Jia Guolong has long been known for charging ahead. Now, he is trying to survive by stepping back.
36Kr has learned that before the Lunar New Year, Jia stepped down as CEO of Xibei’s core brand, Xibei Youmian Village, and reinstated former CEO Dong Junyi. Dong joined Xibei in 1992 and rose from apprentice to store manager, regional head, and eventually CEO of the company’s business division. “Dong understands the frontlines better. People feel more at ease with him,” one Xibei employee told 36Kr.
Another veteran, Zhang Zhongqi, who rose from head chef to regional chief, has also returned to headquarters to help stabilize operations.
It has been less than two years since Jia last made a high-profile return to take command.
These moves are only part of a broader effort to stabilize the company. Recently, Xibei informed employees internally that, due to a reported drop in business volume, many headquarters staff would be placed on standby at minimum wage or asked to leave.
One headquarters employee who was asked to depart said the company offered three options: unpaid leave; voluntary resignation in exchange for partial performance bonuses for 2025; or termination with variable compensation paid in installments over one year, potentially converted into equity.
According to 36Kr, Xibei’s headquarters previously had more than 500 employees. After this round of layoffs, that number may fall to just over 200.
Below headquarters level, store closures and layoffs are accelerating. In mid-January, Jia convened an internal meeting in Hohhot and announced plans to shut 102 outlets.
The reality may be more severe.
Before the public dispute with Luo Yonghao, Xibei operated roughly 350 stores. A current store employee told 36Kr that about 150 have now closed. A former senior executive said even that may be only the beginning.
“The internal discussion isn’t how many to close, but how many to keep,” the person said. Even strategically important locations will not be renewed if they lose money. “The goal is to close until we can survive.”
In one second-tier city, a store employee described a three-step process used to dismiss staff: persuasion, emphasizing how well the company has treated them; pressure, transferring employees to other stores and marking them absent if they fail to report within three days; and finally inducement, offering RMB 2,000 (USD 280) in discretionary compensation after formal resignation.
Sweeping layoffs at headquarters and aggressive store closures may represent Jia’s last resort. Several insiders said that if Xibei’s cash flow does not turn positive by April, the situation could become perilous.
In 2025, an unexpected wave of public backlash pushed the restaurant chain toward a breaking point. On the surface, this marks roughly 180 days of Jia’s fight for survival. Beneath it lies six years of strategic misalignment.
180 days of self-rescue
Xibei’s recent actions fall into several categories, one of which is cost-cutting.
Beyond payroll reductions, Xibei has also been trimming office expenses. In 2020, the company moved its headquarters to Beijing’s Shougang Sports Building, a spacious office that had undergone extensive renovation. When 36Kr visited, it found the lease had expired at the end of 2025. The first floor had been converted into an exhibition hall that recently hosted a Tibetan culture event. It now sits vacant.
The former office on the 20th floor is empty, except for the characters “Xibei” on the door and a notice listing the company’s anti-corruption hotline.
Remaining employees are now scattered across several locations: the fourth floor of Xibei’s Liuliqiao flagship store in Beijing, a courtyard inside its former restaurant on Fushi Road, and offices in Hohhot.
Another effort is fundraising, evident from Jia’s recent shift toward greater openness to primary market investors.
A consumer-focused investor who met with Xibei representatives several months ago told 36Kr that the company needs additional capital to support restructuring. According to the investor, Jia hopes investors will trust him and weather the downturn together, offering valuations described as more attractive than before.
Employees are also being called upon to contribute. At the end of 2025, Xibei raised funds from city managers and headquarters staff, offering dividends proportional to their investment. Because payouts are tied to net profit, Jia and his wife pledged to top up dividends to ensure a 6% return if annual net profit margins fall short.
The last time Xibei opened a funding window was around 2020, when it sought backing for a new venture, Jia Guolong Kung Fu Cuisine. At the time, Jia was said to view Xibei as an attractive opportunity for investors. He met with Neil Shen of HongShan and Zhang Lei of Hillhouse Capital, but no external funding materialized. Instead, Jia focused on several new ventures that had yet to prove their viability.
