Core Viewpoint - The restaurant market is showing signs of slow recovery in Q1 2025 compared to the entire year of 2024, with an increase in the number of stores [3] Group 1: Market Trends - The restaurant market's consumption was relatively weak in the first three quarters of 2024, but saw a significant increase in Q4 2024, likely due to the issuance of dining consumption vouchers and active holiday spending [3] - In Q1 2025, the restaurant market's prosperity slightly declined compared to Q4 2024, possibly influenced by the Spring Festival holiday, but remains in a recovery phase compared to the entire year of 2024 [3] - The number of restaurant stores increased by 1.5% in Q4 2024 and 1.8% in Q1 2025, indicating ongoing intense competition within the industry [3] Group 2: City-Level Analysis - First-tier cities have seen an increase in restaurant heat since Q4 2024, with cities like Shanghai, Guangzhou, and Beijing launching dining consumption vouchers to stimulate demand [4] - The number of restaurant stores in first-tier cities increased by 1.0% in Q3 2024, 2.4% in Q4 2024, and 3.6% in Q1 2025, indicating intensified competition on the supply side [4] - In contrast, the restaurant heat in second and third-tier cities showed mixed performance, with the number of stores remaining relatively stable [4] Group 3: Store Opening Rates - Categories with relatively low average spending, such as noodle shops and snacks, maintained high opening rates of 10.5% and 9.8% respectively, indicating a strong demand for affordable dining options [5] - Local specialty categories, including Cantonese dim sum and Yunnan mushroom hot pot, also exhibited rapid expansion [5] Group 4: Consumer Spending Trends - The trend towards affordable dining remains strong, with restaurants priced under 50 yuan accounting for 70% of the total number of stores as of Q1 2025, showing an increase in their market share [6] - The number of restaurants priced above 200 yuan decreased by 0.3%, while those priced between 100-200 yuan and 50-100 yuan also saw declines, indicating a softening in mid-range dining [6] - The expansion of low-cost, high-value dining options is particularly evident in first-tier cities, where the focus is on restaurants priced under 100 yuan [6]

Investment Rating - The report maintains a "Buy" rating for the food and beverage sector, indicating an expected investment return exceeding 15% over the next 6-12 months [5][33]. Core Insights - The restaurant industry is expected to gradually recover, with a slow recovery trend observed in Q1 2025 compared to the entire year of 2024, as indicated by an increase in store numbers and market heat [1][13]. - The first quarter of 2025 saw a slight decline in restaurant market sentiment compared to the previous quarter, likely influenced by the Spring Festival holiday, but remains in a recovery phase compared to the full year of 2024 [1][13]. - The report highlights a significant increase in restaurant store numbers in first-tier cities, with a 3.6% increase from Q4 2024 to Q1 2025, driven by the issuance of dining vouchers [2][16]. - The trend towards affordable dining continues, with restaurants priced under 50 yuan per person accounting for 70% of the total store count as of Q1 2025, reflecting a shift towards low-cost, high-value dining options [3][26]. Summary by Sections Restaurant Industry Recovery - Q1 2025 shows a slow recovery in the restaurant market, with a 1.8% increase in store numbers compared to Q4 2024, despite a competitive environment [1][13]. - The overall restaurant income growth rate has improved, with March 2025 showing a year-on-year increase of 5.6% in total retail dining income [1][13]. First-tier City Performance - First-tier cities have seen an increase in restaurant heat since Q4 2024, with a 3.6% increase in store numbers in Q1 2025, aided by government policies [2][16]. - The report notes a mixed performance in second and third-tier cities, with store numbers remaining relatively stable [2][16]. Consumer Trends - The report emphasizes the continued expansion of low-cost dining options, with a notable increase in stores priced under 50 yuan, while mid-range dining options have seen a slight decline [3][26]. - The opening rates for affordable dining categories such as noodle shops and snacks remain high, indicating strong consumer demand for budget-friendly options [2][21]. Investment Recommendations - The report suggests focusing on upstream supply chain-related companies, highlighting specific firms such as Lihigh Food, which reported a 14% year-on-year revenue growth in Q1 2025 [4][31]. - Other recommended companies include Anjii Food and Qianwei Central Kitchen, both of which are adapting to market conditions and focusing on product innovation [4][31].