Text | Narrowcast, author | Xiao Chao (Suzhou)
In August this year, Beijing Din Tai Fung, which was founded in 2004 and has per capita consumption of about 140 yuan, announced that it would gradually close its 14 branches in cities such as Beijing, Tianjin and Qingdao before the end of October.
The closure of Beijing Din Tai Fung is just a microcosm of the current operating difficulties of catering companies.
According to data released by various local statistical bureaus, the growth rate of the catering industry in first-tier cities has declined significantly this year – the national catering revenue growth rate was 7.9%, while Beijing was -3.5%, Shanghai was -3.6%, Guangzhou was 3.0%, and Shenzhen was 1.3%. %. The national growth rate is 8.6 percentage points higher than the first-line average. This gap is the largest since 2014.
The combination of various unfavorable factors such as high unit prices, formal meals, and being located in a first-tier city where competition is particularly fierce is the reason why the industry has turned cold. But overall, experiencing simultaneous declines in revenue and profits is the biggest problem facing the domestic catering industry in 2024.
After experiencing the cold winter of catering in 2022 due to the inability to dine in due to the epidemic, and vigorously expanding stores in 2023 because of the recovery in consumption, although the national catering revenue continues to grow, catering companies have to face the current situation of abundant supply but insufficient consumer demand. , the industry as a whole has entered a period of structural adjustment.
At this stage, catering will inevitably converge in the direction of more rigid needs and higher frequency. Therefore, high-end restaurants will be the most obvious. Affordable catering will become the main theme in the next few years, and the competition for cost-effectiveness will be extremely fierce.
But on the other hand, the catering industry is not in decline. For example, although the catering revenue growth rate in first-tier cities such as Beijing and Shanghai was negative in the first half of the year, the catering growth rate in places such as Sichuan, Hubei, and Yunnan exceeded 10%. The differentiation trend shows that the first-tier market is slowing down overall, the second- and third-tier markets are better than the first-tier markets, and the sinking market is better than the second- and third-tier markets.
Different trends are also reflected in subcategories. Still taking Beijing as an example, although meal services suffered a large loss in the first half of the year, fast food, beverages and delivery, and catering delivery are still developing positively.
As a trillion-dollar market closely related to people’s livelihood consumption, catering is a decentralized track with high store opening rate and high store closing rate. As the industry cools down and removes bubbles, hundreds of rivers merge into the sea. Opportunities and challenges coexist. Excellent companies will eventually gain more markets.
Affordable era:Overheated supply meets weak consumption
Catering is undoubtedly a high-growth industry. Especially after suffering from the inability to dine in during the later stages of the epidemic, the recovery of catering is expected by everyone.
According to data from the National Bureau of Statistics, national catering revenue exceeded 5.2 trillion yuan for the first time in 2023, a record high, a year-on-year increase of 20.4%, ahead of the 13.2% increase in retail sales of consumer goods during the same period. By the first half of 2024, national catering revenue will increase by another 7.9% year-on-year.
But the dilemma the catering industry faces now is that while catering revenue, that is, consumer demand, is growing rapidly, catering supply is increasing at a faster rate.
According to Qichacha data, in the past ten years, the number of registrations of catering-related enterprises in my country has continued to grow positively, reaching new highs every year. In 2021, 2022 and 2023, the number of registered catering-related companies in my country will exceed 3.2 million, 3.3 million and 4.1 million respectively.
With a certain chance of recovery, and relatively low financial and qualification thresholds for entry, catering has indeed become a popular career change choice in the post-epidemic era.
Wang Taizhou, CEO of the catering service provider Shiheng, once described the enthusiasm for opening stores at the end of 2022 and early 2023 to “Narrow Broadcast”: There are too many newcomers who want to pour into this industry. It seems that everyone wants to work in catering. Almost everyone we have talked about Brands all say that that period is the quarter when brands attract the most investment.
The catering industry is in a state of enthusiasm for rapid development, and more and more brands are choosing to open up franchises and accelerate expansion. However, overheated growth is destined to cover up many problems. Although catering also has a high store closure rate, stores opened in upper-tier cities, especially in core business districts such as shopping malls, are not as flexible as the scattered small stores of the past.
By this year, according to data from Red Meal.com, the number of catering stores nationwide has exceeded 9 million. This figure shows that the number of restaurants per capita in China is already more than three times that of the United States. Wang Taizhou believes that even without the superimposed factors of overall weak consumption, the overheated supply increase rate has already brought the catering industry to an inflection point.
In this case, the sluggish consumer demand will undoubtedly make the contradiction between supply and demand more acute. As a result, catering has entered an era of price parity where high frequency is more urgently needed. Competition over price/performance ratio is fierce, and local price wars also occur from time to time.
At the 2024 Catering Industry Conference, Xibei founder Jia Guolong’s evaluation of the current catering industry situation was that from the previous era when “you can make money by opening high-end restaurants, you can also make money by opening mass catering” to this year’s “Xibei Noodle Village” Sales have dropped by an average of 10% nationwide.” “The era of traditional catering companies making quick money has completely passed.”
Consumer demand and consumer confidence are insufficient, and the decline in unit price is inevitable. Taking hot pot, the most standardized Chinese food industry, as an example, Haidilao’s per capita consumption in 2023 is 99.1 yuan, down 10 yuan from the high point in 2020. This is also the first time in the past five years that its per capita consumption has fallen below the 100 yuan mark; entering 2024 In 2019, Xiabu Xiabu announced that the price of set meals would be reduced across the board, with the average price of set meals falling by more than 10%; Jiu Maojiu’s Zingzi Hotpot announced that it would lower its price system, “Bottom dishes start at 8 yuan, and meat dishes start at 9.9 yuan.”
