The competition in the catering industry continues to be fierce, and the chain rate of the industry continues to increase

Reporter Zhong Chuhan and Jiang Zheng report from Shanghai

According to the National Bureau of Statistics, in the first two months of 2024, the growth rate of the catering industry will be 12.5%, which is halved compared with the growth rate of 20.4% in the whole of 2023.

At the same time, the degree of chaining of the catering industry is increasing. According to the "2024 White Paper on China's Catering Franchise Industry" (hereinafter referred to as the "White Paper") jointly compiled by the China Chain Store & Franchise Association and Meituan, the rate of China's restaurant franchise industry will increase to 21% in 2023, which is increasing compared with the past few years.

Competition continues to be fierce

Regarding the current catering market, Xu Weilian, CEO of CFB Group, pointed out: "The current catering operation is a little different from previous years. When I came to Beijing from Taiwan in 2007, there was probably double-digit growth in the FMCG industry in mainland China as long as foreign brands and multinational brands came in, did a good job in channels, collected collections, and performed normally. At present, the operation of the catering industry is more fierce and hard than before, which is mainly reflected in several aspects: first, the cost performance, now the price has returned to the era of normal pricing, and many brands have premiumized in the past; second, marketing is much more than before; third, there are more competing brands, mainly referring to the scale effect of chain brands is much larger than before, and the proportion of chain brands is also increasing. ”

Regarding the changes in the catering business, Wang Bin, the founder of Shuyi Xiancao, said with emotion: "From the opening of the store to 2021, our performance, scale, and profits have continued to grow. But since 2021, it will not be possible to do a marketing campaign as before, and a product can quickly increase revenue, which will help with a certain amount of performance, but the effect is already very small. In addition, innovation has become less of a contributor to performance. ”

In addition to the increasingly fierce competition, another major feature of the industry is that the rate of restaurant chains in China is constantly increasing. According to the white paper, in recent years, China's restaurant chain rate has increased from 15% in 2020 to 18% in 2021, and further increased to 21% in 2023.

Among them, the chaining rate of the fourth- and fifth-tier city markets is increasing. According to the white paper, the distribution of chain stores in third-tier cities and below increased by 0.6% compared with 2021, and the expansion rate is faster than that of first-tier and new first-tier cities. In addition, Meituan data shows that compared with 2021, the proportion of chain stores in first- and second-tier cities will decrease by 1.7% in 2023, and the proportion of chain stores in third-, fourth- and fifth-tier cities will increase by 1.7% accordingly.

Regarding the improvement of the degree of chain in the industry, Kong Lingbo, chairman of Ao Qiwei, pointed out: "When we discuss the increase in the chain rate, we should be aware that new changes are taking place in the industry, that is, excellent and steadily growing chain enterprises in the future will squeeze the development space of the catering industry." If a business wants to go big, the pressure may be greater in the future than before. The increase in the chain rate may lead to the operating pressure of many waist enterprises. ”

In addition, the improvement of the degree of chaining also has an impact on brand development and franchising, PwC Food & Beverage Industry Leader Cao Wenjing said: "In 2023, many leading companies will open up to joining. With the improvement of the chain rate, good store resources, locations, and capable franchisee resources in the market will become relatively scarce resources in the future, and brand competition will be required, and this trend will become more and more obvious. Therefore, well-known enterprises have gradually opened up to join in various ways, and there will inevitably be fewer and fewer good resources in the market. ”

How to deal with it?

At present, price reduction has become a common practice for catering companies. Since 2023, many well-known F&B brands have reduced prices or launched low-priced products. Gao Defu, chairman of Xijiade, found: "When the economy is on the upswing, the fine dining and expensive catering business is very good. And during the economic downturn, the business of super cost-effective catering is very good. ”

As for the price adjustment of catering companies, Kitakita, the founder of Hanyu Catering Planning, believes: "You can't blindly make low prices. We need to first consider whether we can shape the value of the product. Blindly playing low prices will not work, and the most important thing to pay attention to is to return to the product, because every penny in the business comes from the product. ”

How should enterprises respond to the current market environment? Kong Lingbo believes: "Experience first, efficiency as the root. No matter how the industry is involuted, first of all, enterprises should consider how to provide consumers with a better sense of experience. Secondly, it is necessary to consider whether you can make money at a low price. Finally, consider how the volume experience is and how efficiently the volume is performed. ”

