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The news of Saizeriya’s price increase became a hot topic.

According to market news, recently, some Saizeriya consumers reported that the price of porcini chicken cheese baked rice, which was previously priced at 18 yuan, has slightly increased to 20 yuan; the price of tuna salad, which was previously priced at 11 yuan, has increased to 12 yuan. In addition, the price of fruit salad and chicken breast salad has also increased by 1 yuan.

On July 16, a reporter from 21st Century Business Herald contacted Shanghai Saizeriya Catering Co., Ltd. posing as a consumer. Relevant staff said that the menu prices of all restaurants in the Shanghai area have been adjusted uniformly. There is indeed an increase in the prices of some dishes, and the main reason for the price increase is the increase in labor costs and raw material costs.

The above-mentioned staff member also said that Saizeriya’s low-price strategy does not mean that Saizeriya will never raise prices, but means providing high-quality services within the range that consumers can afford.

Saizeriya is a representative brand of "affordable Western food". Precisely because of the "low price" label, its price increase behavior is very sensitive. This price increase has attracted great attention from consumers on social media, and discussions on the price increase have never stopped.

Faced with market changes, Saizeriya has decided to raise prices, but must also face the resulting storms.

Price Sensitive

"Affordable" is not only how consumers perceive Saizeriya, but also what Saizeriya itself insists on.

Previously, Saizeriya President Hideji Matsutani has repeatedly stressed that Saizeriya has always adhered to the "principle of no price increase", which shows that this is Saizeriya's corporate strategy. In Saizeriya's menu, most dishes are priced at no more than 25 yuan. According to public information, among Saizeriya's 100 dishes, 72 are priced below 20 yuan.

Saizeriya has never won the recognition of consumers with its "taste". According to many consumers interviewed by the 21st Century Business Herald reporter, their brand perception of Saizeriya is highly similar, that is, "cheap, filling, and average taste." This means that Saizeriya's consumers are likely to be price-sensitive people.

Before the price increase sparked heated discussions, Saizeriya had already taken corresponding actions in the Japanese market. As early as July 12, 2023, Saizeriya began to adjust its Japanese menu. Although the overall price did not increase, it stopped providing cheese powder for free and instead provided it in small plates at a price of 100 yen.

Similar measures have been taken for the price increase in the Chinese market this time. For example, the price of garlic snails, which automatically includes bread slices, has changed from 18 yuan to 19 yuan per snail, and the bread slices are provided at 5 yuan; in addition, many single products have also increased by 1 to 2 yuan.

Some of the Saizeriya consumers interviewed by the 21st Century Business Herald still expressed concerns about Saizeriya's price increase. Consumer Xiao Lin said that the price increase broke the "impression" that Saizeriya had previously insisted on not raising prices. It may be just a test, and prices will continue to rise in the future. This will not only seriously affect his impression of Saizeriya, but also affect the positioning of the brand itself.

Some consumers also believe that the price increase of some dishes at Saizeriya is acceptable, because the increase is not very large, most of them are only 1 to 2 yuan, which can still be regarded as affordable Western food, and this should be the company's response strategy in the face of declining profits, which is understandable.

Zhu Danpeng, a Chinese food industry analyst, told the 21st Century Business Herald that products and brands with high cost performance are favored and sought after by consumers, and products with high cost performance have been selling well in the past two years. The gross profit margin of the catering industry is mostly high, and most of them can exceed 50%. It's just a matter of how much you make, and the pricing depends on the choice of the company.

Popular in China

With its low-price strategy, Saizeriya's growth performance in the Chinese market is obvious to all.

According to the financial report for the first three quarters of fiscal year 2024 (September 2023 to May 2024) recently released by Saizeriya, during the reporting period, Saizeriya's sales reached 163.2 billion yen (approximately RMB 7.494 billion), an increase of 24% over the same period last year.

From the breakdown, we can see that Saizeriya's revenue comes from three major divisions: Japan, Australia and Asia (excluding the Japanese market), and the main source of the Asian division is China. According to data previously released by Saizeriya, as of the first quarter of fiscal year 2024, Saizeriya has a total of 1,549 stores, including 1,051 stores in Japan and 498 stores in Asia outside of Japan, of which Chinese stores account for 466 stores in Asia.

It can be seen from the financial report that in the first three quarters of 2024, the sales of the Asian division in China were approximately 58 billion yen (approximately RMB 2.663 billion), a year-on-year increase of 30.1%, and operating profit was approximately 8.2 billion yen (approximately RMB 377 million), accounting for more than 35% of sales.

Despite the low price, Saizeriya's profit margin is still quite impressive. Based on the operating profit of 10 billion yen in the first three quarters of 2024, its gross profit margin even exceeds 60%. The key to achieving high gross profit is that Saizeriya mainly sells pre-prepared dishes. Its restaurant staff only need to heat the semi-finished products to quickly serve the dishes, which can both speed up efficiency and reduce costs.

Perhaps due to the success of Saizeriya's affordable product line, more brands in the Chinese market are targeting this track.

In May 2024, Pizza Hut opened a new store type "Pizza Hut Wow" in Guangzhou. The restaurant mainly serves simple Western food such as pizza, pasta, snacks, and drinks. The prices are comparable to those of Saizeriya. The minimum price of main dishes is 19 yuan, the minimum price of noodles/rice is 15 yuan, and the minimum price of drinks and ice cream is 6 yuan.

The pricing system of Pizza Hut LeXiang stores is very close to that of Saizeriya, which may trigger a close fight.

Consumer Xiao Li told the 21st Century Business Herald reporter that "Pizza Hut Wow Le Xiang Store" currently has a small number of stores, but in the long run it may have a market impact on Saizeriya because Pizza Hut has a stronger brand advantage than Saizeriya. "When the prices of Saizeriya and Pizza Hut are the same, I prefer Pizza Hut because I am more familiar with it and trust it more."

With the involvement of players such as Pizza Hut, Saizeriya, which only offers value for money but not taste, will face pressure from all sides. Price increase may be just a last resort for Saizeriya, and more challenges are on the way.