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In the prosperous night-time economic ecosystem, Banu has made new moves.

Recently, Banu Maodu Hotpot announced that its three stores in Zhengzhou (Zhengzhou Concept Restaurant, Shangding Road Store, and Jinshui East Road Store) will open "24 hours a day". At the same time, except for some newly opened stores, most of Banu's stores are open until 3 am.

Dapeng｜Written by

In fact, since the "Opinions of the General Office of the State Council on Accelerating the Development of Circulation and Promoting Commercial Consumption" in 2019 proposed "activating night-time business and markets", local governments, enterprises and market players have successively introduced new measures to develop the night economy, and many chain restaurants have also begun to launch "all-day operation" strategies.

But Banu’s “24-hour operation” is not only aimed at boosting the night economy.

At present, there is fierce competition among hotpot chain brands, with fierce "price wars" and "elimination rounds" between old and new brands alternating. Hotpot chain restaurants have almost reached the stage of "rowing against the current, if they do not advance, they will retreat."

How to fight against industry involution with a sustainable development attitude? This is a question for all hotpot chain brands.

For Banu, "some stores open 24 hours a day" may not be a new thing in the industry, but this is a "self-examination" of Banu's product strength, service strength and brand strength. It is also the natural result of the "spillover" of its overall catering capabilities. It also hopes to explore a way to "fight against internal circulation" for the hot pot track and even the catering industry.

01/‍‍‍

The conspiracy of "24-hour operation"

As we enter 2023, the nighttime economy in various regions continues to be booming, and related consumer demand and catering supply are both increasing.

According to the Ministry of Commerce's urban residents' consumption habits survey report, 60% of China's consumption occurs at night, and the daily consumption of large shopping malls from 18:00 to 22:00 accounts for more than half of the total daily consumption. A special survey also pointed out that the number of people who participate in the "night tour experience" between 18:00 and 22:00 accounts for 77%.

"One of the main reasons for the rise of the night economy is that nighttime dining and entertainment can meet the spiritual needs of young people and is driven by current policies." Jiang Zhaoyi, deputy director of the Jiangsu Financial Research Institute, believes that young people have a fast pace of life and are under greater pressure during the day, so nighttime consumption and entertainment have become a favorite way for young people to relieve stress.

When Banu officially announced its 24-hour stores, it also put up a slogan, "Workers' Night Plan", which is in line with the current working and living habits of urban white-collar workers. It hopes that young people can "sweep away hunger and get rid of the 'work smell'" in nighttime dining.

As demand grows, the supply of nighttime dining has also shown an upward trend.

Data shows that there are more than 1.588 million existing related enterprises in my country's "night economy". Popular industries derived from the "night economy", such as hot pot, barbecue, and beer, have added more than 50,000 new ones this year.

Driven by the nighttime economic ecosystem, more catering companies are focusing on nighttime catering consumption, or launching street stalls and night markets, or combining with the "secondary consumption" scene after the concert, or extending business hours to create "all-day open" stores.

From an izakaya and snack stand that soothes people's hearts and appetites to leading restaurant chains continuously extending their evening business hours, the concept of "late-night diner" is widely popular in first- and second-tier cities, and is also driving more restaurant brands to transform into "24-hour" stores.

However, "24-hour operation" for restaurants does not simply mean extending the business hours.

There was once a well-known Hu La Tang brand in Zhengzhou. It tried many times to operate around the clock, adding dumplings and ramen at noon and opening a night market at night, but the results were minimal, and it eventually returned to the breakfast category.

The key logic is that consumers perceive the brand as "selling Hu La Tang, and Hu La Tang is breakfast." This is the impact of brand power itself on attempts at full-time operations.

It is not only about brand power. If a catering brand wants to operate well at all times, it will be an all-round test of the brand's products, customer base, scenes, manpower and other aspects. This will test the catering brand's "stickiness" ability, especially in attracting customers during the idle time at night. This requires the catering brand to have strong influence, good operational capabilities and service experience, and sufficient cost investment.

