A once-prominent restaurant chain has plunged into a public relations and labour crisis after management reversed earlier promises to protect staff pay and then moved to compress costs through coerced resignations and staggered severance. Employees received a March 6 notice that effectively forced quick resignations — those who left by 11 p.m. that night would receive normal pay, while others faced months on “standby” at local minimum-wage rates. The episode culminated in founder-figure Jia Guolong relinquishing the CEO role, leaving a new executive to declare that rebuilding trust is now the organisation’s top priority.
The tactics deployed by Xibei are blunt and illustrative. Staff who did not accept immediate voluntary resignation were to be put on half-year standby with wages reduced to the local statutory floors — as low as RMB 2,540 in Beijing — creating strong financial pressure to quit. For employees who hang on, severance has been proposed on a stretched timetable: 20% the following month, 30% in month six, and the remaining 50% not due until the end of 2026. Store managers have reportedly taken unilateral pay cuts of around 30% with no promise of later make‑good.
Those measures contradict public commitments made earlier in the year. In January Jia publicly vowed that staff forced to leave would “not lose a penny,” a pledge that has since been abandoned. The contradiction has inflamed anger among employees and the wider online community, and the CEO’s departure has been read less as a graceful exit than as an attempt to deflect accountability. With more than 10,000 people employed across the chain, the episode has immediate human costs and wider reputational fallout.
Xibei’s woes reflect deeper pressures on China’s mid‑market restaurant sector. Many chains expanded aggressively during the recovery from the pandemic and are now confronting squeezed margins, rising rents and cautious consumer spending. But cost cutting that breaches labour expectations or legal norms risks accelerating brand deterioration: customers who sympathise with laid-off workers may stay away, and talented managers may leave the sector rather than face uncertain pay and status.
There are also legal and governance angles that matter beyond one company. Some multinational firms that have exited China’s market closed factories yet complied fully with statutory severance and won no small measure of public and regulatory acceptance. By contrast, staggered payments and coercive resignations invite complaints to labour bureaus, class-action claims by employee groups and intensified scrutiny from local regulators keen to avoid social unrest. The longer the delay in paying severance, the higher the chance of formal enforcement action and the greater the reputational damage.
Xibei now risks becoming a textbook failure for the industry: not simply because it ran into hard times, but because management chose cost-minimising tactics that undermine trust. For corporate leaders the lesson is stark — in a sector driven by people and reputation, short-term labour savings can translate quickly into long-term brand and legal costs. The immediate questions are whether a credible compensation plan can be delivered, whether local authorities will intervene, and whether the chain can stem store closures and rebuild customer faith before the damage becomes permanent.