GreenTree Cuts Costs 19.4% on L&O Closures as Hospitality Sector Restructures

American Jews, Chinese food, and Christmas have an unexpected historical thread that dates back to a 1935 gift of chow mein to a New Jersey orphanage. The gesture, while seemingly modest, marked an early cultural intersection between two distinct communities. Decades later, Chinese cuisine has become a staple of American holiday traditions for many, blending into the fabric of festive gatherings and celebrations.

In recent years, the restaurant and hospitality industries have experienced significant shifts, with some major financial implications. GreenTree Hospitality Group Ltd., for example, reported notable year-over-year decreases in operating and marketing costs in its third quarter of 2025. These reductions were largely due to the closure of several L&O hotel and restaurant locations, a move that appears to have streamlined the company's operations.

As the year draws to a close, these financial trends highlight the adaptability and resilience of the hospitality sector amid changing consumer behaviors and market dynamics. The year-over-year decline in operating costs underscores the impact of strategic restructuring and the reevaluation of business models in the face of evolving challenges.

Financial Shifts in the Hospitality Sector

The operating costs for the restaurant business in the third quarter of 2025 were RMB43.0 million, a 19.4% decrease compared to the previous year. This decline was attributed to the closure of L&O stores, a decision that appears to have trimmed operational expenses significantly. The first nine months of 2025 showed an even broader cost reduction, with operating costs at RMB555.8 million, a 10.4% year-over-year decrease. These figures indicate a strategic shift in how GreenTree Hospitality Group Ltd. is managing its resources.

Marketing and selling expenses also saw a notable reduction. For the same period, selling and marketing expenses were RMB13.4 million, a 14.4% year-over-year decrease. This was due to lower travelling and sales-channel commission costs. The decrease in expenses reflects a more cost-effective approach to marketing and brand visibility, which could be a response to shifting market conditions and consumer preferences.

Broader Industry Impacts

The cost-cutting measures seen at GreenTree Hospitality Group Ltd. are part of a broader trend in the hospitality and restaurant industries. Many businesses have adopted leaner operational models to remain competitive and financially viable. GEN Restaurant Group, for instance, reported a 9.9% decline in same-store sales in its third quarter of 2025, despite a revenue increase of 2.7% year-over-year. This suggests that while the company managed to grow its revenue, the underlying performance of its individual stores was not as strong. The company also recorded a net loss of $3.9 million, highlighting the challenges of maintaining profitability in a competitive market.

These trends are not limited to specific regions or companies. The hospitality sector as a whole is adapting to new economic realities and consumer behaviors. For example, Western Union, while not in the hospitality industry, reported significant revenue growth in its second quarter of 2025, with the Branded Digital business accounting for 29% of total CMT revenues. This underscores how businesses across various sectors are repositioning themselves to meet evolving demands and economic conditions.

What This Means for Investors

For investors, the shifts in the hospitality and restaurant industries present both challenges and opportunities. Companies like GreenTree Hospitality Group Ltd. are demonstrating the ability to reduce costs and streamline operations, which can lead to improved financial performance and long-term stability. However, the same cannot be said for all companies in the sector. GEN Restaurant Group's struggles with same-store sales and profitability suggest that not all businesses are adapting as effectively.

Investors are also closely watching the expansion strategies of companies in the hospitality sector. GEN Restaurant Group, for instance, is exploring grocery store initiatives that could be worth $100 million over four to five years. While these ventures may offer new growth opportunities, they also come with risks, particularly in the face of economic uncertainties and potential pauses in new restaurant openings. The company's CEO emphasized the importance of its expansion strategy despite current challenges, but also acknowledged the impact of factors like tariffs on Hispanic customers in California and Texas.

As the hospitality sector continues to navigate a complex economic landscape, the ability to adapt and innovate will be crucial for long-term success. For now, the financial performance of companies like GreenTree Hospitality Group Ltd. and GEN Restaurant Group provides insight into the broader trends shaping the industry.