Wallace's Delisting and Predicament: From Lower-Tier Market Leader to Strategic Adjustment

In the highly competitive restaurant market today, Wallace, once a “leader in the sinking market,” is facing unprecedented challenges. Due to its inability to meet the growing and diverse needs of customers, the company has had to initiate delisting procedures and is now facing a survival crisis. Recently, Wallace invested heavily to acquire all shares of Shandong Xinshizhou Food Co., Ltd. Prior to this, Wallace Food had officially delisted from the National Equities Exchange and Quotations System. The latest data shows that as of February 2026, the number of operating Wallace stores has decreased to approximately 19,494, a significant reduction from its peak.

Under the financial strain of a debt of 2.108 billion yuan and negative revenue growth, store partners are bearing the costs of this “sinking market giant” delisting. The official explanation states that delisting was based on a comprehensive assessment of current operations, market environment, and long-term strategic planning, aiming to improve decision-making efficiency and reduce operating costs. This decision reflects the company’s strategic adjustments in response to changes in the market competition landscape.

Looking back at Wallace’s listing journey, since its listing on the New Third Board in April 2016, it has only raised 10 million yuan through market financing over nearly a decade, which has had little substantive impact on store expansion and business development. Instead, listing has brought substantial compliance audits, financial disclosure costs, and ongoing regulatory and investor scrutiny. When costs outweigh benefits, Wallace’s delisting from the New Third Board may be a pragmatic choice for its next stage of development.

Founded in 2001, Wallace’s first store was located at the entrance of Fujian Normal University. Brothers Huaiyu and Huaiqing, who operated a shoe store in Fuzhou, seized the fast-food market trend and raised 80,000 yuan to open the first “Wallace.” Initially, mimicking the giants’ business model was unsuccessful, but after launching the “Special Price 123” promotion, sales doubled, establishing a “low-price” strategy and entering the sinking market.

Between 2019 and 2023, Wallace Food’s revenue grew from 2.5 billion to over 8.8 billion yuan. Its unique expansion model of “store crowdfunding, employee partnership, and direct management” linked interests and motivated staff, laying a system foundation for rapid growth. By 2022, Wallace’s store count surpassed 20,000, exceeding the combined total of KFC, McDonald’s, and Dicos at the same time, making it the first truly large-scale fast-food giant in China.

The massive store network gave Wallace strong bargaining power in the upstream supply chain, controlling costs through supply chain integration and supporting its core competitiveness of “affordability.” However, this reliance on “cost squeezing + decentralization” for rapid expansion also planted hidden risks. As scale increased, issues with loose management began to surface, with food safety becoming a critical pain point.

In recent years, on social media, Wallace has been jokingly called “Jet Warrior” by netizens. In response to food safety concerns, Wallace has regularly published restaurant inspection results since 2022 and has been working on brand image rebuilding, including launching a new logo, upgrading its first store, and opening themed specialty outlets. Product innovation shifted toward “whole chicken burgers” with regional特色, and marketing efforts included variety show sponsorships, signing brand ambassadors, and collaborations with domestic animation IPs.

But Wallace faces challenges beyond food safety. Today, China’s Western-style fast-food market is fiercely competitive, with new Chinese burger brands like Tasting rapidly rising, surpassing 8,000 stores by 2025 and forming a encirclement around Wallace. Major fast-food giants like KFC and McDonald’s have launched low-price combo meals, squeezing Wallace’s market space and diminishing the effectiveness of its low-price strategy.

In search of new growth points, Wallace attempted to launch a 9.9 yuan monthly coffee subscription at the end of 2025, but its market effect remains to be seen. The competition in the restaurant industry has intensified in recent years. On one hand, international fast-food giants continue to deepen their presence in China with localized products and promotions; on the other hand, emerging domestic fast-food brands, tea drink brands, and delivery platforms have greatly diverted customers and changed consumer dining habits.

Although Wallace has a large number of stores, it faces increasing challenges in brand upgrading, product innovation, digital operations, and food safety management. Financial data shows a complex picture of its performance. According to Wallace Food’s 2025 semi-annual report, the company’s revenue in the first half of 2025 was approximately 4.625 billion yuan, with a net profit attributable to the parent of over 121 million yuan, a 35.32% increase year-on-year. However, behind this seemingly stable base, underlying issues persist.

While the revenue in the first half of 2025 showed no significant difference from the previous year, this was the first time revenue experienced negative growth. Looking at a longer timeframe, the company’s growth rate has slowed continuously—from 24.36% in 2022 to 13.31% in 2024. Wallace’s delisting also reflects the broader difficulties faced by the traditional fast-food sector in China.

Under the pressures of rising costs, diversified consumer demands, increased health awareness, and rapid marketing model iteration, relying solely on scale expansion and price advantages for growth is no longer sustainable. Brands need to deepen their focus on enhancing product quality, service experience, and supply chain resilience to build long-term core competitiveness.

(Author: Li Qiang)