So, why does Banu dare to try the "24-hour open" store again?

Since opening its first store in Anyang, Henan in 2001, Banu has undergone several strategic adjustments, but has gradually established its brand power and consumer mentality of "productism", insisted on focusing on its core business, and expanded outward at a steady pace.

Data shows that Banu currently has over 120 stores, with 8 new stores added in the second quarter of this year. Next, Banu will focus on expanding into provincial capitals such as Hangzhou and Jinan.

Banu focuses on scale, but does not blindly believe in scale effects. Banu founder Du Zhongbing once said: There is no concept of market share in the catering industry. The most important thing for the catering industry is to survive well and survive for a long time. "Rapid expansion and rapid store openings will not appear in Banu's development plan."

Screenshots of some Banu stores

Just as Banu first proposed the concept of "productism" in the industry, it streamlined the SKUs of dishes and focused on enhancing the appeal of key products, while combining it with brand power to stimulate consumption, and ultimately focused on creating popular categories such as tripe and mushroom soup.

This craftsman's persistence in "doing one or several things well" is the foundation of Banu.

When it comes to specific details, Banu is committed to allowing consumers to eat truly good products and enjoy a good experience, and has been deeply engaged and "reinventing the wheel" for decades. Just as Du Zhongbing's evaluation of Banu's supply chain: it is the result of years of accumulation.

Ultimately, Banu will incorporate the overall concept of "focus and perseverance" into every aspect including supply chain, store management and brand operation, and will continue to integrate and focus its efforts to form Banu's comprehensive catering capabilities.

Today, the opening of Banu’s “24-hour store” is a natural extension of its comprehensive catering capabilities.

In addition to being a 24-hour store, Banu announced that it has been trying to trace the origin of its products through travel live broadcasts since August last year, and launched a series of "Geographical Indication Protected Products" in November of that year, hoping to use the most direct and real perspective to let users feel the true value behind the ingredients.

All things return to their origin. It is precisely with the support of comprehensive catering capabilities that Banu is able to stick to productism in the "involutionary" competition.

02/‍‍‍

Perseverance in the midst of internal competition

As catering consumption continues to recover, chain hotpot brands are experiencing fierce competition.

One of the most direct manifestations is that the leading hotpot players have been "cutting prices" and the price war has been fierce. Taking the relatively high-priced Coucou Hotpot as an example, its average customer price in 2023 has dropped from the original 150.9 yuan to 142.3 yuan.

In addition, Jiu Mao Jiu's Shuang Hotpot is also experiencing a wave of price cuts, with some stores putting up banners that read "hot pot base starting at 8 yuan, meat dishes starting at 9.9 yuan, and vegetarian dishes starting at 6.6 yuan." The price reduction of some dishes is about 0.9-14 yuan, and the hot pot base has dropped by 2-4 yuan.

The financial report shows that from 2021 to 2023, the per capita consumption of Shuang Hotpot was 129 yuan, 128 yuan and 113 yuan respectively, declining for three consecutive years.

The combination of consumer price cuts and fierce industry competition has brought about a more brutal industry elimination round in the hotpot price war.

According to data from Zhaimen Canyan, 220,000 new hotpot restaurants were added in the past year, but the net increase was only about 84,000, which means that more than 130,000 hotpot restaurants have left the market. From January to May this year, nearly 20,000 new hotpot-related companies were added, but this was a 22.5% decrease compared to the same period last year.

Regarding the negative impact of price wars on the catering industry, Xie Shuqin, Executive Director of Greater China at Sullivan, pointed out: "Price wars are not suitable for all brands!" Although price reduction strategies can bring certain benefits in the short term, they may also cause many problems such as damaged brand image and unclear positioning.

Du Zhongbing said in an interview earlier that prices can be relatively adjusted when consumption is down in order to attract the original target group, and it is difficult to completely convert a consumer group by lowering prices. From a strategic perspective, price reduction can only be a phased strategy, and it is difficult to overtake others by lowering prices.

