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Author: He Hongyuan

Edited by Zhu Yimin and Jiang Peipei

The trend of price cuts has hit the catering industry! “Price/performance ratio” seems to be increasingly becoming the mainstream in the catering industry.

Many brands have joined the price cuts. In May, Xiabu Xiabu released a new menu showing that the average price of a single meal dropped by more than 10%. In June, the price of Hefu Lamian products dropped again by about 30%, and the price range of mainstream products was adjusted to between 16 and 29 yuan.

Financial reports from various companies show that in 2023, Haidilao's average customer spending had dropped below 100 yuan; Jiu Mao Jiu's Shuang Hotpot had an average customer spending of 113 yuan, down 12% year-on-year; the average per-customer spending at Tai Er Pickled Fish in the second quarter was 69 yuan. This is the first time that the brand's average customer spending has dropped to the 60 yuan price range since the company went public in 2019.

The average customer spending at Tai Er Pickled Fish has dropped back to seven years ago, with netizens complaining that it is "not enough to eat"

The financial report shows that in the second quarter of 2024,The average consumption per person at the self-operated Tai Er restaurant is 69 yuan、The average consumption per person at Shuang Hotpot is 104 yuan, and the average consumption per person at Jiu Mao Jiu is 55 yuanIn 2023, the average consumption of Tai Er Restaurant is 75 yuan, the average consumption of Shuang Hotpot is 113 yuan, and the average consumption of Jiu Mao Jiu is 58 yuan.

On July 23, #Tai Er Pickled Fish’s average customer spending has dropped to the level of 7 years ago# became a hot topic on Weibo.Some netizens said that the portions are getting smaller and smaller. They couldn’t finish it before, but now it’s not enough.

Many readers complained on social media that the portion of Tai Er Pickled Fish has become smaller

As for the decrease in per capita consumption, the reason given by Jiu Mao Jiu Group in its second quarter announcement was:Due to changes in the external environment, adjustments to brand development strategies, adjustments to menu structure and prices, and increased promotional activitiesIn addition, the increase in the proportion of Tai Er restaurants in lower-tier cities has also led to a decline in per capita consumption.

The announcement also pointed out that the group will adopt a more cautious restaurant expansion strategy.By the end of the year, Tai Er will have opened 80 to 100 new self-operated stores in mainland China and 15 to 20 new stores in other regions."We ensure that every store we open is profitable. For example, the store opening target of Shuang Hotpot has been adjusted to 25 stores, and will focus on Guangdong and other southern China regions," Jiu Mao Jiu revealed.

Source: Screenshot of announcement

Jiu Mao Jiu expects its net profit to drop by nearly 70% in the first half of the year

Recently, Jiu Mao Jiu issued a profit warning, predicting revenue of 3.064 billion yuan in the first half of 2024, an increase of about 6.4% year-on-year; net profit is expected to be no less than 67 million yuan, a year-on-year decrease of no more than 69.8%.

Specific to the brand segment,The average daily same-store sales of the three major brands, Tai Er Pickled Fish, Shuang Hotpot, and Jiu Mao Jiu Northwestern Cuisine, in the second quarter fell by 18.1%, 36.6%, and 12.6%, respectively, year-on-year.

The decline in profits is due to price wars.

Jiu Mao Jiu mentioned,The restaurant's average customer spending and table turnover rate both declined, leading to a decline in the restaurant's single-store revenue.At the same time, the cost control measures implemented by the company to reduce the various costs of restaurant opening and operation lag behind the decline in restaurant single-store revenue. Therefore, the group is expected to have negative operating leverage during the period. In addition, the company incurred impairment losses on property, plant and equipment and right-of-use assets during the period.

As of around 13:00 on July 24, Jiu Mao Jiu’s Hong Kong stock price was HK$2.86, with a market value of only HK$4 billion. Its share price has fallen by half this year.

Some information comes from: Announcements from listed companies, comments from netizens

SFC

Editor of this issue: Jiang Peipei

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