Is eating out not popular anymore? The share of formal meals has been declining for five consecutive years. How can Shanghai restaurant companies save themselves?
2024-08-16
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"In the first quarter of this year, our business growth was still good. But it dropped significantly in April. At that time, I was thinking, would it be better during the May Day holiday and summer vacation? But in the second quarter, the data kept falling. We must make changes." said Ye Lixia, general manager of Shanghai Red Chicken Food Collection Co., Ltd.
On August 15, the Shanghai Municipal Commission of Commerce and the Shanghai Catering and Cooking Industry Association held a "Shanghai Formal Dining Enterprises Steady Growth On-site Meeting" at Hongziji Phoenix Building. More than 20 companies attended and 6 companies made theme exchanges. The Paper (www.thepaper.cn) reporter learned from on-site interviews that many chain catering companies began to see a decline in revenue in the second quarter of this year. On the one hand, companies "saved themselves" by reducing customer orders and explaining products through video clips. On the other hand, the government and associations also provided support through policies and activities.
The Shanghai Catering and Cooking Industry Association revealed that in the past five years, the share of the catering market in Shanghai's formal dining format has declined to varying degrees every year (ranging from 2% to 5%). In 2024, the share of formal meals was 31.1%, while the share of simple meals and fast food increased.In other words, the structure of the catering industry is quietly changing, and formal dining businesses are most significantly affected.
Zhang Guohua, deputy director of the Shanghai Municipal Commission of Commerce, revealed that Shanghai's catering industry is seeking high-quality development, with more and more catering companies transforming into fine catering and pursuing scientific and refined management.
The share of formal meals has decreased, while the share of light meals and fast food has increased
The Hong Zi Ji brand was founded in Huizhou, Guangdong in 1988, and opened its first store in Shanghai in 1997. In 2021, the store was upgraded and renovated. Ye Lixia said that from January to July this year, the overall turnover of Hong Zi Ji remained the same, with a slight increase, but most of the growth came from the first quarter. The turnover from April to July decreased to varying degrees year-on-year.
Hongziji kitchen. This year, Hongziji implemented the "6T" transformation of the kitchen to standardize management, reduce costs and increase efficiency. Photo by Zou Juan, reporter of Thepaper.cn
The formal dining companies at the meeting shared similar experiences. Yuyuan Cultural Catering Group revealed that the group has 21 brands and eight Chinese time-honored brands: Songhelou, Nanxiang Mantou Shop, Shanghai Old Restaurant, Lvbolang Restaurant, Shanghai Dexing Pavilion, Chunfeng Songyuelou, Laochenghuang Temple, and Yuyuan. In the first half of this year, the revenue of many brands of the group showed a downward trend for the first time. The main reason is that the passenger flow in the business districts where the stores of various brands are located has dropped sharply and the single customer consumption has become lower. But at the same time, the cost expenditures such as rent, labor, and ingredients remain at a high level, and the marketing expenses and commissions of mainstream cooperation platforms such as Douyin and Dianping related to the business continue to grow, resulting in continued increase in business pressure.
Shanghai Shunfeng Catering Group Co., Ltd. revealed that from January to June this year, its catering revenue fell by 3% year-on-year, and its turnover in July was still declining. On the other hand, the increase in employee salary costs, raw material prices, and rents have brought great pressure to the company.
Jin Peihua, deputy secretary general of the Shanghai Catering and Cooking Industry Association, said that the association conducted monthly revenue statistics on 61 catering companies in the city that were included in the Municipal Statistics Bureau and could reflect the catering industry. The statistical results showed that the revenue of these companies in July fell by 9.8% year-on-year. Among them, the formal dining industry fell by 21.3%, and the cumulative decline this year was 6.9%.
He said that according to incomplete statistics and association observations, in the past five years, the market share of formal dining has declined to varying degrees every year (ranging from 2% to 5%). This year, formal dining accounts for 31.1%, while the share of simple meals and fast food has increased. "Formal dining is the pillar of the catering market and a barometer of the social and economic environment. In the face of the trend of formal dining companies operating difficulties, the government, associations, and companies are working together to find ways to promote consumption and stabilize growth."
Lower unit price, increase in individual customers
Ye Lixia analyzed the data from the first half of the year and found that both the per capita consumption of consumers and the number of business banquets decreased. In response to this trend, starting from July 18, the average price of red chicken was reduced by 20%. At the same time, all raw materials were purchased from the source. Since the price adjustment, the flow of people has increased by double digits.
