2024-08-22
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arts | Lin Jing
Cover source | Tuchong Creative
Rotating hotpots are pouring into first-tier cities such as Beijing, Shanghai and Guangzhou at an accelerated pace.
Tian Yu, who works in Shanghai, discovered that two nearby shopping malls were both posting posters announcing the upcoming entry of the same self-service hotpot brand, claiming that consumers could enjoy more than 100 dishes for less than 30 yuan, with no time limit or quantity limit.
What is happening in the hotpot industry today is that hotpot brands including Haidilao, Xiabu Xiabu, and Banu, while sticking to the high-end market, have all reduced prices to a certain extent to cope with competition, and are also exploring the launch of small hotpot products or sub-brands.
The Rotating Hotpot has accelerated its expansion, opening hundreds of stores, some of which are even located close to Haidilao and Xiabuxiabu. In 2023, Wei La Hotpot will open more than 280 stores, Qianwei Yiding Self-service Hotpot will open more than 300 stores, and nearly half of the more than 100 Nong Xiaoguo stores are located in Beijing.
Rotating hotpots are nothing new. In the early days, they were mainly opened at street stalls. Now, they have entered shopping malls in first-tier cities such as Beijing, Shanghai and Guangzhou. They have changed their previous dirty and messy image and become the new "poor man's meal" for working people through bright decoration, hundreds of SKUs of dishes and extremely low prices.
Zhang Yuan is a franchisee of Nong Xiaoguo in Beijing. In his opinion, the hot pot market has been chasing low prices in the past two years. Compared with Xiabu Xiabu's small hot pot for one person with an average price of 60 yuan, Nanchengxiang and Yoshinoya have successively launched hot pots with an average price of around 39 yuan. Although the former is also a self-service model, it has only more than ten SKUs, while the latter's set meal is more similar to Xiabu Xiabu.
The rotating hotpot has improved the variety of dishes and further lowered the price. Zhang Yuan told Tech Planet that Nong Xiaoguo has hundreds of SKUs. In addition to the traditional hotpot series, it also includes pastry series, fruit series, and snack series. This year, the headquarters has added a fried food series. The current group purchase price is 36 yuan.
A rich SKU is also one of the key factors in attracting users to the store, Zhang Yuan said, especially the combination of meat and vegetarian dishes, which is very particular, to ensure that consumers passing by can see the richness of the dishes at a glance.
Compared with high-end hotpots with an average price of 200 yuan, the low price is the killer feature of the rotating hotpot. When users pay more attention to cost-effectiveness, a wave of small hotpot entrepreneurship has been set off in the catering industry in the past two years.
Tianyancha data shows that from January to the end of June this year, more than 1,500 new "small hot pot" related companies have been added. At present, the market is relatively fragmented. In Henan, there are Nong Xiaoguo, Wei La Xiaohuoguo and Qianwei Yiding, in Changsha, there is Shengxiangting Zhuanzhuan Relu, in Shenyang, there is Xijia, in Shandong, there is Longge, and in Harbin, there is Su Xiaobei. All brands started as regional brands and then expanded to the national market.
Behind the low price, the rotating hot pot business is booming. Zhang Yuan said that there are less than 100 seats in the store, and the daily customer flow on weekends can reach more than 300 people, which means the average turnover rate is 3.0 times/day, and the average monthly turnover is about 300,000. According to her understanding, the first franchise store of Nong Xiao Guo can achieve a monthly turnover of about 500,000. At present, his store estimates that it can pay back in two to three years.
The competitors of the rotating hot pot are not only hot pot, maocai, and malatang, but also the broader fast food market. Another rotating hot pot franchisee told Tech Planet that in his mall, compared with the quiet business of other stores, Nong Xiaoguo has a very large daily customer flow, which not only has a certain impact on the nearby Xiabu Xiabu, but also forced another barbecue restaurant to switch to a self-service model.
But it is not easy for merchants to make a lot of money. The cost of opening a store in a first-tier city mall is not low. Zhang Yuan introduced that the area required for Nong Xiao Guo stores is generally 100 to 200 square meters. Equipment and some raw materials need to be imported from the headquarters. In addition to rent and labor costs, the initial investment starts at at least 1 million yuan. Moreover, the headquarters will later charge a commission of 2% to 3% of the franchisee's annual turnover.
Like the franchise model of other industries, the sale of raw materials and equipment is an important source of income for these rotating hot pot brands. A rotating hot pot business agent said that the gross profit of hot pot base alone is extremely high. Moreover, it is difficult for franchisees to lower the price of meat products by purchasing them on their own, and the factory may not necessarily supply in small batches.
Behind the extremely low prices are the merchants’ efforts to increase profit margins by drastically compressing the costs of raw materials, labor and services, as well as making “exquisite” combinations of ingredients.
Faced with the high rent of shopping malls, rotating hot pot restaurants are mostly located on the underground first or second floor of shopping malls. A rotating hot pot brand founder told Tech Planet that the rotating model can save kitchen space and labor costs. In his offline store of more than 100 square meters, there are only 4 employees, who are responsible for the cashier at the front desk, soup ingredients in the kitchen, replenishing the dishes on the rotating table and washing the tableware.
Moreover, the store does not have high requirements for the professionalism of the waiters. The employees he recruits are relatively older and do not need to have any experience in hot pot.
