GreenTree Hospitality Group Ltd. (NYSE: GHG), China's fourth-largest hospitality company by hotel count, reported second-quarter 2026 total revenues of RMB 235.1 million ($34.7 million), an 18.7% decline from the year-earlier period, as softening room rates and weakening restaurant traffic weighed on both operating segments.
The Numbers
Hotel revenues fell 16.2% year over year to RMB 204.6 million ($30.2 million), dragged by a 9.1% drop in blended revenue per available room to RMB 103 and a net closure of 13 leased-and-operated hotels since the second quarter of 2025. Occupancy slipped to 65.2% from 67.9%, and the average daily rate declined 5.3% to RMB 157. Restaurant revenues contracted 33.5% to RMB 30.5 million ($4.5 million), with average daily sales per store falling 20.3% to RMB 2,893 — a signal that consumer spending in China's casual-dining segment remains under pressure.
Despite the top-line contraction, operating discipline partially cushioned the blow. Income from operations held nearly flat at RMB 48.2 million ($7.1 million) versus RMB 49.2 million a year ago, supported by a 20.0% reduction in operating costs to RMB 146.5 million and a 35.0% cut in general and administrative expenses to RMB 28.1 million. Gross margin improved modestly to 37.7% from 36.7%. GAAP net income dropped sharply to RMB 21.3 million ($3.1 million) from RMB 160.0 million in Q2 2025, though that prior-year figure was inflated by the one-time gain on the divestment of an ownership stake in Argyle and fair-value fluctuations in securities. On a non-GAAP basis, core net income rose 4.4% to RMB 47.2 million ($7.0 million), expanding the core net margin to 20.1% from 15.6%.
Restaurant Segment in Focus
The foodservice arm, anchored by the Da Niang Dumplings and Bellagio brands, ended the quarter with 198 locations — up from 183 a year ago as franchised unit growth offset leased-store closures. Even so, the segment's consumer metrics deteriorated across the board: average check fell 15.5% to RMB 36, average daily ticket count slipped to 81 from 85, and blended ADS contracted more than one-fifth. Franchised-and-managed restaurant revenues tumbled 64.4% to RMB 0.5 million, partly because management fees were waived for underperforming units — a practice the company also applied to struggling hotel franchisees. The restaurant segment did swing to operating income of RMB 1.6 million from an operating loss of RMB 1.0 million in the year-ago quarter, reflecting cost reductions that outpaced the revenue decline. China's restaurant industry broadly has faced persistent consumer caution since the post-pandemic rebound faded, compressing ticket sizes and footfall across mid-market dine-in concepts — a dynamic that has also weighed on comparable same-store sales at peers operating in the country's lower-tier cities, a core market for GreenTree's brands. For a deeper look at the structural forces reshaping foodservice in Asia, see our recent analysis of Asian restaurant industry trends.
Outlook and Expansion
Management maintained its full-year 2026 hotel revenue guidance, projecting a 10% to 15% year-over-year decline — unchanged from prior guidance. Adjusted EBITDA for the quarter came in at RMB 68.9 million ($10.2 million), down 12.1%, though the Adjusted EBITDA margin widened to 29.3% from 27.1%, consistent with the company's cost-reduction narrative. The company's development pipeline stood at 1,278 hotels contracted or under construction as of June 30, 2026, and it opened 18 new hotels in the quarter. On the capital-allocation front, the board authorized a share-repurchase program of up to $5.0 million in Class A ordinary shares over a two-year period.
Two significant property acquisitions signal longer-term ambitions beyond China. A hotel opposite the Petronas Twin Towers in Kuala Lumpur — acquired in 2025 and handed over in July 2026 — is intended as the flagship for a Southeast Asian expansion. Separately, GreenTree won a competitive bid for a Huangpu River waterfront site in Shanghai's Yangpu District, planned as a signature mid-to-upscale hotel with an integrated food-and-beverage and lifestyle retail component. Closing procedures for the Shanghai property are expected to conclude before the end of the third quarter of 2026. Investors tracking Chinese hospitality and restaurant M&A activity will find both deals instructive as a gauge of domestic operator confidence in premium mixed-use formats.
Written by Michael Politz, Author of Guide to Restaurant Success: The Proven Process for Starting Any Restaurant Business From Scratch to Success (ISBN: 978-1-119-66896-1), Founder of Food & Beverage Magazine, the leading online magazine and resource in the industry. Designer of the Bluetooth logo and recognized in Entrepreneur Magazine's "Top 40 Under 40" for founding American Wholesale Floral, Politz is also the Co-founder of the Proof Awards and the CPG Awards and a partner in numerous consumer brands across the food and beverage sector.
