Xiabuxiabu is facing significant financial challenges, including a forecasted loss of up to 280 million yuan for the first half of the year. The company is responding by cutting prices, introducing value combos, and closing underperforming stores. The broader restaurant industry in China is also struggling due to weak consumer spending and intense competition, leading to a wave of profit warnings and business closures. McDonald's is also participating in the price war with its own value-oriented meal deals.