Juewei Food (SH: 603517) reported its 2026 first-half results on August 20, showing revenue of 2.515 billion yuan and net profit attributable to shareholders of 135 million yuan, representing year-on-year decreases of 10.82% and 23.16%, respectively. While the decline narrowed compared to the same period in 2025, the non-recurring adjusted net profit fell sharply by 40% to just 80 million yuan. After excluding investment income and gains from fair value changes, the core braised food business contributed less than 60% of actual profits. Even more striking is the significant reduction in store count. According to data from the Zhaimen Canyan tracking platform, as of April 11, 2026, Juewei Food's operating stores numbered approximately 10,272 — a 31% decrease from the last disclosed store count in the 2024 interim report.

Juewei Food's rapid growth once relied on franchise store expansion, but this model is now under strain as sales continue to slide. The company's response has been a "store overhaul" strategy, expanding from traditional braised snacks into categories like casual side dishes and late-night meals. However, the "fresh snack" segment differs greatly from Juewei's traditional bulk-snack retail approach, raising uncertainty about whether it can become a viable second growth engine.

Behind the Marginal Improvement: Accelerating Cash Flow Drain and High Accounts Receivable

Juewei Food's revenue has declined for ten consecutive quarters since Q1 2024. In Q2 of this year, revenue contracted by 5.26% year-on-year, with the pace of decline narrowing, while net profit attributable to shareholders even posted growth of 14.44%. Yet, three factors warrant attention behind these marginal improvements. First, non-recurring items dominate profits, meaning the core business's profitability has not improved. Of the total pre-tax profit of 198 million yuan in H1, investment gains and fair value changes of financial assets played a substantial role, supported by the exit of investment projects — an area once touted as a "second growth curve." As of mid-2026, the company's long-term equity investment balance stood at 1.93 billion yuan, nearly a quarter of its total assets, though down roughly 20% year-on-year. From 2022 to 2024, the investment business accumulated losses exceeding 370 million yuan, with 2025 still in the red; thus, H1 2026 profits depended entirely on project exits, which lack sustainability. Excluding non-recurring items, H1 net profit was just 79.8669 million yuan, and Q2 adjusted net profit hit a record low of 6.7706 million yuan for that period. H1 gross margin slipped to 26.36%, a year-on-year decline of 3.56 percentage points. The adjusted net margin fell to 3.18%, while the Q2 net margin was a razor-thin 0.54%, approaching the break-even point.

Second, accounts receivable remained elevated, reaching 236 million yuan in H1 2026, a counter-trend increase of 13%. Other receivables stood at 81.4391 million yuan. Simultaneously, contract liabilities dropped sharply by 34%. Third, cash flow is bleeding at an accelerating pace. Starting in Q1 2026, Juewei Food's net operating cash flow turned negative, with an outflow of 182 million yuan in H1, attributed by the company to reduced sales collections and higher tax expenses. Cash received from sales of goods and services decreased by about 15% year-on-year, exceeding the revenue decline, while cash paid for purchases and services fell only close to 4%. Cash paid to employees and for other operating activities rose rather than fell.

Store Count Keeps Falling; H1 Contract Liabilities Drop Sharply by 34%

For Juewei Food, aggressive franchise store expansion was once the main driver of performance growth. This expansion hit its peak in 2022, slowed in 2023, and from 2024 onwards, a wave of store closures began. The root cause lies in declining per-store sales, coupled with rising rent and labor costs that compressed profit margins. When franchisees could no longer operate profitably, shutting down became the only option. Since 2024, Juewei has stopped disclosing specific store counts; according to Zhaimen Canyan, as of April 11, 2026, operating stores numbered around 10,272, a 31% reduction compared to the last disclosed figure in the 2024 interim report. The closure trend is still ongoing. Franchise management income in 2025 fell by 31% from its peak, and H1 2026 saw a further decline of 3.28%. Meanwhile, contract liabilities — primarily advance payments for goods and franchise fees — shrank dramatically, dropping by 34% in H1 2026 alone.

To confront this impasse, Juewei Food has adopted a "store overhaul" strategy, pivoting toward the fresh snack segment. The company has added staple foods and side-dish braised items, aiming to broaden operating hours and consumption scenarios to boost per-store efficiency and overall profitability. However, these overhauls remain in the pilot and optimization phase, with outcomes yet unproven.

Both Revenue and Net Profit Decline — Can Store Overhaul Save Juewei Food?

Juewei Food stands out as the only one among the "Big Three" braised food players to see both revenue and net profit fall. The contraction in its core braised business is comprehensive: in 2025, revenue from braised food products decreased by 14.04% year-on-year, with core fresh products dropping over 16% and poultry items declining even more. In H1 2026, the downturn showed no fundamental reversal. Revenue from fresh products was 1.819 billion yuan, down 13.89% year-on-year, with poultry product revenue falling 17.09%. The negative feedback loop of "duck necks not selling — stores closing" persists.

For Juewei, the biggest issue is a flawed pricing strategy. In September 2023, the topic "Why are the Big Three braised food brands struggling?" trended on Weibo, and in media surveys, "prices getting too expensive" was the most selected response. According to a report from the Hongcan Industry Research Institute, the braised food category market reached 157.3 billion yuan in 2024, growing just 3.7% year-on-year, with an expected rise to 162 billion yuan in 2025. From 2023 to 2025, the share of stores with per-capita consumption of 25-35 yuan or above has been declining, while stores with per-capita spending below 25 yuan are increasing. Consumers are highly price-sensitive toward snack foods, and Juewei's relatively high pricing has seemingly driven customers away. While the Big Three grapple with growth stagnation, emerging brands are quietly rising: Wangxiaolu, driven by the single hit product of braised chicken feet, achieved annual sales of 3 billion yuan in 2025 (per media reports). Quzhou duck heads, leveraging extreme cost-effectiveness, rapidly expanded to 30,000 stores. Additionally, bulk-snack retail stores are disrupting the casual braised snack segment, using lower rental costs and higher turnover efficiency to siphon off a large share of price-sensitive consumers.

Whether the store overhaul can reverse Juewei's downturn remains to be seen. Beyond this, historical compliance risks are another major pressure point. Public records indicate that from 2017 to 2021, the company underreported operating revenue for five consecutive years by not recognizing income from franchise store decoration services, with the impact representing 5.48%, 3.79%, 2.20%, 2.39%, and 1.64% of disclosed annual revenue, respectively. In October 2025, the China Securities Regulatory Commission (CSRC) imposed corrective measures and warnings on Juewei Food and related executives, along with fines. Starting September 23, 2025, the company's stock name was changed to "ST Juewei." After self-inspection, the company must pay back taxes and late fees totaling 342 million yuan, which will also affect its 2026 financial statements. Beyond the financial impact, the exposed internal control and compliance vulnerabilities pose an even more significant concern for investors.