"Although per capita consumption has decreased, the overall turnover has basically remained the same as the previous year. In addition, the number of individual tables has increased significantly, which has given us new inspiration. In the future, family banquets and business banquets may be given equal importance. Now the demand for birthday banquets and baby banquets has increased." Ye Lixia said.
It is the summer vacation now, and the proportion of citizens traveling to Shanghai, especially foreign tourists, has increased significantly. The 124-year-old Chinese time-honored Nanxiang Steamed Bun Shop launched the "Shanghai-style morning tea" in mid-July, allowing more people to experience the unique traditional food culture of "drinking tea, listening to music, and eating steamed buns" in Shanghai Yu Garden. This is also the first time that Nanxiang Steamed Bun Shop has resumed its morning tea service in nearly 20 years. Customers can enjoy the experience at a special price of 15% off (excluding alcoholic beverages). In addition, in mid-August, there will be a "cultural bonus": live Pingtan performances will be launched every Saturday and Sunday, allowing customers to immerse themselves in the Shanghai morning tea culture. At present, the morning tea service time of Nanxiang Steamed Bun Shop is 7:30-9:30 from Monday to Friday, and 7:30-9:00 on Saturdays and Sundays.
Video explanation of dishes, prioritizing customer experience
At the on-site meeting, the heads of many formal dining companies not only asked each other about their recent situation, but also asked: "Have you opened a Douyin account?"
In 2023, Harvest Day established a special Douyin department. "After operating, we increasingly found that only by serving customers well can we survive." Qiu Yan, vice president of Harvest Day (Group) Co., Ltd., said that the previous idea was that they decided what was in the set meal for customers, but now they let each department design their own set meal and then ask customers to rate it. Only those with high scores will be developed into a set meal. The team will select a main dish from each set meal and explain the story and characteristics of it in a video, so that customers can feel the team's dedication when eating this dish.
According to the Shanghai Catering and Cooking Industry Association, in 2023, the association invited ByteDance to officially join the association and become a standing director unit, to carry out Douyin online operation experience sharing and practical training for formal dining companies, and Douyin will provide corresponding support in terms of traffic. At present, more than 150 catering stores of more than 30 catering companies have been recommended to carry out Douyin live broadcast and group purchase sales, and have achieved positive results. For example, "Tang Palace" has driven a total revenue of more than 50 million yuan, "Xiao Nan Guo" has driven a total revenue of more than 15 million yuan, "Shanghai Family" and "Manxin Pavilion" have each driven a total revenue of more than 5 million yuan.
Refined transformation and refined management
In August 2024, the State Council issued the "Opinions on Promoting the High-Quality Development of Service Consumption", the first article of which is to tap the consumption potential of catering and accommodation.
Shanghai has also spared no effort in its attention and support for the catering industry. Since the beginning of this year, relevant officials of the Shanghai Municipal Commission of Commerce have visited enterprises more than 10 times to conduct in-depth research on assistance measures. At the symposium for formal dining companies held in July, the General Office of the Shanghai Municipal Party Committee and the Municipal Commission of Commerce held discussions with the main leaders of 31 well-known catering companies. On July 19, 10 departments including the Municipal Commission of Commerce, the Municipal Development and Reform Commission, and the Municipal Finance Bureau jointly issued the "Several Measures to Promote the High-Quality Development of the City's Catering Industry". In addition, Shanghai is scheduled to hold the "Shanghai Style Fine Food Festival" in the second half of the year, with the theme of "Food Classics · Taste of Shanghai", and organize six benchmarking activities to promote the high-quality development of the catering industry and boost the development confidence of consumers and enterprises.
Zhang Guohua, deputy director of the Shanghai Municipal Commission of Commerce, pointed out that today's catering industry is transforming towards sophistication, and catering companies are also accelerating their move towards scientific and refined management.
"In addition to serving full meals, dinner stalls now also provide snacks. In addition, for 2-3 people consuming in the hall, we have added small portions of dishes to reduce the average customer spending and attract more customers to the store." A relevant person in charge of Xinghualou said that refinement will be the general trend of the catering industry.
Zhang Jian, director of Zuihuihuang Group, said that the company worked with Alibaba for half a year to develop a management software system, which introduced a big data management model. After the software was officially launched on July 1, the company's management efficiency was significantly improved. "From personnel recruitment, meal reservations, raw material purchases, front office ordering and payment, kitchen production, to salary commission calculation, financial cost accounting and other complete systems, they are all implemented in the same software, which greatly enhances management efficiency and achieves the management goal of controlling costs and increasing gross profits." Scientific and refined management is providing greater space for enterprises to solve problems.
Zou Juan, senior reporter of The Paper
(This article is from The Paper. For more original information, please download the "The Paper" APP)
