news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Click on the picture above▲ to learn more

“Maintaining a flexible consumption environment that is both up-and-down, petty-bourgeois and affordable will help better cope with changes and fluctuations in consumer consumption levels.

Text/ Ba Jiuling (WeChat public account: Wu Xiaobo Channel)

Consumption in the first half of the year was driven by restaurants.

From January to June, the total retail sales of consumer goods in China increased by 3.7% year-on-year, among which the catering revenue was 2624.3 billion yuan, an increase of 7.9%, which was the highlight.

However, this is not a catering consumption feast in all cities across the country.

Let's first look at a set of catering revenue data for Beijing, Shanghai, Guangzhou and Shenzhen: In the first half of this year, Beijing's catering revenue fell by 3.5%, Shenzhen's catering revenue grew by 1.3%, and Guangzhou's catering revenue grew by 3.2%. From January to May, Shanghai's catering revenue fell by 3.1%.

The catering revenue in Beijing, Shanghai, Guangzhou and Shenzhen was either loss-making or growing slowly in the first half of the year.

Then, the high growth of the whole country can only be carried by other low-tier provinces and cities. For example, from January to May, Jiangxi's catering revenue increased by 14.3%, Chongqing's catering revenue increased by 11.9%, Sichuan's catering revenue increased by 11.8%, Yunnan's catering revenue increased by 11.7%, Shandong's catering revenue increased by 8.4%, Henan's catering revenue increased by 7.8%, and Fujian's catering revenue increased by 7.5%.

Catering revenue is a microcosm of the total retail sales of consumer goods.

From January to May, the total retail sales of consumer goods in Shanghai fell by 0.7%, in Beijing, by 1%, and in Guangdong, by 2.1%.

In contrast, the growth rates of Jiangsu, Shandong, Zhejiang, Henan, Sichuan, Hubei, Fujian, Hunan and Liaoning were all 5% or above, with Hunan having the highest rate of 5.9%, making it the well-deserved consumption capital of China.

From catering to the entire consumer sector, the "leader" role of first-tier cities seems to have failed.

As high-end restaurants withdraw, will affordable fast food take their place?

A Shanghai resident recently visited several high-end restaurants and said, "Business is so bad! French, Chinese and Japanese food are all over 1,000 yuan per person. In the past, reservations had to be made in advance. Now, the hall is sparsely populated with three or four people. I asked the manager and found that there were only two tables in the private room. Even fewer people are ordering wine."

At the same time, there are quite a few old high-end restaurants in Beijing and Shanghai that have announced their closures this year, including Shanghai Greenland Marriott Hotel, Shanghai KOR Shanghai, Shanghai Osteria Oyster and Seafood Restaurant, Shanghai Yuzhilan, Beijing Great Wall Hotel, Beijing Opposite House Hotel, Beijing Italian restaurant Opera Bombana, and Beijing restaurant TIAGO HOME KITCHEN.

The Great Wall Hotel in Beijing has been closed for several months

According to the self-media "High-end Restaurant Observation", as of September 2023, the total number of high-end restaurants in Shanghai (with an average of more than 800 yuan per person on Dianping.com, the same below) is 315, and the total number of high-end restaurants in Beijing is 160, ranking first and second in China. Shenzhen, Hangzhou, Guangzhou and Chengdu follow.

The survival crisis of high-end restaurants in Beijing and Shanghai is a microcosm of the survival crisis of mid- to high-end restaurants across the country. Peng Wenjie, dean of the Hunan Cuisine Research Institute of Changsha Business, Trade and Tourism Vocational College, recently conducted a survey on 20 representative commercial catering companies in Changsha to prove this:

Among the top 20 companies whose revenue exceeded 12 million last year, except for Xiaoxiang Dafurenjia Tea Banquet House, which stood out with a slight growth of 1%, the other 19 companies all faced performance challenges, with year-on-year declines ranging from 3% to 30%.

At the same time, several other forces are eager to try, with a spirit of "taking the place of the others". For example, in the past six months, Shandong fast food giant Chao Yixing has entered Beijing, and Beijing fast food giant Nanchengxiang has entered Shanghai, making the Beijing-Shanghai fast food market very lively.

There are successful cases. Micun Bibimbap is a fast food chain brand with an average price of 30-40 yuan per person. It is based on Korean cuisine and was born in Yanbian, Jilin.

