floor mostly dedicated to beauty products, and floors two to five primarily for clothing and trendy brands, with dining and cinemas located higher up. This layout prevents a good interaction between dining and entertainment formats, leading to a weakening attraction of the malls. In a situation where price and value are severely mismatched, the mall's leasing, rental pricing, and marketing have also failed to adjust in a timely manner. Image source: Hongcan Network The homogenization of mall leasing is severe, with almost every mall having similar brands, resembling a copy-paste situation. From the consumer's perspective, visiting any mall feels the same, lacking novelty. A senior commercial real estate professional with over ten years of experience bluntly stated that shopping center leasing is falling into a vicious cycle. The more vacant stores there are, the more aggressive the leasing efforts must be, leading some malls to lower entry thresholds, just to find any store to open. However, this could lead to two outcomes: one is attracting restaurants that do not fit the mall's customer base and positioning, resulting in a decline in consumer experience and subsequently a drop in mall foot traffic; the other is that malls attract whatever type of restaurant is popular, causing a clustering of similar types of restaurants, making business increasingly difficult and complicating mall leasing efforts. Ultimately, as the business for mall dining becomes harder, a number of restaurants will choose to withdraw from the mall, leading to an increase in vacancy rates. This issue is also difficult to improve in the short term. Of course, some malls realize the need to continuously provide fresh experiences for consumers and are intent on accelerating adjustments to their spaces and frequently replacing brands. However, a higher brand turnover rate also means a shorter survival cycle for dining establishments in malls. Additionally, while foot traffic declines, the adjustment of mall rents is also not timely. Due to the decrease in foot traffic and rising vacancy rates, malls face greater survival pressure. To maintain basic operating expenses, many malls would rather endure rising vacancy rates in the early stages of declining foot traffic than easily lower rents. Data from the China Real Estate Index System shows that in 2024, the average rent for shopping mall shops exceeded 27 yuan/square meter/day, a mere 0.06% decrease compared to the previous year The rent and operating costs of shopping malls are too high, while foot traffic is declining. For restaurant owners, opening a store in a shopping mall is becoming increasingly "uneconomical." Image source: Hongcan Network A restaurant owner once calculated that his store is located in Shanghai's Baiyulan Plaza, with an annual rent of about 2.2 million. "The average monthly rent is 183,000, and a pure profit of 6,100 per day is needed to cover the rent. Assuming a 50% gross profit, the minimum daily revenue must be 12,200. Based on an average of 150 per order, at least 82 customers need to spend daily." Guo Chen (pseudonym), who originally planned to open a store in Chengdu's Da Mo Fang, told Hongcan Network that Da Mo Fang is located in Chengdu's Financial City business district, backed by SKP and Global Center, but the popularity since opening has far from met expectations. "In the second half of last year, three well-known restaurants from Xi'an, Lao Sun's Lamb Soup, Xi'an Restaurant, and De Fa Chang, all withdrew from Da Mo Fang. Kao Jiang was originally renovating on the sixth floor but never opened, and later withdrew as well," Guo Chen said, expressing his disappointment after seeing Kao Jiang leave. Shou Wenbin pointed out that restaurant stores in shopping malls today, especially small and medium-sized restaurant businesses opening in shopping centers in first and second-tier cities, are experiencing similar situations to those of street-side shops previously. "In cities like Guangzhou and Shenzhen, the entry fees and transfer fees for street shops were once very high. With the emergence of numerous shopping centers, foot traffic has been drawn into the malls, collapsing the property price system of street shops. Without foot traffic, they are forced to lower prices, which is determined by market supply and demand." ### **The Only Opportunity: Sink or Sink** So, during this period of value reconstruction for mall dining, does it mean that escape or withdrawal is the only option? Hongcan Network analyzes that the only opportunity lies in "sinking." First is the "sinking" of the shopping mall's own floors. Currently, many shopping centers' B1 and B2 levels have become hot spots, not only do consumers love to play, shop, and eat there, but restaurant brands are also eyeing the considerable foot traffic and starting to "sink" to open stores on the B1 level. For example, Kao Jiang's first store in Beijing opened on the B1 level of He Sheng Hui; the boutique bakery brand Youhe's first store in Beijing also opened on the B1 of Chaoyang He Sheng Hui, with several of its stores in