Is the catering industry accelerating its collapse?

The catering industry is facing unprecedented challenges. This article deeply analyzes the current difficulties and market changes in the catering industry, explores the changes in consumption habits, the intensification of market competition, and the "28 split" phenomenon within the industry, providing a comprehensive perspective for understanding the current situation and future trends of the catering industry.

In April this year, the national catering revenue was 391.5 billion yuan, a year-on-year increase of 4.4%, while in the first four months, the national catering revenue exceeded 1.7 trillion yuan, a year-on-year increase of 9.3%.

Judging from the revenue data, the national catering industry has shown a good growth trend and the industry is gradually recovering.

However, judging from the store opening and closing data, the situation is not so optimistic.

Data from Qichacha shows that from January 1 to May 16 this year, the number of registered and revoked catering companies nationwide was 723,000.

The number for the period from January to May last year was 677,000, which means that just halfway through May this year, 46,000 more restaurant companies had gone bankrupt than last year.

While the number of license revocations has increased significantly, the number of new catering players entering the market has decreased significantly.

According to Qichacha data, as of May 16 this year, the number of newly added restaurant companies nationwide was 970,000.

The number of newly added catering companies from January to May last year was 1.397 million, a difference of 427,000.

The total volume data reflects the recovery of the catering industry, but the structural data shows the fierce competition in the industry. In the final analysis, there is a clear "28 split" in the market.

The good ones are getting better, and the bad ones are getting worse. On one hand, the leading catering companies are launching IPOs and popular restaurants are queuing up, while on the other hand, hundreds of thousands of catering companies are forced to close down due to lack of customers.

March of each year is the off-season for the restaurant industry. Some restaurant owners think that they can just hold out for it, but others have no expectations for business in the next six months, saying, "There is no off-season this year because it will be an off-season all year long."

Why is it more difficult to do business in the catering industry this year than before? The key reason behind this is that consumption habits have changed and market competition has become increasingly fierce.

From the consumer side, as the social wealth effect weakens, many companies have laid off employees and cut wages, people's desire to consume has been suppressed to a certain extent, and their willingness to resist unknown risks through savings has increased.

In the past, people tended to pursue added value in consumption, such as high-end dining environment, on-demand catering services, etc.

Nowadays, consumers are more concerned about the essence of catering consumption, that is, products and prices, and hope that food is cost-effective, good quality and inexpensive.

As the catering industry faces the impact of "extreme cost-effectiveness", businesses are looking for new ways out by "slimming down" and "low price and high quality".

The chain hotpot Xiabu Xiabu recently announced a comprehensive reduction in the price of its meal packages, with the price of a single meal reduced by up to 8 yuan, and the overall price reduction is around 10%. Pizza Hut opened a new store in Guangzhou, Pizza Hut Wow, with prices close to Saizeriya, and single items are basically between 10 and 20 yuan.

Heytea launched a limited-time event for its 12th anniversary, offering a buy-one-get-one-free deal for the "Zhizhi Golden Phoenix Tea King" originally priced at RMB 15, which translates to RMB 7.5 per cup. Other new tea brands are also constantly testing the bottom line of tea prices and launching products with lower average customer prices.

In addition to cost-effectiveness, the consumer side is also very busy during holidays and quiet during weekdays.

In contrast to the price war among the top catering brands, the sinking catering market performed exceptionally well in April and May.

Especially in second- and third-tier cities and county towns, catering consumption is increasingly showing a "festival-like" trend.

During the Qingming Festival and May Day holidays, the popularity of barbecue in Zibo revived, and Tianshui Malatang flourished across the country.

The rise of these local characteristics has, to a certain extent, stimulated consumers' desire to explore county-level catering. "Reverse tourism" has become popular, and many county-level restaurants have ushered in a peak in consumption.

However, the consumption flow during holidays is temporary and not that high on normal days. Some restaurant owners have increased their production capacity or opened new stores, but after the holidays, they will only have excess capacity.

For example, after Qingming Festival and May Day, the first batch of Tianshui Malatang stores in cities across the country such as Jinan, Rizhao, Guilin, Tongling, Hohhot, Suqian and other cities have begun to be transferred, and Tianshui Malatang stores across the country have begun to close down in large numbers.

From last year's bamboo tube milk tea and Zibo barbecue to this year's Tianshui Malatang, the "new catering people" are heading straight to the top of the pyramid, planning to "earn three years' money in one month."

This has also prompted the industry to "heat up earlier", with a shorter cycle, which has further led to increased fluctuations in store openings and closures.

From the supply side, the leading catering brands have accelerated their expansion to the lower-end markets and launched price wars. A large number of new entrepreneurs have flocked to the tail-end catering industry, and the middle-end catering industry can only attract customers by offering low prices, thus forming a large-scale internal competition in the catering industry.

Today, leading brands are expanding their presence in the lower-tier cities, from large cities to smaller cities and counties.

Heytea, Nayuki, Luckin Coffee, Kudi Coffee, McDonald's, Haidilao, Lao Xiangji... From tea and coffee to hot pot and full meals, all major brands have focused on expanding into lower-tier markets.

Many brands have also accelerated their market capture by adopting strategies such as “0 yuan franchise”, “installment payment”, and “small store” to lower the threshold for opening stores.

Some brands have started a price war, and even high-end restaurants with average per capita consumption of thousands of yuan have offered a "discount" by launching a single-person set meal at 198 yuan.

In the tail catering industry, many entrepreneurs have flocked in. Most of the people who opened stores are "unemployed", "can't find a job", or have some money to invest but don't know what to do. So they hold the mentality of "food is the first necessity of the people" and comfort themselves by opening restaurants.

At any time, catering is an industry full of imagination. Without the high-tech background of the technology and artificial intelligence industries, nor the turning point of the new consumption and Internet industries, what we see and hear are more inspirational stories of "grassroots counterattack" and "starting from scratch".

However, the catering industry is not an industry that can be started casually.

From purchasing, selecting materials, selecting dishes, putting on the market, to operating... there are many links involved, and any change will affect the quality and cost. If you do it yourself, you don't know how to do it; if you join a franchise, you may get ripped off if you are not careful.

The result is predictable. In the past, even if they made a loss, they could still make money, but now they can’t even make money. Most of them will eventually lose all their remaining money, or even go into debt.

For new restaurant owners, setting up a street stall is a more rational choice, because street stalls often have lower rent and labor costs than restaurants, and their prices can also be lower.

However, as more and more people start setting up street stalls, it will not only divert local consumers, but also intensify industry competition, leading to a decline in business for surrounding physical store catering businesses.

For restaurants with no advantages, the only way to compete for customers is to keep inward, or lower prices, or reduce costs.

In short, involution and reshuffle have become the norm in the catering industry. For those catering people who are still persisting, they need to manage their expectations and be prepared for a protracted war.

References:

• 460,000 restaurants "died", the catering market in the first quarter was a bit miserable https://mp.weixin.qq.com/s/a0WiKznbFBz3e1Ny8k0Sfw
• Catering industry is in deep negative growth! Bosses from all over the country say they can't hold on https://mp.weixin.qq.com/s/3W98ux3VGW5PQikVNRWHkw
• Completely unable to roll? Beijing and Shanghai catering revenues show "negative growth"! https://mp.weixin.qq.com/s/CVeoz4r8ZzG-xSpyBarBPw Big drop in temperature! Catering business in various places has plummeted after "May 1st" https://www.canyin88.com/zixun/2024/05/21/94753.html