"Your comments, I received. The price increase at this time is not right. After Haidilao, Xibei also apologized for the price increase.
On April 11, Jia Guolong, chairman of Xibei Catering, posted on his personal Weibo that the company had indeed increased its price. Since February 1, the 18 takeaway dishes in Shanghai and 8 surrounding cities in Xibei Noodle Village have risen by 1-10 yuan. Since April 6, 25 dine-in dishes in 12 stores in Shanghai have also risen by 1-10 yuan. Dine-in prices at the other 374 stores across the country have not changed.
Jia Guolong announced on his Weibo that starting today, the prices of all takeaway and dine-in dishes that have increased in price will return to the standards before the store closed on January 26, 2020.
"I also decided that before May 31, 386 Xibei stores in 59 cities across the country can enjoy a discount of 100 yuan and a refund of 50 yuan to show sincerity." The 50 yuan coupon can only be used next time, in fact, we are quite difficult, and I hope you support the business. Jia Guolong said in the official micro.
Subsequently, the official of Xibei Shinomian Village forwarded Jia Guolong's Weibo, saying "I'm sorry everyone."
Does the catering industry rely on price increases for self-help?
Industry experts: Price increases are a double-edged sword
In fact, the catering companies that have increased their prices are not unique. Some insiders said that behind the increase in the price of dishes in catering enterprises, it reflects the huge losses suffered by the catering industry due to the impact of the epidemic. Although the catering industry is now open for dine-in, due to epidemic prevention and control considerations, many stores have taken measures to maintain customer distance, and some stores even specify that a table cannot exceed 3 people, which affects the flow of customers to a certain extent. Some analysts believe that in the future, more catering companies may increase the price of dishes.
In the interview, a number of catering companies said that with the improvement of the epidemic prevention and control situation, catering enterprises have resumed work one after another, but business is far from recovering. "It is unrealistic for catering companies to return to their previous levels in the short term." Shao Qian, media public relations manager of Xiaolongkan Holding Group, admitted that "retaliatory consumption" will not come so soon. In the aftermath of the pandemic, more and more people are more concerned about their health and remain concerned about the potential risks of eating out.
According to the "Investigation Report on the Impact of the Covid-19 Epidemic on China's Chain Catering Industry" released by the China Chain Store & Franchise Association, from March 1, 2020, 5% of the sample enterprises have no cash on their books to support operations; 79% of the sample enterprises said that they could not rely on their own cash for 3 months; and only 16% of the sample enterprises said that they had abundant cash flow reserves and could support more than 6 months.
At the same time, the catering industry is also facing serious losses. According to the report of the China Cuisine Association, during the Spring Festival this year, 93% of catering enterprises chose to close their stores, and 78% of catering enterprises lost more than 100% of their operating income compared with the same period last year. It is precisely for this reason that as the national epidemic prevention and control situation continues to improve, leading cadres in many parts of the country have taken the lead in "going down to the restaurant", aiming to guide the general public to gradually resume normal consumption under the premise of doing a good job of protection.
In the face of the operational pressure brought about by the impact of the epidemic, should catering enterprises increase prices? Does the company rely only on price increases?
Jiang Zezhong, a professor at the Capital University of Economics and Business and a researcher at the Research Center for Private Enterprises of the Chinese Academy of Social Sciences, also gave his point of view, "On the basis of rising costs such as raw materials, enterprises can appropriately increase prices, or maintain the original price to win consumer recognition and increase the market scale effect." Jiang Zezhong believes that with the resumption of work and production of enterprises, market consumption will rebound, and the intensity is very large, which is a good time for enterprises to improve brand awareness and customer loyalty, and price increases will obviously damage consumers' consumption enthusiasm and brand recognition.
The case of price reductions by some catering companies also confirms this view. Recently, KFC launched a 30 yuan coffee monthly card, one cup a day, equivalent to only 1 yuan per cup of coffee; McDonald's original price of 22.5 yuan burger is now only 9.9 yuan, and also launched a Monday membership half price activity. Price cuts have brought a large number of consumers, and some stores have even lined up. Many netizens sighed that in the special period, good quality and low price are more acceptable.
