Huaxi Securities released a research report stating that the Spring Festival, as a peak season for dining consumption, continues to demonstrate strong festive effects in 2026. The clear rebound in dining consumption has laid a solid foundation for the recovery of the upstream supply chain. Among specific segments, frozen food and seasonings are benefiting fully from the surge in seasonal demand. As restaurant foot traffic recovers and the pace of new store openings accelerates, leading companies with high exposure to the food service sector are expected to capture demand dividends first, achieving steady growth in sales and revenue. The firm maintains its core view that "service consumption will lead the recovery," with sector performance and valuation rising in tandem. Key points from Huaxi Securities are as follows:

The Spring Festival dining consumption showed high vitality, underscoring the festive effect. According to data from the Ministry of Commerce, average daily sales of key retail and dining enterprises during the holiday increased by 5.7% year-on-year. Foot traffic in 78 key pedestrian streets (commercial districts) rose by 6.7%, while revenue grew by 7.5%. These figures confirm a robust recovery in dining consumption, with end-demand resilience exceeding expectations. Breaking down by consumption scenarios, holiday dining demand surged explosively. Meituan's New Year's Eve meal reservations grew 105% year-on-year, while Douyin's group-buying sales for New Year's Eve meals jumped 185%, reflecting strong consumer-side activity. Meanwhile, high travel volumes during the Spring Festival boosted destination dining demand, with significant increases in foot traffic at restaurants in scenic spots and core commercial districts, accelerating the recovery of business-side dining scenarios. Regionally, Jiangsu Province reported dining revenue of RMB 18.3 billion during the nine-day holiday, up 11.9% year-on-year, setting a benchmark for regional dining recovery and indicating a nationwide rebound in dining consumption.

Strong seasonal demand is transmitting upstream, with improvements in inventory stocking and sell-through expected. The better-than-expected performance in downstream dining consumption is resonating across the food service supply chain, suggesting potential enhancements in inventory preparation and sales velocity. After a previous adjustment cycle, the competitive landscape in the dining supply chain has continued to optimize. Leading companies, leveraging scale, distribution, and product advantages, are further strengthening their competitive barriers during the peak season, with profitability likely to recover first. In specific segments, frozen food and seasonings, as core categories in the dining supply chain, are benefiting significantly from seasonal demand: In frozen food, the recovery in dining scenarios directly drives business-side sales growth. At the same time, consumer demand for "convenience and quality" is boosting prepared meal sales. Coupled with easing price competition in the industry, leading companies are expected to see continued optimization in product mix and profit margins. In seasonings, the food service channel remains a key growth driver. As restaurant foot traffic recovers and new store openings accelerate, leading companies with high exposure to this channel are poised to capture demand benefits, achieving steady growth in volume and revenue.

The recovery logic is strengthening, with synchronized improvements in performance and valuation anticipated. Huaxi Securities reiterates its core view that "service consumption will lead the recovery." Dining and travel, as key areas of service consumption, are recovering ahead of other sectors, which is expected to further boost consumer confidence and sustain willingness to spend. Continued improvement in dining sales during the peak season, along with multiple positive factors such as rising store numbers, downward adjustments in price points to suit mass consumption, and expansion into lower-tier markets, will support sustained growth in dining demand. This, in turn, will drive demand for related categories in the dining chain, such as frozen food and seasonings. Additionally, as price wars in the supply chain subside, corporate profit margins are likely to recover year-on-year, further supporting simultaneous improvements in sector performance and valuation.

Investment recommendations focus on core picks with both alpha and beta drivers: Key recommendations include Anjoy Foods, Yihai International, and Guoquan (which combine company-specific strengths with industry tailwinds, offering strong earnings visibility), as well as Qianwei Central Kitchen, Tianwei Foods, and Haitian Flavouring & Food (with high exposure to the business-side segment, fully benefiting from the dining recovery). Also worth monitoring are Zhongju High-tech and Qianhe Condiment & Food, where ongoing reforms may unlock earnings potential.

Risks include a post-holiday slowdown in dining consumption, weaker-than-expected consumer recovery, and intensified competition.