The decline in unit price per customer requires more customer traffic to make up for the filling. At this time, it is often necessary to launch lower-priced packages or products to attract traffic. Taking Western food as an example, KFC launched a 9.9 yuan burger promotion; McDonald’s launched a “10 yuan burger” three times; Burger King offered “signature burgers for 9.9 yuan every week”.
Consumers are becoming more and more price-sensitive and entering the era of affordable catering is indeed a big challenge for catering companies that have been accustomed to the trend of consumption upgrades for more than ten years. At this time, price war, as the simplest and crudest competitive strategy, is most likely to be chosen by companies in a short period of time.
But a price war is not a good idea. On September 18, Heytea issued an internal letter to its business partners stating, “Next, we will not make homogeneous products or simple low-price inclusion, but will provide users with differentiated products and brand experiences that go beyond price.”
Founder Yang Guofu also said in public recently that how long catering companies can survive by competing at low prices is a soul torture. The market is becoming more and more popular, and consumers not only need to eat enough, but also eat well. At this stage of development, catering companies must empower products with high quality, and it is not recommended to occupy the market with low prices.
To do the difficult but right thing, to achieve long-term stable operation, we must ultimately achieve sustainable, high-quality and cost-effective results and cultivate the internal strength of the enterprise.
Steady operation:Value for money but high quality
At the crossroads of change, every catering brand is thinking about ways to move forward.
In the current era of survival of the fittest and consumers voting with actual actions, chain brands with supply chain advantages and refined operational capabilities are re-anchoring category prices and expanding rapidly. New cost-effective benchmarks have emerged in multiple market segments, such as Ruhua Xiao Xiaomi Noodles, Micun Bibimbap, Xiong Miao Lai Hot Pot, Nong Xiaoguo Hot Pot, Lan Xiangzi Hunan Cuisine, etc.
As for the classic representatives of excellent cost-effective companies, Salia is undoubtedly one of them. As a Japanese chain Italian restaurant brand that can eat you all for 50 yuan, it once again doubled its net profit in the first three quarters of fiscal year 2024.
In order to reduce the cost, the Salia store has only one full-time store manager, and the others are part-time employees; all dishes are pre-made; every detail of the kitchen line of cups, dishes, and chopsticks is optimized for efficiency and cost savings; and even goes deep into the source. The farm helps farmers improve planting efficiency and output rates.
Jinan’s community restaurants are very popular and have been highly praised by Tomato Capital Qingyong as the king of cost-effective fast food in the country. By accurately positioning itself as a common people’s canteen, abandoning fancy decorations and menus, and maintaining a long-term business philosophy of low profits, no dish in Chaoyixing exceeds 10 yuan, polenta porridge is provided for free, and meat and vegetable combinations can be eaten for only 14 yuan. Today, Chaoyixing has opened more than 600 stores across the country, with annual revenue exceeding 2 billion yuan.
In summary,For most catering companies, in order to provide cost-effective products with competitive prices, they must first focus on cost control and operational efficiency.
As the three big mountains that weigh on catering companies, rent, manpower, and ingredients are always the bulk of costs. To reduce costs and improve efficiency, these three items are also the top priorities of the reform, and more innovative business attempts are also taking place.
Taking rent as an example, as the highest proportion of rigid costs, many catering companies have now tried to open satellite stores specializing in takeout. These satellite stores do not need to consider dine-in space and offline customer flow. They are usually located in areas with lower rents, and the store area is also significantly reduced. They only use about one-tenth of the store opening cost of ordinary stores, that is, they provide takeout services of the same quality. .
According to media reports, 120 chain catering brands such as Haidilao, Laoxiangji, and Nonggenji have opened nearly 800 satellite stores this year. Meituan’s on-site visits to brand satellite stores show that the average store efficiency can reach more than 4,500 yuan per square meter, and the average customer efficiency can reach more than 35,000 yuan.
At present, catering companies are accelerating their online deployment, improving operational efficiency through online booking, mobile payment, smart ordering, data analysis, etc., and expanding service channels through online ordering, takeout and delivery.
In addition to rent, reducing labor costs by introducing more standardized food production processes and smart equipment, and reducing raw material losses by optimizing supply chain management, intensive procurement, and centralized logistics distribution are also worthy of consideration and exploration by catering companies. Optimization direction.
Secondly, on the basis of achieving affordable operation, catering is a business that relies on regular customers. Ensuring product strength is only the first step. It also needs to continuously enhance brand value and differentiation strategies to better capture consumers’ minds.
For example, Yao Zhe, founder of Hezhong Co., recently mentioned that 33% of the restaurants in shopping malls are local dishes. Behind local dishes are the cultural drivers of various places. Producing specialty catering of origin can help catering companies create their own unique value. Label. For example, he said that the market knows that Inner Mongolia’s mutton is good, but there are few Inner Mongolia kebab brands. These are category opportunities that have not yet been explored.
As the catering industry enters a period of structural adjustment, the pursuit of parity and ultimate cost-effectiveness has become a typical feature of mass consumption. If the first half of the catering industry can reap the dividends of the times by relying on extensive operations, then the second half is the era of refined operations that truly competes with intensive farming.
Keeping up with market changes, embracing mass consumption, expanding consumption scenarios, and seizing brand awareness are both forced by the situation and the way to survive for catering companies at an inflection point.
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