Industry experts analyzed that price increases are a double-edged sword, and the catering industry must also improve its ability to resist blows, reasonably digest pressure, and carry out self-help is the long-term way. Some catering companies should not use their brains on price increases, but should make more efforts in innovating products and business methods and continuously optimizing services.
Mo Yuanming, a researcher at the Yangtze River Economic Research Center of Chongqing Technology and Business University, suggested that the price increase of the catering industry must fully weigh the interests of itself, the market and consumers. At present, it is more necessary to huddle together for warmth, not to rudely "rise up", and to make consumers pay for their losses in disguise through price increases. At the same time, the government's policy regulation and guidance should also play a role, such as the introduction of consumption coupons in various places will also boost consumer confidence and will also help the catering industry tide over the difficulties.
Why should they apologize for price increases?
After Haidilao apologized yesterday, Red Star News published a commentary article saying that to examine Haidilao's price increase and apology strategy, it is still necessary to uphold the principle of "market to market, morality to morality", in order to better understand the internal logic and behavior patterns.
The price of products of catering businesses such as Haidilao and Xibei has risen, causing some users to complain, and there are many opinions about this. Some people believe that the rush to increase prices such as Haidilao is a kind of harm to consumers' feelings. However, some people believe that the adjustment of commodity prices by catering merchants is a spontaneous act of the market, and those who wish to pay the bill, and those who do not want to choose other catering businesses, can not be committed to this.
In the end, Haidilao chose to apologize rather than stick to the price increase route, probably because it reassessed the consequences of the price increase. We should see that although the price increase can partially make up for the economic losses suffered by Haidilao before, for catering businesses, in fact, indicators such as user consumption frequency and turnover rate are more important. If too many customers are scared away because of the price increase, the price increase is a choice that is not worth the loss.
Due to the impact of the epidemic, the catering business has previously stopped operating and is still in a gradual recovery period. At this time, what catering businesses need to do most is "popularity", attracting old customers to return through various ways and finding ways to obtain new customers. If the price increase leads to the loss of old customers and the deterrence of new customers, it will not be conducive to the follow-up operation of catering businesses such as Haidilao.
Relatively speaking, the catering industry is a fiercely competitive industry, Haidilao and other businesses increase prices, other catering businesses if from the perspective of customer acquisition, choose not to increase prices or smaller increases, or even price reduction promotions, then Haidilao's price increase strategy, it is possible to let their own customers flow to competitors.
Compared with small and medium-sized catering businesses, Haidilao belongs to large chain catering brands, especially Haidilao has been listed. Therefore, once the market feedback appears unfavorable to Haidilao, and even some consumers begin to "vote with their feet" not to come to Haidilao for consumption, it will not only bring losses to Haidilao's current performance, but also directly endanger the market value of Haidilao, and even make investors have doubts and worries about Haidilao's future development prospects.
Combining the above factors, it can be judged that Haidilao chose to apologize and restore the price to the previous standard, which is actually a trade-off of various long-term value indicators such as brand, comprehensive income, market value management, performance growth, etc., and finally came to the conclusion that "long-term value cannot be damaged by immediate gains" and took stop-loss action in a timely manner.
It should also be noted that in the days of price increases, many people on the Internet have "denounced" Haidilao, which means a bit of "kidnapping", which may also be part of the factors that prompted the apology. In fact, catering is the most fully competitive industry, price increases and discounts are all market freedom, why not let the "invisible hand" play a role.
It can be said that Haidilao's apology is on the one hand a reassurance to consumer sentiments, on the other hand, it is a choice based on its own fundamental interests, which is the result of the rational trade-offs of economic people. Judging from Haidilao's choice, doing so can keep its own brand from being too affected by this price increase, and apologizing with a low posture may win the recognition of more consumers.
In the end, when we examine Haidilao's price increase and apology strategy, we still have to uphold the principle of "market to market, moral to morality", in order to better understand the internal logic and behavior patterns.
Column Editor-in-Chief: Zhang Wu Text Editor: Song Hui Title Image Source: Visual China Photo Editor: Yong Kai
Source: Economic Daily