There are currently 1,300 stores. The expansion direction in the past two years has been first-tier cities and new first-tier cities. Currently, first-tier cities account for 11.94%, with 120 stores in Beijing and 22 stores in Shanghai; new first-tier cities account for 24.9%, ranking first for the time being.

A 94-year-old entrepreneur who started delivering maocai malatang in a village in Shenzhen, became the number one in the same category in the business district in about a year.

He revealed to Xiaoba: "About 15,000 people come to the store to order food every month. The actual monthly payment from customers is about 300,000 yuan, and the monthly turnover of the store is about 200,000 yuan (equivalent to about 100,000 yuan deducted by Meituan every month, part of which is the salary of the riders). After deducting expenses, the monthly net income is about 40,000 yuan."

In his opinion, "the requirements for doing catering in Shenzhen are getting higher and higher, but there are still many gaps for ordinary people to survive."

These gaps mainly refer to the fact that opportunities in categories with "high cost-effectiveness, tendency towards hard demand, and a wide audience" still exist.

It can be echoed thatThere are 2,797 businesses on Dianping's must-eat list in 2024, of which 46% are fireworks shops, more than 500 are snack businesses, and 70% of the restaurants have an average per capita consumption of no more than 100.

Do first-tier cities lack a flexible consumption environment?

From the above, a question worth pondering is obvious: Can the rise of fast food and other affordable restaurants in a city make up for the decline of mid- to high-end restaurants?

For first-tier cities such as Beijing, Shanghai, Shenzhen and Guangzhou, this is a question that urgently needs an answer.

In the eyes of many catering professionals, the decline of mid- to high-end catering is a long-term trend. If other catering categories cannot catch up in time, the catering revenue in first-tier cities may continue to decline, and even affect the overall consumption situation.

In the opinion of Qin Chao, the founder of "Insider Guide for Restaurant Bosses", Micun Bibimbap from Northeast China and Chaoyixing from Shandong are conquering the Beijing market."This shows that fast food still has room to survive in first-tier cities, but it cannot replace the contribution of mid- to high-end catering."

Micun Bibimbap store in Beijing

This is mainly the result of Beijing's previous reliance on mid- to high-end catering. For example, he believes that Guangzhou and Shenzhen's catering consumption has seen a slight increase, and has not fallen into negative values ​​like Beijing and Shanghai. This is closely related to the support of affordable catering such as fast food.

"Guangzhou and Shenzhen have always been businesses dominated by fast food and basic needs, which is very different from Beijing and Shanghai. With basic needs consumption as a foundation, the decline will be slower," Qin Chao analyzed to Xiaoba.

In fact, there are obvious differences in the degree of urban tolerance for small catering businesses such as fast food between Beijing, Shanghai, Guangzhou and Shenzhen.

How can we tell? Small catering businesses and urban villages with lower living costs are often two sides of the same coin. Where urban villages are densely populated, small catering businesses are also densely populated. This can give us a glimpse.

For example, according to the data disclosed in the "China City 100 Forum 2023 Autumn Forum": The construction area of ​​Shenzhen's urban villages accounts for 36.3% of the city's total housing construction area, with 5.1 million units, accommodating Shenzhen's 10 million population, including 87% of the city's migrant population.

Beijing has 501 urban villages with a population of 1.5 million. These villages are mainly distributed in the intersections of Beijing's fifth and sixth ring roads, urban traffic radiating outward, and at the end of rail transit connecting the central city and peripheral areas such as Changping, Shunyi, and Yizhuang.

Xiaoba has worked and lived in Beijing for many years, and one of the more obvious feelings about the catering industry is:Many snack streets full of the flavour of everyday life, as well as high-end restaurant complexes and famous streets, have become yesterday’s news and are no longer as popular as they used to be.

For example, in 2017, Xidan Heng'er Hutong, which was known as "the hottest snack street in Beijing" and "with an average daily passenger flow of more than 100,000 people in the off-season", was demolished; in 2021, Xidan "Food Forest", Beijing's "first large-scale food complex", was completely destroyed.

In 2022, Zhongguancun Food Street, which had "more than 50,000 visitors per day", exited the stage of history; last year, Nanluoguxiang completely stopped selling meals through windows and moved everything indoors.

Nanluoguxiang has changed to a dining-in restaurant

It is worth noting that in July this year, Shanghai launched the "Several Measures on Promoting the High-Quality Development of the City's Catering Industry", summarizing its methodology as follows:Increase high-quality supply, optimize supply and be prudent and inclusive.

