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On August 5, a reporter from the Beijing News learned from Burger King China that Burger King will launch the "Signature Burger, 9.9 Yuan Every Week" campaign from now on. For four consecutive weeks, the price of a signature burger will be reduced to 9.9 Yuan every week.

McDonald's, KFC, and several coffee and new tea brands have announced that many of their products will be priced at "9.9 yuan". Burger King's Chief Marketing Officer Tang Junzhang also admitted that "9.9 yuan" is an almost "crazy" price. "The cost of a hamburger is 2-2.5 times that of a coffee. The 9.9 yuan price will definitely not make "immediate profits". But now is a good opportunity for the hamburger category to quickly penetrate the Chinese catering market."

Some industry insiders believe that big brands join the "price war" to accelerate brand penetration in the stock market and expand market share. While profit margins are further squeezed, price competition also forces companies to continue to roll back on the road of "extreme cost-effectiveness".

Multiple brands embrace "9.9 yuan"

Burger King China said that Burger King's "Signature Burger, 9.9 Yuan Every Week" campaign will start from August 5 and last until September 1. During this period, Burger King will launch a high-quality burger for 9.9 Yuan every week. Including the Little Royal Burger, Fruitwood Flavor Chicken Burger, Cheese Burger, Spicy Chicken Burger, all of which are Burger King's most popular and popular signature burgers. At the same time, the campaign covers Burger King's dine-in, delivery, e-commerce and other channels and scenarios, and there is no consumption threshold, and consumers do not need to join the membership.

"Promotions during the consumption upgrade period were symbolic 'discounts' based on high unit prices, but now catering companies are offering promotional prices to consumers regardless of cost." Tang Junzhang said that if the price of 9.9 yuan is used to stimulate consumers' enthusiasm for "eating quality burgers" and to become Burger King's "fans", he believed that when the market recovers, Burger King will definitely get a satisfactory return.

In the current market environment, competition among catering brands is more intense, and almost all catering brands are offering big discounts to attract consumers. The Beijing News reporter noticed that before Burger King "officially announced the price of 9.9 yuan", several Western fast food brands had been fighting in this price war for a long time: McDonald's has a discount package of nearly 50% off on Meituan online, and a fixed "second set of 2 yuan" star package discount every day. After meeting certain package consumption conditions and opening a card, you can get burgers and value-for-money coupons at a unit price of 8.8 yuan; in addition to the "29.9 yuan for 2" and "39.9 yuan for 3" hamburger packages launched on Meituan's 88 Golden Powder Festival, KFC also launched "29.9 yuan/4 pieces" and "49.9 yuan/8 pieces" weekend discount packages on its App; Dicos launched the "9.9 yuan every day" event, and you can choose a "burger + drink" in the package; Tustin has launched low-priced packages on multiple platforms, including "snack 2-piece set 6.9 yuan", "single person set 9.9 yuan" and "burger 2-piece set 16.9 yuan".

In this regard, Tang Junzhang admitted that in terms of market size, Burger King has a clear gap with McDonald's and KFC, and currently does not have enough resources to create a category IP with sufficient influence. The "follow-up strategy" is "I hope everyone will play together, make the momentum and scale bigger and bigger, so that more people are willing to try 'Western fast food chain'". He said that currently, "Western chain restaurants" account for less than 3% of the entire catering market. "Everyone plays together" is not to fight to the death, but to work together to make the pie bigger. "And for brands like Burger King, this is a 'good opportunity to accelerate brand penetration and expand market share'."

The price range continues to drop, and the competition among restaurant companies' comprehensive capabilities intensifies

The latest data released by the National Bureau of Statistics in June showed that from January to May 2024, the national catering revenue was 2163.4 billion yuan, an increase of 8.4% year-on-year. In this regard, the China Cuisine Association analyzed that in May, the growth rate of national catering revenue and the growth rate of catering revenue above the limit increased by 0.6 and 2.5 percentage points respectively. The May Day holiday showed a peak in catering consumption, but the catering industry saw a phenomenon of revenue growth but no profit growth. "Price war", homogeneous competition and the increasing cost pressure are the major factors causing the current phenomenon of "increased revenue but not increased profit" in the catering industry. Stopping the "price war" and turning to healthy competition, developing "digital + catering" to enhance value creation, increasing talent training to improve the overall level of the catering industry, and increasing policy support to stimulate the potential of catering consumption are the key elements to break the "increased revenue but not increased profit". At present, catering consumption is increasingly returning to the masses. Catering companies should change their business ideas, grasp consumer positioning, actively understand policy trends, seize policy opportunities, take the initiative to change, and constantly innovate to contribute to the sustainable and high-quality development of the catering industry.

The "China Chain Catering Enterprise Capital Road Series Report 2024" recently released by the China Chain Store Association and PwC shows that in order to respond to the rationality and pragmatism of consumers, catering companies have cut prices or promoted sales, and the price war in the coffee and tea beverage track has continued to escalate, with "9.9" and "8.8" activities. The China Chain Store Association believes that although consumers are less willing to spend money than before, their requirements for quality and dining experience have not decreased. On the one hand, catering companies must maintain their competitiveness through low prices, and on the other hand, they must still maintain the original quality, quantity and dining environment. Price competition forces companies to continue to roll inward on the road of "extreme cost-effectiveness". The catering industry seems to be recovering rapidly, but in fact it needs to face greater cash flow and store operation challenges.

The industry believes that in the current consumption environment, the price reduction of catering companies reflects the trend of users focusing on the pursuit of cost-effectiveness in catering consumption, and the return of catering businesses to the essence of cost-effectiveness and quality-price ratio. Qing Yong, founder of Tomato Capital, once publicly stated that price reduction will be a very important basis for the price competition in the entire catering industry in the future. At the same time, price reduction tests the comprehensive capabilities of a catering company in terms of supply chain, management, product development and brand operation.

Beijing News reporter Wang Ping

Editor: Wang Lin

Proofread by Liu Jun