Young people have a double standard for pre-prepared meals: they can buy them on their own initiative and refuse to be “fed” by restaurants

Pre-prepared meals have always been a topic of social concern. Many people on the Internet are boycotting restaurants from using pre-prepared meals, but pre-prepared meals on shopping platforms have high sales. Let's take a look at the specific situation.

Young people’s attitude towards pre-prepared meals is a bit inconsistent, as can be seen from the recent discussions on pre-prepared meals for the Chinese New Year.

As the Spring Festival approaches, topics such as pre-made New Year's dishes and pre-made gift boxes for New Year's Eve dinner have become hot topics for discussion.

First, Tmall’s advertisement for pre-made New Year’s Eve meals was ridiculed by the public. Workers who did not have a holiday on New Year’s Eve this year were upset, saying, “The advertisement is too gloomy” and “Let’s have something delicious for New Year’s Eve dinner.”

Simba’s remarks such as “It’s okay to let children eat good pre-prepared meals, which are healthier and more hygienic” and “Laoganma and milk powder are pre-prepared meals” triggered “condemnation” from netizens.

Looking back over the past year, controversies such as "pre-prepared meals entering campuses" and "pre-prepared meals used in wedding banquets" have frequently arisen, and some young people have a clear attitude towards boycotting pre-prepared meals.

However, the market gave the opposite reaction - on various online platforms, pre-prepared dishes for the Chinese New Year are very popular, and the cumulative sales of many Buddha Jumps Over the Wall gift boxes on Taobao have reached tens of thousands of orders; JD data shows that from January 17 to January 23, searches related to "New Year's Eve dinner" increased by more than 2 times year-on-year, and the transaction volume of many pre-prepared dishes such as sweet and sour pork, big plate chicken, and Peking duck increased by 2 to 7 times year-on-year.

On social platforms, many young people are also sharing the New Year’s Eve gift boxes they bought, or asking others to recommend pre-prepared dishes for the Chinese New Year.

Among them, the "King Crab Three-piece Set" launched by Hema at the end of December last year has entered the New Year's dinner list of many people due to its high taste recovery rate and cost-effectiveness that is 50% lower than the same item in the restaurant; according to Hema data, Hema's semi-finished New Year's dinner sales increased by 20% month-on-month in the past week, among which Golden Soup Buddha Jumps Over the Wall, Abalone Fish Maw Chicken, and Black Truffle Cheese King Crab Legs are the most popular.

In fact, since last year, pre-prepared New Year’s dishes have become users’ favorite.

A survey conducted by Hema during the Spring Festival last year found that more than 50% of users were willing to buy pre-prepared New Year's dishes, of which 33% chose to "buy some pre-prepared dishes + cook some themselves" to solve the New Year's Eve dinner.

According to iMedia Consulting statistics, the national sales of pre-prepared meals during the 2023 Spring Festival were approximately 130.753 billion yuan, a year-on-year increase of 43.6%.

Various data show that pre-prepared meals are being accepted by more and more people. But why is there such a sharp contrast between public opinion and the market? Why do young people boycott it verbally while paying money to support it?

1. Online pre-prepared meals are accepted

“I buy pre-prepared meals for Chinese New Year because I don’t want my mother to get backache from being tired. Every year from the second to the sixth day of the Chinese New Year, many relatives come to pay New Year’s greetings. Buying pre-prepared meals can be prepared quickly, which makes her feel more relaxed,” said An Ran, born in the 1990s.

Enron's thoughts represent the voices of many people.

In fact, young people’s acceptance of pre-prepared meals is not limited to the Chinese New Year, and has permeated into their daily lives.

On social platforms, many users shared their experiences of purchasing pre-prepared meals on platforms such as Taoxianda, Sam's Club, JD.com, and Hema.

Convenience is a common demand. After all, most young people are busy with work, and many of them are not good at cooking at all.

According to the survey data of iMedia Consulting in 2022, 71.7% of consumers choose convenience and speed when purchasing pre-prepared food products.

Many users are satisfied with the efficiency of pre-prepared meals. "It takes less than half an hour to cook a table of dishes with pre-prepared meals, which is suitable for cooking after get off work." "I can't cook, and pre-prepared meals are simple, which is the only thing I can get." "It's so convenient to invite friends to dinner at home with the help of pre-prepared meals."

Of course, the prerequisite for paying is that the taste and cost-effectiveness of the pre-prepared dishes must be acceptable.

Judging from the feedback on social platforms, there are many brands that have been recognized. "I bought Anjing's frozen pickled fish on Meituan Youxuan. It tastes good and the price is right. The promotional price is 16.9 yuan, and takeaway costs 30 yuan." "The crayfish I bought from Hema tastes better after heating than in the restaurant."

It is worth mentioning that the current channels for users to purchase pre-prepared meals are mainly concentrated online. According to iiMedia Research's 2022 data, 62.3% of consumers purchase pre-prepared meals on e-commerce platforms, followed by supermarkets and convenience stores.

Major online platforms have benefited from this, and their sales data for pre-prepared meals are on the rise.

For example, the transaction amount of prepared food on JD.com during Double 11 last year increased by 44.1% year-on-year; data from Chanmama showed that from January to September last year, sales of prepared food industry on Douyin e-commerce increased by 53% year-on-year.

Users' preference for online channels may be related to the difficulty of dining out during the epidemic, which has "passively" cultivated the habit of online shopping.