In terms of improving efficiency, Kong Lingbo believes that efficiency can be improved through the introduction of advanced technology. "In the past, there were too many jobs in the catering industry that relied on masters and experience, such as the experience of chefs, the experience of asking for goods, and the experience of operations. In order to do a good job in system efficiency, it is necessary to model and intelligentize the experience precipitated in the brain. One of the advantages of large-scale model technology is that it can solidify human experience through large-scale models, and form a stable support system in the accuracy of procurement forecasting, the accuracy of scheduling, and the accuracy of taste in product research and development. In the cost of catering enterprises, if the ingredients are reduced by 3%, the labor cost is reduced by 2%, and the marketing cost is reduced by 2%, the net profit level of nearly 7%-8% can be saved, and in this process, AI technology and digital technology can play a huge role. Kong Lingbo said.

Xu Weiluan believes that if you want to compete in the era of lower prices, you must make greater breakthroughs in cost, consumer attraction and marketing methods.

Wang Hongtao, vice president and secretary general of CCFA, found several significant characteristics through the screening and analysis of industry innovation cases: first, digitalization is an important innovation direction for chain catering brands, secondly, products are still the eternal innovation theme of the new tea beverage industry, thirdly, marketing is a common innovation point in the catering or new tea beverage industry, and finally, catering and new tea beverage companies have begun to pay more attention to and carry out ESG work.

How to grow?

In the current market environment, more and more companies choose to enter the sinking market or go overseas to pursue growth. In terms of enterprise sinking, the market space is huge. Liu Jingjing, founder of Jiahe Yipin, said: "Now, to reach thousands of stores and 10,000 stores, you may have to extend your tentacles to the sinking market. From the perspective of national policy guidelines, by 2025, it is necessary to build about 500 county-level commercial 'leading counties' in the country, which is a very good opportunity for the restaurant chain industry. Now the young people in the small town are living more and more nourishing, which is also very much room for development for enterprises that do consumption and catering. ”

Kong Lingbo believes: "For the head enterprises, the next two to three years is a good window period for the sinking market, mainly because the population density of the third and fourth tier cities is very small, and once the new brand enters, it will quickly form customer stickiness and will not be broken by other competitors." In the first-tier cities, because of its very high fault tolerance rate, it accepts many new entrepreneurs almost every year, so the chain rate in the first-tier cities will not be particularly high. ”

At the same time, sinking also needs to have corresponding strength. Zhao Zhiqiang, chairman of BigPizza, said: "The most important point of sinking is to have ultra-high cost performance, which is the most difficult thing to do, and it needs to have particularly strong product research and development capabilities, supply chain management capabilities, efficiency capabilities, and informatization capabilities." ”

In addition, enterprises also have a broad space for development when they go overseas. Qiu Zhuquan, Deputy General Manager of China Telecom Global's Beijing Branch, said: "Chinese food has received a lot of praise overseas, and Chinese food is also China's business card overseas. With the continuous deepening of the national 'Belt and Road' initiative, a 'new blue ocean' has emerged in the overseas Chinese food market. ”

Cao Wenjing said: "The consumers in the overseas Chinese food market are not all Chinese, and a large number of foreigners are also consuming. In the eyes of some foreigners, Chinese food is an irresistible temptation to taste, so the appeal of Chinese food in many countries is very strong. For overseas markets, we must take the initiative to adjust and adapt to the needs of overseas markets. Companies that can survive in overseas markets and make good profits need to be prepared. It is mainly divided into: planning, research and research before departure, and planning and preventive measures after departure, and at the same time, communication with employees, the government, and cooperation with partners are as localized as possible. ”

It is worth noting that catering companies are also facing challenges when going overseas. Liu Jingjing pointed out: "Many enterprises that develop overseas have paid a lot of 'tuition'. On the one hand, intellectual property protection is very important, and well-known brands in China may also be preemptively registered abroad, so it is still necessary to protect your brand and register your trademark first. On the other hand, domestic efficiency is higher than in most countries. In terms of foreign procedures, whether it is finance and taxation or licenses, enterprises need to learn from local intermediaries before doing more standardized operations. ”

Whether it is sinking into the market or going to sea, the competition between enterprises must finally return to the characteristics and competitiveness of the brand itself. Liu Jingjing believes: "For a brand chain enterprise, whether to sink and go abroad cannot follow the trend. As long as the enterprise is competitive, productive, and manageable, to achieve the ultimate cost performance, and at the same time, the long board is long enough, both at home and abroad. ”

(Editor: Yu Haixia Review: Li Lin Proofreader: Yan Jingning)