The Numbers
GreenTree Hospitality Group (NYSE: GHG) reported second-quarter 2026 total revenues of RMB235.1 million ($34.7 million), an 18.7% year-over-year decline, as demand weakness in China's lodging and foodservice markets compressed both its hotel and restaurant segments simultaneously. Income from operations held nearly flat at RMB48.2 million ($7.1 million) versus RMB49.2 million a year ago, an outcome management attributed to significant reductions in operating costs and G&A expenses rather than any top-line recovery.
On the hotel side, blended RevPAR dropped 9.1% year over year to RMB103, driven by a 5.3% decline in average daily rate to RMB157 and a 270-basis-point compression in occupancy to 65.2%. The company opened 18 hotels in the quarter, ending June 30 with 4,615 properties and 330,029 rooms in operation. A development pipeline of 1,278 contracted or under-construction units provides a runway for future franchised-and-managed unit growth, but the pace of leased-and-operated closures — 13 L&O hotels exited since Q2 2025 — signals an ongoing asset-light pivot as the company lets lease expirations trim the higher-cost owned footprint.
Restaurant Segment Pressure
The restaurant business, which operates the Da Niang Dumplings and Bellagio dining brands across 198 locations in 53 Chinese cities, posted revenues of RMB30.5 million ($4.5 million), a 33.5% year-over-year drop. Average daily sales per store fell 20.3% to RMB2,893, average check declined 15.5% to RMB36, and average daily ticket count slipped from 85 to 81. The segment, however, posted a rare quarterly operating profit of RMB1.6 million ($0.2 million) with a 5.2% operating margin, swinging from a RMB1.0 million operating loss in Q2 2025 — a sign that the franchised-and-managed restaurant expansion, which grew the total restaurant count from 183 to 198 units year over year, is beginning to contribute incremental royalty and fee income even as leased-and-operated store traffic deteriorates.
Cost Control and Non-GAAP Picture
G&A expenses fell 35.0% to RMB28.1 million ($4.1 million), aided by lower headcount costs, reduced credit-loss provisions, and lower consulting fees. Total operating costs declined 20.0% to RMB146.5 million ($21.6 million). Those cuts supported an adjusted EBITDA margin of 29.3%, up from 27.1% in Q2 2025, even as adjusted EBITDA itself fell 12.1% to RMB68.9 million ($10.2 million). Core net income (non-GAAP) — the company's preferred recurring-earnings measure, which strips out equity-investment gains, subsidies, and one-time items — rose 4.4% to RMB47.2 million ($7.0 million), with core net margin expanding to 20.1% from 15.6% a year earlier. The GAAP net income comparison is distorted: Q2 2025 included a one-time gain from the divestiture of GreenTree's ownership in Argyle Hotels and fair-value swings in equity securities, inflating that year's figure to RMB160.0 million.
Expansion Strategy and Full-Year Guidance
GreenTree is pressing an international expansion play alongside its China operations. A hotel property opposite Kuala Lumpur's Twin Towers — acquired in 2025 — was handed over in July 2026 and is positioned as the company's Southeast Asia flagship. A second landmark acquisition along Shanghai's Huangpu River waterfront in Yangpu District is expected to close before the end of Q3 2026; the property is planned as GreenTree's signature mid-to-upscale Shanghai hotel with an integrated food-and-beverage and lifestyle retail component designed to generate recurring ancillary revenue. The board also approved a $5 million share repurchase program, effective immediately, citing the current trading price as an opportunity. On guidance, management maintained its full-year hotel revenue outlook: a 10% to 15% decline versus 2025, consistent with first-half performance. For foodservice operators tracking Chinese casual-dining and franchise trends, GreenTree's restaurant metrics — falling average check and declining traffic despite modest unit growth — mirror broader consumer-spending caution visible across China's mid-market dining sector.
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.