For example, the main benefits for restaurants are:

"For the first stores of national brands or above opened in Shanghai since 2024, each store will be given a one-time reward of no more than 100,000 yuan, and no more than 500,000 yuan for the same enterprise";

"Since 2024, each store that carries out green, digital, intelligent and other transformation and upgrades will be given a one-time reward of no more than 100,000 yuan."

"Increase innovation in public management policies for the development of catering clusters such as food landmarks and food streets...rationally plan outdoor dining areas."

Earlier this year, nine departments in Beijing issued the Action Plan to Promote the High-Quality Development of Beijing's Catering Industry and Accelerate the Creation of an International Food Capital. The data targets mentioned in the plan are as follows:

“By 2025, introduce more than 500 well-known domestic and foreign food brands”;

"Encourage enterprises to create quality restaurants such as 'Michelin', 'Black Pearl' and 'Diamond Restaurant'";

"By 2025, each of the six urban districts, the sub-center, and the plain new town area will have at least two catering districts";

"By 2025, the city will cultivate more than 30 'late-night canteen' specialty dining districts";

"Support the construction of a number of smart stores and cultivate 25,000 catering businesses with a high level of digitalization" etc.

The two catering industry development plans in Beijing and Shanghai can be summarized as follows:Continue to follow the development path of "transformation and upgrading" and appropriately tolerate and support affordable catering.

They also leave us with something to think about: as a city’s consumption environment moves towards mid- to high-end, how should it treat the “downstream consumer market”?

Maintaining a flexible consumption environment that is both up-and-down, petty-bourgeois and affordable will help better cope with changes and fluctuations in consumer consumption levels and ensure consumption vitality. This may be a topic that needs to be considered in current urban development.

Observations and opinions from senior catering professionals

Next, we invited Datou to talk about his feelings and opinions on the current catering industry, especially the decline in catering revenue in first-tier cities.

If it were a normal year, (Beijing's catering revenue) would never have experienced such negative growth.

But I was not particularly surprised. In the past, people thought that the economy would enter a long period of retaliatory consumption, but it has entered a long period of rational and pragmatic consumption with a certain consumption downgrade, which has determined that the supply side has undergone very big changes.

One of the most obvious changes is that even during the epidemic, the consumption growth of mid- to high-end catering was still quite good, but since 2023, the consumption of mid- to high-end catering has directly declined.

For example, fine dining, Michelin, Black Pearl, and mid- to high-end restaurants priced above 600 or 700 yuan have collectively experienced a sharp decline. According to our visits, the decline is basically 30% or even 50%.

From another perspective, fast food and small meals that are just needed for daily living have actually grown very rapidly in the past two years.

We can see that in Beijing, fast food restaurants such as Nancheng Township and Jiahe Yipin have become a mainstream business, and Micun Bibimbap from Northeast China and Chaoyixing from Shandong have entered Beijing, which shows that fast food still has room to survive in first-tier cities.

New growth trend of Beijing catering enterprises in the past decade

In terms of consumer groups, they tend to pay more attention to cost performance. There will be a group of die-hard fans in mid- to high-end restaurants, but they are a very small minority. The majority of consumer groups are the middle class and new middle class who can "move up and down".

Today, they save part of their budget for fine dining and mid- to high-end dining, and consume some cost-effective brands more frequently.

In addition, today business social and team-building scenarios are shrinking, and the consumption of this group of people will return to daily consumption.

For restaurant owners in first-tier cities, rental costs have not dropped significantly over the past year or so, but have instead increased slightly, and labor costs have not changed much.

Therefore, owners of mid- to high-end restaurants in first-tier cities are generally anxious. They have invested heavily in their stores in the past, and it is very difficult for them to undergo a sudden transformation. They can only take some passive self-help measures, such as launching cost-effective packages, but these are only a drop in the bucket.

There is no way, the team is still there. In the words of some restaurant owners,Let the team have something to do and work to do, and don't let them sit idle.This is a very helpless move. Some measures have also been taken to reduce costs and increase efficiency, such as working two days and resting one day, and flexible employment.

A relatively good transformation example is Yongfu in Shanghai, where the per capita consumption is around 800 to 1000 yuan. It promotes Yongfu Xiaoxian, with per capita consumption of 200 to 300 yuan.

The entire industry agrees that there are greater opportunities in the lower-tier markets. A large part of the growth in second- and third-tier cities comes from the passenger flow from first-tier cities and the sinking of first-tier city brands.