Rotating hotpot is actually very operational. The above-mentioned founder said that in terms of dish matching, meat dishes are mainly chicken and duck, which are cheaper in cost, and two kinds of fresh meat and all high-cost products cannot be placed between two plates of green vegetables. The cuisine must also be constantly optimized and adjusted. For example, due to the increase in rainy weather, the price of spinach has risen, so other cheaper green vegetables must be used instead, and the frequency of rotating the existing spinach plates in front of customers should be reduced.
According to him, even if the average price is as low as 33 yuan, at most 1 to 2 customers can make back their investment within a month. As long as the merchant does not act as a "hands-off boss" and personally participates in the operation, the average gross profit level of 50% for buffets can be achieved.
As the density of stores continues to increase, competition among rotating hotpot restaurants has become more intense. A franchisee said that generally, hotpot brands will sign exclusive agreements after entering shopping malls, that is, after a brand enters the market, it is difficult for other similar brands to enter. In addition, players in the industry are also highly homogenized, and those who can grab a good location can gain a first-mover advantage.
Hotpot, with an average price of 30 yuan per customer, has now occupied the main market of small hotpot. According to the data of Hongcan, from 2022 to July 2024, the proportion of small hotpot restaurants with an average per capita consumption range of 60 yuan or less has increased to varying degrees. Among them, the number of small hotpot restaurants in the range of 20-40 yuan has the highest proportion, reaching 30.8%.
Moreover, more and more brands are exploring small hot pot products or sub-brands priced around RMB 30. Haidilao launched “hot pot dishes for rice” on its food delivery platform, focusing on single-person dining, with multiple combination meal prices ranging from RMB 30 to RMB 40. Xinladao’s “Mini Hot Pot” also launched a small hot pot priced at RMB 43.9 in May this year.
Xiabu Xiabu, which specializes in hotpot for one person, is also lowering its prices and currently offers a single-person hotpot set meal for 47.7 yuan. The founder of Xiabu Xiabu once told Chinese entrepreneurs, "The entire catering market is lowering prices, and we have no choice but to adjust. If you don't grab this market, you will starve to death."
Nowadays, more players are pouring into the low-price hotpot battlefield, and competition and involution have become more brutal.
Will hotpot become the next "Saizeriya"?
There has never been a shortage of "dark horse" companies in the affordable restaurant industry, from Tustin Burger, which has more than 7,000 stores, to Saizeriya, which has annual sales of nearly 10 billion yuan. Low prices are their trading card, which not only make a lot of money, but also win the favor of capital.
An investor from a leading consumer organization told Tech Planet that they had indeed looked at the rotating hot pot track, but the main reason for not investing was that they could not yet see the core competitive barriers of the brands, and whether these brands could reach the level of Saizeriya in terms of operations and cost control in the future.
Saizeriya, which specializes in Italian Western food, liked to claim in its early years that "there is not a single kitchen knife in its kitchen", indirectly demonstrating the power of its central kitchen. In its early years, Saizeriya also continued to save costs by building its own supply chain and reducing external procurement.
Da Mao, a franchisee of rotating hot pot, told Tech Planet that most rotating self-service hot pot restaurants do not have their own supply chain, but instead produce their food through OEM factories or purchase in bulk from some pre-prepared food companies. Many brands have the same supplier behind them, so product homogeneity is naturally serious.
In Damao's opinion, there are two main modes of rotating hot pot, but each mode has its own challenges and problems. One mode is the self-service mode represented by Nong Xiaoguo, which solves the need of "eating enough". Its customers cover all age groups, from children to middle-aged people and even the elderly. However, with the low-price positioning, it is difficult to improve the service and dishes. With the increase of players, it is easy to engage in price wars and fall into the vortex of low prices.
The quality of the dishes is also the most controversial aspect of rotating self-service hot pot. In contrast to the booming customer flow attracted by the low prices, the ratings of rotating self-service hot pot brands on platforms such as Meituan are relatively low, with most of them being around 4 points, and most of the complaints from users are focused on the quality of the dishes.
A consumer of the rotating self-service hot pot restaurant said that among the so-called hundreds of dishes, there were a bunch of cheap snacks that were rarely heard of, as well as some stale vegetables and artificial meat. Due to the high density of seats, the space was very crowded during peak dining hours.
In contrast, the other is the sign-by-sign model represented by skewers and spicy hotpot, where customers can choose dishes of different prices and pay the bill at their own discretion.
Li Ming, a small hotpot merchant, told Tech Planet that this model is mainly aimed at young women, and the average customer unit price in first-tier cities is around 40 to 60 yuan. This price range almost overlaps with Xiabuxiabu's one-person hotpot, so more personalized creativity is needed in store operations and management.
Moreover, unlike the fully self-service model, merchants will increase the average customer spending by invisibly combining the packages. Li Ming said that the disadvantage is that they are often called "assassins" by consumers. Although they seem cheap, the final consumption amount may be as high as hundreds of yuan. Moreover, merchants want to open stores in the more core business districts of first-tier cities. Li Ming said that under the pressure of rent and other factors, his expansion plan for a second store is currently on hold.
Catering to consumers' pursuit of cost-effectiveness, rotating hot pots have become popular again. However, with the general trend of collective price cuts in the catering industry, it is obviously not enough for rotating hot pots to enter the business districts of first-tier cities to rely solely on cost-effectiveness. The construction of the supply chain is the key to long-term operation in the future.
(Note: All names in this article are pseudonyms.)
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