The encyclopedia · Strategy & Leadership · Strategic decision · 2025
Yonghui closed 381 stores in a year copying Pang Donglai — a ¥2.55B loss
China's once-dominant grocery chain closed 381 stores in a single year as a radical copy-Pang-Donglai transformation produced a ¥2.55 billion loss
永辉超市 · 2025
What happened
Yonghui Supermarket was once one of China's largest grocery chains, known for its fresh-food sourcing and direct-from-farm model. But competition from e-commerce platforms, community group-buying, and changing consumer habits eroded its traffic and margins through the early 2020s. In May 2024, founder Zhang Xuan Song visited Pang Donglai, a regional chain famous for exceptional service and employee welfare, and decided to remake Yonghui in its image.
The transformation was brutal. In 2025, Yonghui closed 381 underperforming stores — 41 in Q1, 186 in Q2, 104 in Q3, and 50 in Q4 — while converting 284 others to the Pang Donglai model. Revenue fell 20.82% to ¥53.51 billion, and net loss widened 74% to ¥2.55 billion. One-time charges from closures and remodels reached ¥1.11 billion. Employee count dropped from 79,224 to 49,427 — a 38% reduction.
By mid-2026, the first results of the transformation emerged: Yonghui posted a net profit of ¥250 million in H1 2026, its first profit since the overhaul began. The company announced it would stop large-scale closures and focus on refining the 331 stores already converted. But the cost of the pivot — a year of massive losses, a halved workforce, and a revenue base that had shrunk by a fifth — showed how expensive it is to remake a national chain by copying a regional success story.
Why it happened
- Yonghui's traditional supermarket model lost relevance as Chinese shoppers shifted to e-commerce, community group-buying, and fresh-food platforms that offered lower prices and home delivery.
- The decision to copy Pang Donglai's model required closing 381 stores and converting 284 more simultaneously, generating ¥1.11 billion in one-time charges that overwhelmed the P&L.
- The transformation was rushed — 186 stores closed in Q2 2025 alone — because Yonghui needed to show results quickly, but the speed amplified the short-term financial damage.
- Employee costs of the transformation were severe: a 38% workforce reduction meant losing experienced store staff just when the new service-oriented model needed them most.
The lesson
Copying a successful regional model at national scale costs more than the model itself — the closures and retraining that make the transformation work also make it unprofitable in the short term.
Sources
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