However, the competition in the hotpot industry is "cruel and fierce". How can Banu break out of the internal stalemate?

Since the beginning of this year, Banu has also experienced a wave of price adjustments. Its current national average customer unit price is about 130 yuan. It still insists on positioning itself as a high-quality hot pot. This is not only one of the important niche markets in the hot pot market, but also to a certain extent allows Banu to avoid more intense brand competition.

According to the "Hot Pot Category Development Report 2023" released by Hongcan.com, by 2023, 60-90 yuan will be the mainstream price of hot pot restaurants, accounting for more than 43% of the market. According to the data from Zhaimen Canyan, among the top 10 brands in terms of the number of "hot pot" stores, 9 of them have a customer unit price concentrated here.

Of course, no one can be immune to the wave, but the high-quality positioning that Banu insists on is actually a concentrated reflection of productism all the way, which is also the core path for Banu to break through the internal competition.

In terms of product development, Banu insists on "launching new products every month and having several impressive new products every year", giving full play to the advantages of systematic product development and overall supply chain capabilities. Take Banu's "New Vegetables Monthly" plan as an example, breaking the conventional routine of general hot pot vegetable categories, directly using seasonal fresh vegetables to serve, such as fresh bamboo shoots in April; kale shoots and kohlrabi in June.

To ensure the freshness and high quality of seasonal vegetables, Banu, on the one hand, goes deep into the place of origin and establishes cooperation with vegetable production bases to obtain ingredients from the source, reduce intermediate links and lower costs; on the other hand, it ensures the cold chain insulation of vegetables from picking to transportation to the central kitchen to ensure the stable quality of the ingredients.

To this end, Banu has developed trunk transportation resources from Yunnan to Zhengzhou, Wuxi, Beijing, Dongguan and other places to ensure that the vegetables will be shipped on the same night they are packaged and that no transit is required during the transportation process.

Data shows that Banu currently has four central kitchens and a base material processing factory, with an annual production capacity of more than 20,000 tons. They are all modern logistics systems integrating production, warehousing logistics and supporting facilities to meet the food supply of hundreds of directly-operated stores.

Obviously, behind productism is the "high standards, strict requirements" and long-term experience in building the overall supply chain, which has also become the underlying strength that enables Banu to persist in the competition.

No matter how things change, the essence remains the same. Du Zhongbing once commented on the phenomenon of Internet thinking being popular in the catering industry. He believed that mobile Internet has brought about efficiency improvements, including operational efficiency and efficiency in communicating with customers, but the Internet can never change people's judgment and cognition of food. What consumers think about which restaurant has good ingredients and which restaurant has delicious food is not something that the Internet can determine.

"I found that no matter what kind of doctrine it is, it ultimately depends on the product itself," said Du Zhongbing.

The same is true for the current competitive situation in the industry. Low prices do affect consumers' short-term decisions and bring a short-term surge in customer traffic to stores, but price wars are inherently short-lived, and companies also need to consider their own sustainable development.

Most importantly, when consumption trends return to normal and prices return to average profit margins, most consumers' core concerns about catering are still whether the products are of high quality and whether the overall experience is good. All of this has little direct relationship with price factors, but mainly has to do with the catering companies' deep cultivation and adherence to their core capabilities.

When the tide goes out, you can tell who is swimming naked. If we add one more sentence, it will be "When the tide goes out, you can tell who is holding on."

Du Zhongbing has mentioned more than once that his idol is Apple founder Steve Jobs. He believes that Apple, Starbucks and other companies are already "respectable" super brands worldwide. This is also one of his dreams for founding Banu and creating the Banu Maodu Hotpot brand.

"To build an influential brand in this society, and for people to recognize and respect it from the bottom of their hearts when they mention it, this is what I am most willing to do," said Du Zhongbing.

(Pictures from the Internet)