By May 2021, the investment opportunity had been absorbed internally through an employee equity incentive plan. Participants invested through partnership vehicles into an employee holding platform. Employees could choose whether to opt in, but some said the decision felt more compelled than voluntary.
“The company projected an IPO in the first half of 2026. Some even borrowed money to invest,” said Weng Yang (pseudonym), a former employee.
In early 2025, Xibei secured investment from XinChao Media, which now holds a 1% stake in the restaurant group in exchange for elevator advertising resources.
After the public backlash, Xibei spent RMB 300 million (USD 42 million) on consumer vouchers alone. Combined with refunds tied to store closures and restructuring costs, the company continues to face significant cash outflows.
In January, Xibei completed a Series A funding round with participation from Xinrongji founder Zhang Yong and former Alibaba partner Hu Xiaoming. According to a source, both are personal friends of Jia, and Xibei also had supply chain ties with Hu’s Yimiba Agriculture Technology.
Organizational turbulence predates the Luo Yonghao controversy. Since around April 2025, several regional chiefs once considered trusted lieutenants have departed or been reassigned. The company’s decentralized division model has gradually given way to more centralized control.
Jia has publicly outlined several adjustments: lowering average ticket prices by 20%, slowing expansion, shifting more preparation from central kitchens back to stores, and expanding its focus on children’s meals and birthday services.
Frontline staff, however, said the improvements remain limited. Now, with Dong Junyi reinstated as CEO, another shift may be underway.
A crisis long in the making
Luo Yonghao’s dining experience ignited the controversy, but the company’s problems predate the incident.
More than half of the 102 stores slated for closure were already loss-making. Some were outside Xibei’s core markets, while others faced sharp rent increases upon lease renewal.
A former midlevel manager said signs of decline emerged after 2019. In one case, a mall refused to renew a lease, telling management directly that the brand felt outdated.
From 2015–2018, Xibei’s third-generation, 300-square-meter store model, with open kitchens, made it a sought-after tenant in prime shopping malls. At its peak in 2018, the company opened 110 new stores and distributed RMB 80 million (USD 11.2 million) in bonuses.
Then the pandemic hit, severely tightening cash flow.
As consumer spending weakened further, foot traffic began to drop noticeably from 2024 onward. Jia later said that after the 2024 Lunar New Year, business began to decline.
Most leases run five to eight years, and many expired after the pandemic, often accompanied by rent increases.
“Luo didn’t kill 100 stores,” Weng Yang said. “He just accelerated what was already happening.”
Ironically, some insiders believed a turning point had begun in early 2025, when Jia resumed leadership of the core brand and refocused attention on Xibei Youmian Village. His plan was to anchor the brand’s mid-market positioning through service and emotional value.
“Whoever turns dining into entertainment, satisfying customers’ intangible needs, will win big,” he wrote in a New Year message.
Plans were underway to refine the segmentation of children’s meals, targeting age groups three, six, and nine. Then momentum stalled.
One former employee likened the backlash to a sudden market shock. “It made Xibei look like a stock in free fall.”
From a more detached vantage point, it may have been the final trigger in a longer buildup of pressure.
Chivalry versus business logic
In Luo Yonghao’s critique, a RMB 21 (USD 2.9) steamed bun became a symbol of Xibei’s perceived high prices.
Gross margins hover around 70%, in line with Longjing, Commune, and Xiaocaiyuan, and slightly above Haidilao’s roughly 60%. Net margins, however, are lower, at 3–5%, compared with more than 8% for Haidilao and Yum China in the first half of 2025.
Cost control remains a challenge.
Disposable baby bibs cost RMB 4 (USD 0.6) each and are offered free. Children’s tableware costs nearly RMB 400 (USD 56.0) per set. Ovens priced at RMB 50,000 (USD 7,000) are used primarily to prepare lamb ribs.
One investor noted that Xibei’s lamb spine contains about 30% meat, compared with an industry norm closer to 10%. The cost difference can exceed fivefold.
“Consumers may not need that much meat,” the investor said. “Even if it’s better, if it’s too expensive, it may not be what I want.”
The same tension applies to frozen broccoli, sourced at RMB 8 (USD 1.1) per jin, or about 600 grams.
