The competitive landscape of China's community catering market is undergoing a profound reshaping.
It is not difficult to find that the shops around the community are gradually occupied by major chain catering brands, such as Ziyan Baiwei Chicken, Yuan Ji Yun Dumpling, Mixue Bingcheng, Luckin and other chain brands have settled in, creating a prosperous scene of "community is a small business district".
Behind this change is a significant increase in the chain rate of China's catering industry. Jumping from 14.7% in 2018 to 20.4% in 2023, the rapid development of chain restaurants has become a trend that cannot be ignored. Corresponding to this is the gradual "disappearance" of many traditional mom-and-pop shops, which are becoming more and more difficult in the fierce market competition.
According to Meituan's latest data, the number of chain brand stores with more than 1,000 stores increased by more than 25% year-on-year in July this year, which further confirms the strong momentum of the expansion of the chain restaurant market. It is foreseeable that the chain rate of the catering market will continue to rise in the future, which seems to have become an unstoppable trend.
In the face of this round of reshuffling of the community catering market, mom-and-pop shops are facing unprecedented challenges and choices. How do they find their place in this competition? Does the rise of chain restaurants really mean that mom-and-pop shops will be completely replaced?
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Chain restaurants are approaching the community, accounting for 80%
In the community, the proportion of large and leading restaurant chain enterprises is steadily increasing, and this phenomenon shows two significant trends:
1. The in-depth layout of the "community catering" brand
Some restaurant chains, which were originally focused on the community market, have accelerated their expansion significantly.
For example, Yuan Ji Yun Dumplings has expanded from 858 stores in 2021 to 3,794 stores today, covering almost the whole country, with special emphasis on the layout of townships and communities, with township stores accounting for 11.23% and shopping mall stores accounting for only 6.06%.
The same is true for Ziguangyuan, which has grown rapidly from more than 20 stores at the end of 2019 to 167 directly-operated stores, mainly concentrated in neighborhoods, hutongs and around supermarkets, with flexible store sizes and cost-effective food to attract customers.
Jixiang Wonton also performs well, currently has 2,691 stores, including more than 50 stores in many cities, and also attaches great importance to the development of township and community markets.
Even in the face of the challenges of the epidemic and the industry-recognized "catering winter", these brands still insist on opening stores against the trend and penetrating into various communities, becoming a common choice in residents' lives.
2. Cross-border attempts from shopping malls to communities
Another trend is that chain restaurant brands, which originally used large shopping malls and office buildings as their main positions, have also begun to set their sights on the community market.
As a typical representative, Starbucks not only opened community stores in Guangzhou, Shanghai, Chengdu and other places, but also launched the "Coffee Express" service to meet the needs of the community. Well-known catering companies such as Xiabu Group, Donglaishun and Xiaolongkan have also set foot in community catering, further enriching the diversity of community catering.
A closer look reveals that chain brands such as Ziyan Baiwei Chicken, Yihetang, Cudi Coffee, and Ningji have widely penetrated into community business districts, such as Weihai Road in Shanghai's Nanjing West Road subdistrict, where these brands account for about 80% of the market share. The commercial streets outside Xiaobian's own community are undergoing changes, and traditional individual restaurants are gradually being replaced by neat and large-scale chain restaurants.
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The era of "just need catering".
Community catering is an important battleground
The phenomenon of chain restaurants gradually penetrating into the community is actually a natural extension of its strategic layout, and now the trend of "approaching" is significant, behind which there are multiple considerations:
1. Community catering: a blue ocean market with great potential
According to data analysis, it is expected that by 2030, more than 20,000 new communities will emerge in the mainland, covering 350 million households, and this huge base has given birth to a trillion-level community service consumer market.
Community catering, as an important part of it, has become a "big cake" in the eyes of chain brands due to its low cost (only about one-fifth of the cost of shopping malls) and high demand (strong rigid demand and affordable price). In addition, the epidemic has changed people's consumption habits and increased time at home, and community catering has become more and more popular because of its convenience and high-frequency consumption.
2. Chain expansion strategy: the inevitable path from shopping malls to communities
As the rate of restaurant chains in China has increased year by year, from 14.7% in 2018 to 20.4% in 2023, and is expected to continue to grow, chain brands have adopted the franchise model to accelerate their expansion.
When the high-quality spots in first-tier cities and shopping malls tend to be saturated, chain brands naturally set their sights on the community market in second- and third-tier cities, counties and even towns to seek new growth points.
3. New trends in community flow: the Internet celebrity effect is beginning to appear
Due to the dense population and agglomeration effect, some communities have shown the potential to become "Internet celebrity streets".
The F&B outlets in these communities, even if they are modest on the outside, may have a sophisticated interior and professional service, which is indistinguishable from a chain brand, attracting a large number of customers.
In contrast, traditional shopping mall restaurants have diminished their attractiveness in the face of crowded saturation and increased price sensitivity.
However, those seemingly inconspicuous mom-and-pop shops and fly restaurants in the community can survive for a long time with a stable source of customers and word of mouth, which has stimulated the strong interest of chain brands in the community market, prompting them to lay out the community one after another, in order to occupy a place in this new blue ocean.
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Under the "barbaric invasion" of the giants
Where do mom-and-pop shops go from here?
In the case of the continuous weakening of residents' spending power, the trillion-level community service consumption market of community catering is becoming more and more important. It not only carries the rigid needs of residents' daily life, but also has become a new battlefield for many catering companies because of its advantages such as proximity to consumers and relatively low cost.
With the vigorous blessing of capital, a large number of "armed to the teeth" chain merchants are carrying out a merciless "massacre" against traditional mom-and-pop shops.
After the head attacked and occupied the territory, where is the vitality of the mom-and-pop shop?
There are two directions of breakthrough. The first is to choose to hold a big tree, join some mature head brands, and seek profit margins in a large system; The second is to inject ingenuity, make flavors that cannot be reached by industrialization, and exert their strength in areas that the head is not good at.
Even if it is a small store, re-examine the market, find its own differentiation, avoid the field where the giants are located, and look for opportunities in the gap market.
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