Chinese restaurant chain Xibei, known for its northwestern cuisine, will shut about a third of its outlets nationwide this year, a move likely linked to the fallout from a pre-cooked meals controversy last year.

The Beijing-based chain plans to close 102 stores, representing roughly 30% of its total locations, founder Jia Guolong said on Wednesday.

The controversy erupted in September when Chinese influencer Luo Yonghao, who has millions of followers, criticized a visit to Xibei, writing online: “Almost all pre-made dishes. Still so expensive. Disgusting!” The remarks triggered widespread public scrutiny and online backlash.

In response, Xibei launched a series of corrective measures, including switching to hand-wrapped dumplings, hand-skewered lamb kebabs, and freshly brewed soups. In November, the chain cut prices on 30 to 40 menu items by about 20% on average, offered promotional vouchers, and provided daily half-price dishes via food delivery platforms.

Despite these efforts, an internal source told Yicai that customer traffic fell by as much as 45% at the chain’s lowest point last month, putting significant pressure on revenue and cash flow. The sharp decline has also disrupted Xibei’s plans for a public listing this year.

The controversy coincides with new national standards for pre-cooked meals in China, which now require restaurants to disclose whether and how such items are used. Experts say the standards focus on product definitions and food safety indicators, marking a first step toward greater transparency in the restaurant sector.