The catering industry under special group buying: merchants and customers love and kill each other

This article is from the WeChat public account: Dining View Bureau (ID: Can_guanju), author: Yang Ze, Karma, original title: "The catering industry under the special group buying: the platform makes money by watching dramas, and merchants and customers love and kill each other", the title picture comes from: Visual China

"Before looking for a seat, find a group purchase package at the store", which has become the standard action of the migrant worker Xiao Zhang to eat at noon.

From 9.9 yuan for two hamburgers, 9.9 yuan for a set meal with meat, vegetables and drinks, 9.9 yuan for a bowl of all-you-can-eat noodles, and then to a 44.9 yuan meal for two with three dishes and one soup, 99 yuan for all-you-can-eat meat package, 128 yuan for Xinjiang cuisine with roasted lamb leg and large plate of chicken, Xiao Zhang, who has not been on fire since 2022, relied on the 100 meals purchased by the special group to eat in the restaurant and gained 10 pounds.

In order to compete for Xiao Zhang, even McDonald's and KFC have begun to lower the price of the main burger and fried chicken, and the ubiquitous 9.9 yuan McSpicy Chicken Leg Burger, Grilled Chicken Leg Burger and even Big Mac Coupons have replaced the original cheap and high-quality 13.9 yuan with 1+1 package, which has become the biggest motivation for migrant workers to enter McDonald's.

According to the rhetoric of the two giants, they contributed a lot of traffic, did not charge money, and even took out huge subsidies to help catering merchants use "special group buying" to attract traffic online, so that hundreds of consumers can walk into the store, taste delicious food, and fall in love with the brand, so as to achieve a win-win situation for catering merchants and consumers.

However, while consumers are enjoying it, the platform has also benefited a lot. Meituan's financial report said that the rapid growth of its special group purchase orders has helped it further strengthen consumers' mentality of "daily low prices". It is also reported that in the first quarter of this year, the sales of Douyin life services before the write-off exceeded 100 billion, and such a business volume was quickly achieved by relying on huge traffic and low-price subsidies.

The caterers seem to be the victims of this game. If you don't participate in group buying, you can hardly see the flow of customers. Is group buying really a nightmare for caterers, or is there another solution?

1. Why do you do special group buying?

In a sluggish consumption environment, many F&B brands are struggling to find opportunities to ensure that no deal is missed and no opportunity is missed.

For example, aiming at the needs of consumers to increase categories, setting up "poor ghost packages" that do not make money or even lose money as promotional offers, capturing the traffic dividends of short videos and live broadcasts, building a membership system and private domain community to maintain old customers, and acting quickly under the guidance of platforms and catering KOLs......

These strategies are not affordable for every merchant, especially those who lack the time, energy, and capital. For them, engaging in price wars may be the easiest and quickest way to achieve results.

In particular, some beginners who are new to the catering industry enter the market with a "bottom-buying" mentality, only to find that the dividends of the catering industry's recovery are rapidly fading, and the balance between supply and demand is broken. In the face of insufficient customers, they can only be coerced and dance with the price war.

At the same time, the platform has also begun to exert force, Meituan and Douyin have as many as 320 million overlapping users, with an overlap ratio of 81%.

Middlemen and agents are also adding fuel to the fray, and in order to earn commissions in a short period of time, they attract F&B people to set up special packages for impulse.

In their words, the catering market is undergoing a traffic reshuffle, and it is very important to seize the opportunity, it is necessary to use special packages, or even at a loss, to build up popularity, and then make money.

So, the fire of special group buying burned like this. Some unreasonable special group purchases that fell below the "bottom line" began to appear frequently.

Some Hunan restaurants will do group purchases of less than 5% off to attract customers, and barbecue restaurants release 19.9 barbecue packages for two. Some hot pot restaurants have also launched coupons of 9.9 to 100 yuan.

False propaganda is also beginning to emerge. For example, the name is not true, the quality has shrunk, or the dishes purchased in the group are "special", which is significantly different from the normal order. Some group purchase coupons cannot be used normally, or there are invisible consumption thresholds.

Not only that, ultra-low discounts attract too large customer flows, which often exceed the service capacity of merchants, which not only causes more than 1 hour of waiting during peak hours, but also affects the quality of service, "basically throw down the plate and leave" and "don't shout two or three times, you can't find a waiter".

Is the special group buy "out of control"? Some caterers are unmoved. They believe that doing special group buying at a loss will basically attract the wool party, and may not necessarily bring new customers.

There are also some who integrate special group buying into their business, and some restaurants will take the initiative to inform the reviews that there are discounted packages after entering the restaurant. There are also stores that build the ordering system directly on the Meituan Dianping system, making it convenient for consumers to purchase and deduct discounted products.

No, special group buying is not always a flood of beasts, they are using group buying strategically to increase exposure and foot traffic. The point is that the caterers should settle their own accounts.