Chengdu, Nanjing, Wuhan, and Hangzhou also located on the underground level of shopping malls; brands like HAIDILAO, Xibei, and Xita Laotai have also successively opened new stores in the underground levels of shopping malls in recent years. The rent for underground levels is relatively lower. According to data from Cushman & Wakefield, the average rent for shopping mall underground levels is about 65-80% of that of above-ground levels; additionally, many underground levels are often connected to subways and other rail transit, providing stable foot traffic and potential customers for restaurants. Opening stores in underground levels is equivalent to setting "touchpoints" on the daily paths of consumers, forming a consumption loop of "commuting - dining - shopping." Image source: Tuchong Creative Another "downward expansion" refers to entering the vast underdeveloped markets where shopping centers and malls are not yet saturated. Hongcan.com has noticed that in recent years, dining establishments in county-level cities have become increasingly popular. For example, in Dongtai Wuyue Plaza in Jiangsu's county-level city, the average daily foot traffic during the Spring Festival reached 60,000, with an annual average daily foot traffic of 27,000. It is reported that this mall has introduced well-known dining brands such as McDonald's, Bawang Chaji, and Xita Laotai. According to reports from Daily People, during the Spring Festival, a mall in Qidong, Jiangsu was packed with people, with tea shops like Guming and Jasmine Milk Tea having over 200 cups in queue, and one staff member shaking over 900 cups of milk tea in a single day. On one hand, the purchasing power of the underdeveloped markets represented by county-level cities should not be underestimated. Hongcan.com has reported multiple times that in the past year, first-tier cities experienced a "great escape" in the restaurant industry, while third and fourth-tier cities, and even lower-tier county-level cities, showed stronger vitality. Although the economic scale may not match that of large cities, in the underdeveloped markets, residents have a relatively high savings rate and lower living costs, which makes their disposable income relatively considerable. Additionally, residents' consumption concepts are constantly changing, with increasing demands for quality and service in dining consumption. They are no longer satisfied with street food; more people are willing to choose dining establishments in malls that offer a comfortable environment, diverse dishes, attentive service, and can meet certain social needs. On the other hand, unlike first and second-tier cities, the vast underdeveloped markets, especially county-level cities, are still in the stage of commercial upgrading, with relatively lagging commercial real estate development, fewer malls, and less competition. As more and more chain dining brands continue to expand into these markets, malls with standardized site selection, service, and facilities are forming a mutual pursuit. In other words, there is still a certain time window for mall dining in the underdeveloped markets. Here, high-quality, mature malls are still a scarce resource. For restaurant owners looking to open new stores, if they can leverage leading shopping centers to build brand momentum, there are still opportunities for further expansion. This article is reproduced from Hongcan.com (ID: hongcan18) with authorization, and all rights belong to Hongcan.com. Unauthorized translation or reproduction is prohibited. * * * The "2024 China New Consumer Brand Growth Power White Paper" is based on research from over 8,000 consumers, insights from over 100 experts, and in-depth analysis of over 3,000 companies, decoding the essence of the market from eight dimensions and anchoring future trends from six perspectives. This 200,000-word professional report will serve as a "barometer" for the iteration of the consumer industry and a strategic guide for companies to break through existing constraints and reshape growth momentum. Click here or the image below to purchase, with free shipping to your home! ### Related Stocks - [MCD.US](https://longbridge.com/en/quote/MCD.US.md) - [06862.HK](https://longbridge.com/en/quote/06862.HK.md) - [01364.HK](https://longbridge.com/en/quote/01364.HK.md) - [000031.CN](https://longbridge.com/en/quote/000031.CN.md) ## Related News & Research - [McDonald's (MCD) Valuation Check As New Value Menu And Premium Items Meet Rising Cost Pressures](https://longbridge.com/en/news/287331113.md) - [09:00 ETMcDonald's Laces Up with Basketball Star Devin Booker to Debut the Nike Book 2 McDonald's Sneaker](https://longbridge.com/en/news/287070222.md) - [Teva's Growth Story Is No Longer Just Generic, It's Getting Branded](https://longbridge.com/en/news/287506275.md) - [Is the Cheapest Cruise Line Stock Finally Too Cheap to Ignore?](https://longbridge.com/en/news/287797366.md) - [Getty Images chosen as official photographer for 2026 Tribeca Festival, capturing key moments and sharing with their 200 million+ audience.](https://longbridge.com/en/news/287778304.md)