Banu Hotpot Sparks Outrage as CEO Tells Low Earners to Skip Dining, Exposing China's Widening Wealth Divide

When Hot Pot Becomes a Luxury: The Firestorm Over Banu's Pricing and the Wealth Divide in China

A Controversial Statement Sparks Nationwide Debate

Banu Hotpot, a popular Chinese restaurant chain known for its high-end positioning, found itself in the eye of a public relations storm after a comment by its founder, Du Zhongbing, went viral. During a live-streamed panel discussion on the future of hot pot, a screenshot circulated online quoting Du as saying, "If you make 5,000 RMB a month, you shouldn’t be eating at Banu. Eat something cheaper like spicy skewers."

Though Banu later clarified that his words had been taken out of context, the backlash was immediate. Many saw it as a blatant display of classism, with social media users questioning whether hot pot—originally a working-class meal—had now become a symbol of economic exclusion.

With China's economy facing headwinds and consumer spending increasingly cautious, the incident sheds light on broader concerns about pricing strategies, wealth disparity, and changing consumption patterns in the country’s post-pandemic recovery phase.

How Hot Pot Became a Status Symbol

From Humble Origins to a Premium Dining Experience

Historically, hot pot was the go-to meal for workers and laborers. The name Banu itself is derived from "Ba Nu," referring to the boatmen who pulled cargo up the Yangtze River, eating hot pot as an affordable and filling meal.

However, over the years, hot pot has undergone a transformation. Brands like Haidilao and Banu have moved beyond mass-market appeal to premiumization strategies, offering high-quality, traceable ingredients, luxury service elements, and immersive dining experiences.

Banu, for instance, prides itself on its signature Wagyu beef, hand-selected mushrooms, and proprietary broth blends, positioning itself as an upscale alternative to traditional hot pot chains. With an average per-person bill of 130-200 RMB , it sits well above budget-friendly options where a meal can cost as little as 30 RMB .

The Role of Marketing in Price Inflation

Many high-end hot pot chains have leveraged aggressive branding and experience-driven marketing to justify their rising prices. Concepts such as "ingredient traceability," "organic farming," and "Michelin-level service" have allowed them to command significant price premiums.

While luxury branding in food isn’t new, it does raise concerns in an economy where consumer confidence is wavering. When everyday meals start being marketed as exclusive experiences, they risk alienating the very consumers who built their initial success.

China’s Shrinking Middle Class and the Rise of Consumption Anxiety

Disposable Income is Tightening

The 5,000 RMB salary benchmark mentioned in Du Zhongbing’s statement touches on a growing economic reality: disposable income is under pressure. China's economic slowdown, youth unemployment, and weakened property market have left many consumers far more budget-conscious than before.

According to China’s National Bureau of Statistics, per capita disposable income grew by only 5.6% in 2023, while the cost of living in major cities like Beijing and Shanghai has skyrocketed. Dining out is increasingly seen as a discretionary expense rather than a casual habit, leading to shifts in consumer behavior.

Consumer Preferences are Shifting to Value-Driven Spending

A growing segment of the Chinese population—particularly younger generations—are turning to cost-effective alternatives, such as home-cooked meals and budget-friendly eateries.

This shift is evident in the rising popularity of platforms like Pinduoduo and Douyin’s low-cost marketplace, which focus on providing affordable consumer goods. The demand for “**平替 **” or cheaper substitutes in fashion, electronics, and food has surged, challenging the dominance of luxury-positioned brands.

For Banu, the challenge is clear: Can high-end hot pot sustain itself in an era where consumers are increasingly prioritizing affordability?

Investor Insights: What This Means for China’s F&B Sector

The Broader Implications for Restaurant Chains

Banu’s PR crisis is symptomatic of a broader challenge facing China’s food & beverage sector—brands must carefully balance their aspirational branding with real-world consumer sentiment.

Investor Takeaways:

Premiumization Has Limits – While high-end dining can be lucrative, brands must recognize that luxury perception is fragile, and missteps can alienate key consumer segments.
Recession-Proof Dining Matters – Fast-casual and budget dining brands are seeing stronger resilience in the current economic climate. Low-cost options like Xibei, Malatang chains, and local fast food brands are increasingly outperforming premium restaurants.
Social Sentiment Can Impact Stock Performance – Negative sentiment on platforms like Weibo and Xiaohongshu has shown measurable impact on brand sales and stock prices. Investors should closely monitor consumer backlash as a key risk factor.

Will Banu’s IPO Ambitions Be Impacted?

Banu has long been rumored to be preparing for a Hong Kong IPO. However, investor confidence could be shaken if the brand is perceived as out of touch with evolving consumer preferences.

Key risks include:

Brand Perception Issues: If Banu is increasingly seen as “elitist” rather than an accessible premium brand, it may struggle with customer retention.
Economic Headwinds: China’s slow growth and rising youth unemployment could dampen discretionary spending, particularly for mid-tier luxury dining.
Competitive Pressure: Rivals like Haidilao continue to adjust pricing strategies and menu offerings to remain competitive, potentially siphoning customers away.

While the high-end dining sector in China remains lucrative, companies must remain agile, responsive to social sentiment, and willing to adapt pricing strategies to align with shifting economic realities.

Final Thoughts: Luxury Hot Pot or Just Overpriced?

The Banu controversy goes beyond one CEO’s poorly worded remark. It highlights the growing tension between premium branding and consumer affordability in a market facing economic uncertainty.

For investors, the F&B industry remains one of China’s most dynamic yet volatile sectors, where brands must constantly recalibrate their messaging and pricing strategies to maintain consumer loyalty.

While Banu’s commitment to premium quality is unlikely to change, its ability to navigate shifting consumer sentiment and economic conditions will determine whether it can remain a market leader or become a cautionary tale.