Second, the catering people should calculate their own accounts

The income of most catering businesses comes from the sale of one meal, one dish, one soup and one side to consumers, which is a diligent door in itself, and what they earn is hard-earned money. Internet platforms such as Meituan and Douyin are just a drainage channel and marketing choice, as for whether to participate and how to participate, catering people must have their own accounts.

In fact, some successful cases of special group buying are often supported and created by the platform to demonstrate and attract more businesses to join, and large catering companies have the ability to create content, can bear operating costs, and can try different ways to play and combine punches, which have the opportunity to produce phenomenal effects.

However, for the vast majority of small and medium-sized catering people, such a successful model cannot be replicated. If you want to achieve this effect, you may need to cooperate with a third-party operator, but you may also encounter the erosion of interests in the process, as happened in the agency operation services in the field of food delivery and live broadcasting, facing the risk of "selling one order, losing one order".

So what should a caterer do?

First of all, in the face of the temptation of platforms and agency operators, it is important to maintain concentration and avoid falling into unnecessary anxiety when you see your peers on the street doing special group buying and your turnover declining.

It may be a new store that does a special group buy, and needs to accumulate customers, solve the problem of menu rotation and staff morale. It may be that he was in a hurry to go to the doctor, and he was "cut leeks" by the operator. It may also be that the profits of these restaurants are not in the stores, and they need to maintain enough customer flow and build themselves into prosperous stores, with the purpose of doing "quick recruitment" and "technical teaching", or it may be "fighting against the water", continuing to operate if they do well, and selling them if they do not do well......

Therefore, if you blindly follow the trend just because you see other people's activities, you are likely to step into the trap of group buying.

The decline in store revenue is actually not a big deal. In the case of economic downturn, competitors take turns, and the decline in turnover is a natural trend. Special prices can bring traffic and turnover, but traffic is difficult to become retention, and turnover may not necessarily generate profits.

Secondly, catering people need to be more aware of their own position and do a good job in expectation management. Meituan and Douyin are both marketing tools and drainage channels, which can only be icing on the cake rather than a charcoal in the snow.

The success of large companies is difficult to replicate. They have a large network of stores to take on online traffic. For small and medium-sized catering enterprises, what should be done is to maintain old customers within three kilometers, retain users by products and services, and let users enter the store for secondary consumption.

Special group buying should be mainly used to increase additional market exposure, and should not be seen as a panacea to solve all sales problems, and the proportion should be strictly controlled when used.

If it is not restricted, blindly relying on special group buying will often attract new customers who can't hit the eight poles. While it can increase traffic in a short period of time, this group of new customers can be difficult to repeat, staff will be exhausted by the surge in customer traffic, and it can also affect the dining experience of regular customers, which can damage the restaurant's long-term reputation and customer loyalty.

Third, any special group purchase requires precise calculations, and not all platforms need to do special group buying.

When setting up a special group buy, you also need to strike a balance between store profits, customer-facing price incentives, and platform commissions. It is necessary to build a mechanism that "can make money". Once consumers get used to unreasonable "specials", they are less likely to accept normal pricing.

Improving efficiency, eliminating waste, cutting overhead, creating value-for-money products and menus, and ultimately increasing turnover is the right path. Rather than just selling at a reduced price in the first place.

At the time of the launch, the different local life platforms were good, but not all of them were suitable. Some platforms have a high conversion rate, and some platforms have strong presentation, so you need to make a good trade-off. It should be noted that it should not be done at a loss, nor should it be dependent. Instead, it is necessary to carry out actuarial calculations within the scope of one's own ability according to the stage of development to ensure that it can make money.

Otherwise, it is easy to fall into the quagmire of special group buying, and fall into the vicious circle of "Twitter prices only have customers, there are guests but do not make money, and if you want to make money, you have to reduce the quality".

Han Dong, chief consultant of the Catering View Bureau and catering opinion leader, believes that in today's group buying war, restaurant owners are a real vulnerable group.

Dr. Cao Jianhai of the Chinese Academy of Social Sciences, in his theory of over-management, argues that if two of the following five conditions are met, the industry can be considered to have generated excessive competition:

1. The company sells products at a price below cost;

2. A large number of enterprises are in a state of loss or lower than the rate of return on social funds;

3. Difficulty in exiting;

4. The supply of the industry is greater than the demand of the society;

5. Enterprises mostly adopt strategies such as "suicide" and "destruction" in price wars and advertising wars.

In the current competition for catering group buying, almost all of the above five have appeared, which is a typical "excessive competition" industry, which is not good for society, industry, and practitioners. The causes are complex and mostly structural. From the perspective of the industry, the conditions for cracking this vicious game situation have not appeared at present, and there is no possibility of appearing in the short term, which is both a reality and a cruel environment. This is what everyone calls "volume".

This article is from the WeChat public account: Dining View Bureau (ID: Can_guanju), author: Yang Ze, Kalmar, legal support: Zeng Xianxiang, partner of Beijing Jingdong Law Firm

This content is the author's independent view and does not represent the position of Tiger Sniff. May not be reproduced without permission, please contact [email protected] for authorization

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