Moreover, in the past two years, a number of cost-effective dark horse brands have emerged in second-, third- and fourth-tier cities, such as Chef Fei, Micun Bibimbap, and Xiong Miao Lai... They are even showing signs of counterattacking first-tier cities.

This is a revelation for differentiated competition in first-tier cities: Why are these brands from second- and third-tier cities able to go against the trend and open stores in first-tier cities when many brands can’t make it in first-tier cities?

This kind of decline is causing panic. I talked to many people in the catering industry and everyone was very panicked, as if the situation had dropped so suddenly.

Especially for mid- to high-end catering, it requires strong prerequisite support.

◎First, the economy must be really good and everyone must have money in their pockets. This is a hard condition.

◎Second, everyone has expectations for the future and dares to consume.

◎Third, business banquets or social gatherings are more common and frequent. However, all three pillar conditions have changed.

Of course, ordinary fast food is also in a state of involution, because everyone is trying to serve the market with strong demand, many companies have rushed in, and high-end restaurants are also moving down.

I was impressed by the half-year financial report of Jiu Mao Jiu, which showed a net profit decline of nearly 70%. Therefore, they gave up the two brands of "Na Wei Uncle is a Chef" and "Lai Meili Sour Soup Grilled Fish".

Source: Jiu Mao Jiu

However, there are several brands that have developed well. For example, Lan Xiangzi has developed very rapidly in recent years and has become the number one Hunan cuisine in terms of store size; Micun Bibimbap has also developed rapidly in the past two years; and another one worth mentioning is Xiaocaiyuan.

A prospectus was issued some time ago. From January to April 2024, the revenue is about 1.68 billion yuan, a year-on-year increase of 12.0%, and the net profit is about 179 million yuan, a decrease of about 9.6%. The "Cai Shou" community store in Xiaocaiyuan is being promoted. I think the development potential is very large.

They have three things in common.

◎First, from a broader historical perspective, in line with current consumer stratification, the vast majority of people still attach great importance to cost-effectiveness.

◎Second, in the single-store model, the profit efficiency has been maximized, whether it is the store area, staff configuration or menu structure, including the matching degree between the site selection and the crowd.

◎Third, these brands have strong marketing potential. For example, Lan Xiangzi constantly creates various marketing events, including the "Ganfan Festival" for white-collar workers.

I think,This situation in first-tier cities may continue, which is even more difficult because the white-collar class, the main consumer group in first-tier cities, has suffered the most from layoffs and salary cuts.

Of course, fundamentally, the logic of the catering business has not changed: to provide consumers with products and services that offer great value for money.

It’s just that when the economy was good and everyone was relatively confident, we had too much desire-based consumption.

These desire-based consumption will be greatly impacted by the pressure on the wallet. The general logic will return to: have a good meal.

It can be found that white-collar workers in first-tier cities generally have a new reflection on their lives: Where should I live? What kind of lifestyle should I pursue?

Compared with consumers in first-tier cities, consumers in second- and third-tier cities are still in the stage of releasing their consumption potential. Because they have not seen so much of the world, there are still many new things they want to try.

These people have stronger desires than those in first-tier cities, while consumers in first-tier cities are exposed to too much information and have basically tried everything.

In the past two years, there are only a few brands that truly focus on first-tier cities. Brands like Chef Fei and Auntie Shanghai have basically completed their first-tier layout.

In fact, few companies regard first-tier cities as their core battlefield anymore, because the costs are indeed high and the risks are too great. Most companies adopt the store opening strategy of "planting flags in the first-tier cities, and making profits in the second, third and fourth-tier cities."

For brands that are developing second-, third- and fourth-tier cities, if they can“The brand sense of first-tier cities + the affordability of second-, third- and fourth-tier cities”If we take both into consideration, the brand potential is huge.

For most catering brands that are still conquering the first-tier cities, they should not play tricks, remove all intermediate links that do not create value, do not talk about feelings, do not engage in fancy personalized decoration, the environment and services should be basically good, and the cost-effectiveness of "delicious and inexpensive" should be fully utilized.

About the Author|Lin Bo|responsibilityedit|He Mengfei

Editor-in-Chief|He Mengfei|Image source|VCG

《Entering the Benchmark Factory｜Content White Paper》

Gather the wonderful contents of 11 benchmark factories and take you on a virtual tour of the factories