“Many of the frozen ingredients from the central kitchen are processed using very advanced rapid freezing equipment,” said Li Ni (pseudonym), a former Xibei store manager. “They actually move quickly through inventory.”
A similar example comes from a well-known seafood buffet eatery in Dalian that invested heavily in liquid nitrogen freezing technology. The restaurant promoted the idea that nitrogen-frozen crabs could taste even better than live ones, but few diners were convinced. One consumer who visited the restaurant told 36Kr that locals overwhelmingly chose live river crabs instead. For most diners, seafood simply needs to be alive and fresh, just as many consumers today expect restaurant food to be freshly prepared and reasonably priced.
When consumption was broadly upgrading, higher costs were easier to justify. In the current environment, they risk becoming misaligned with demand.
“Sometimes we wondered whether the boss focused more on what he wanted to sell than on what customers wanted,” Weng Yang said.
Li Ni said Jia had long insisted on paying above-market wages. “If the market pays a server RMB 5,000 (USD 700) a month, we would recruit at RMB 5,500 (USD 770) or RMB 6,000 (USD 840),” he said. After recent adjustments, each store is expected to employ about ten ambassador-style roles earning more than RMB 10,000 (USD 1,400) per month, pushing labor costs toward 35% of revenue. That figure is comparable to Haidilao’s 33.8%.
Ultimately, the virtuous cycle of well-paid staff, better service, and satisfied customers breaks down when traffic falls.
Jia once argued that being expensive is not the problem, being expensive without delivering value is. Yet in today’s consumer environment, Xibei’s pricing has arguably become the main source of customer dissatisfaction.
Jia Guolong’s sweeping bets
For Jia, learning to make things cheaper has never been a natural instinct.
Before returning to the core business in early 2025, Jia spent roughly a decade experimenting with new formats. His ambition was sweeping, for every city in the world, every street, to have a Xibei outlet.
A 300-square-meter Xibei Youmian Village store could not support that vision, so Jia began experimenting with smaller formats and new brands.
Zhou Luo (pseudonym), a former Xibei employee who worked on the Jia Guolong Kung Fu Cuisine project, said the company spared little expense. “We spent more than RMB 100 million (USD 14 million) in a single year,” he said. “There were more than 300 R&D consultants. Our only task was to map the country and find the best dishes, then pay high prices to buy the recipes and turn them into standardized operating manuals.”
“A single mapo tofu recipe could cost tens of thousands of RMB,” Zhou Luo said. “And that wasn’t the end of it. One chef said his version was the best, another said theirs was the best, so we bought both to compare.”
After acquiring the recipes, Xibei began building factories to mass produce the dishes. “We manufactured a large number of products,” Zhou Luo said. “At the time, in the consumer-facing pre-prepared meal market, Jia Guolong Kung Fu Cuisine was among the most advanced.”
Despite high expectations, the ventures struggled. Fast food and casual dining concepts followed similar trajectories: ambitious launches followed by abrupt closures.
In total, the company spent more than RMB 1 billion (USD 140 million) on new ventures.
“One reason many projects failed is that the founder’s will is extremely strong,” Zhou Luo said. “Senior managers execute forcefully, and while Xibei may be a large company, sales cannot always support the costs when spending becomes excessive.”
The path ahead
Investors said some progress is visible: fewer side ventures, greater founder oversight, and a stated willingness to prioritize customer preferences. Yet doubts remain over whether Jia can fully recalibrate the company’s strategy.
Some argue Xibei must lower prices. Others counter that, given its current margins, deeper price cuts could accelerate financial decline.
The challenge may not be competing on price alone, but delivering stronger value within an RMB 80–100 (USD 11.2–14.0) average ticket range.
If Xibei moves upmarket, it must rebuild consumer trust. If it moves downmarket, it must dismantle years of operational buildup around premium inputs.
“From zero to one, Xibei was built by energetic, capable people alongside Jia,” Zhou Luo said. Many of those early standouts have since moved on.
In 2022, an IPO by 2026 once seemed plausible. That ambition has faded.
Even if Xibei survives the current moment, Jia may first need to change himself.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Ren Cairu, Li Xiaoxia, and Xiao Sijia for 36Kr.