Many brands also grew up during this period by seizing the opportunities of online channels. For example, Xinliangji Crayfish became an instant hit in Luo Yonghao's first live broadcast in 2020; for example, Zhenwei Xiaomeiyuan appeared in top live broadcast rooms such as Li Jiaqi and Make Friends in 2021, creating popular products such as Old Shanghai Scallion Pancake and Golden Soup Pickled Fish, and was also named a "Douyin Brand" in 2022.

In sharp contrast to the "hot" online market, offline stores are "cold".

Many brands have enthusiastically tried to open offline stores, but have all encountered resistance.

For example, Pu Wenming, the founder of Zhenwei Xiaomeiyuan, revealed in a public speech in May last year that it had more than 100 stores in Shanghai. But now, Meituan shows that only 50 stores in Shanghai are operating normally, and 48 stores have closed down.

For example, according to the Beijing News, in March 2021, Xibei Kung Fu Cuisine had more than 200 stalls across the country. However, within two years, Xibei said that all Kung Fu Cuisine stalls would withdraw from offline physical stores and turn to online sales and supermarket sales. Today, Meituan shows that only the Yanqing Expo store in Beijing is open for business.

For example, Weizhishan, the "first stock of pre-prepared food" with C-end franchise stores as its main model, also encountered obstacles in opening stores. In the first three quarters of 2023, Weizhishan opened 279 franchise stores and closed 172 stores. Compared with the same period last year, the number of stores opened decreased by 28% and the number of stores closed increased by 54%.

The cold reception of offline store openings may be due to the fact that, at the current stage, the overall consumer awareness of pre-prepared meals is not enough to bring about a traffic aggregation effect for stores, making it difficult to support the positive operation of stores.

Overall, although users are becoming more receptive to pre-prepared meals, users who are willing to pay for them are still a minority, and the consumer market for pre-prepared meals is still in the development stage. According to CCID Consulting's data from June last year, the B-end and C-end consumption ratio of pre-prepared meals was 8:2, a ratio that has been maintained for many years.

If we refer to Japan, a country with a developed pre-prepared food industry, we can see that C-end penetration is a slow process - it took Japan at least 30 years to achieve parity between the C-end and the B-end. A research report by Guolian Securities shows that in 1990, the output of B-end and C-end pre-prepared meals in Japan accounted for 7:3. By 2021, the ratio reached 5:5 for the first time.

It can be seen that it will take some time for pre-prepared meals to become popular.

2. Pre-prepared meals in restaurants are boycotted

Users can accept buying pre-prepared meals and cooking them at home, but they cannot accept eating pre-prepared meals in restaurants, take-outs, schools, etc. This is also the core target of the "attack" on pre-prepared meals.

On social media platforms, users have a consistent view on this, "Pre-prepared meals in restaurants are a scam. When I go out to eat, you give me something that I can make at home," "When you go out to eat, you want freshly cooked food," "There's nothing wrong with pre-prepared meals, they're just used in the wrong place. There's nothing wrong with putting them in supermarkets."

The reason is that, on the one hand, the essence of pre-prepared meals is for efficiency, but when users go to a restaurant to eat, the expectation is to enjoy themselves. The "industrial assembly line" taste of pre-prepared meals makes users feel fooled.

What’s more, according to feedback from many users, many pre-prepared dishes are not delicious, but they are still charged “freshly cooked” prices. Such cost-effectiveness is not satisfactory.

A 2022 survey conducted by the Jiangsu Provincial Consumer Protection Committee showed that 62.32% of consumers said that pre-prepared dishes tasted average, and 3.32% of consumers felt that pre-prepared dishes tasted poor and were not delicious.

On the other hand, since the standards and supervision of the pre-prepared food industry are still imperfect, users generally question the possible presence of preservatives and other additives in pre-prepared meals, which raises concerns about food safety.

Especially when pre-prepared meals are introduced into schools, they may have an impact on children's health, which makes users even more intolerant.

In general, users are not boycotting pre-prepared meals across the board, but rather boycotting the appearance of pre-prepared meals in scenarios that do not meet their expectations.

However, contrary to expectations, restaurants, take-out and other scenarios are the "hardest hit areas" for the use of pre-prepared meals.

According to data from Everbright Securities, the proportion of meal kits used in takeout may reach 70%-80%. According to the "2022 China Chain Catering Industry Report" released by the China Chain Store Association, the proportion of pre-prepared foods of some leading fast food companies is close to 100%, such as Zhen Gongfu and Yoshinoya, while the proportion of pre-prepared meals of Xibei Youmiancun and Xiao Nan Guo has also reached more than 85%.

It is not difficult to understand why pre-prepared meals are popular among merchants. Pre-prepared meals have the advantages of standardized taste, reduced dependence on chefs, and saved serving time, which is conducive to reducing costs and increasing efficiency for merchants.

The "2021 China Chain Catering Industry Report" shows that compared to traditional restaurants, although the use of pre-prepared meals increases the cost of raw materials by 5%, labor costs can be reduced by 10%, energy costs can be reduced by 40%, and the overall net profit can be increased by about 7%.

The different attitudes of users and merchants towards pre-prepared meals seem to be a natural conflict of positions, but more fundamentally, they actually point to problems in the development stage of pre-prepared meals - the current pre-prepared meals do not meet user expectations in terms of taste and safety.

Firstly, the domestic pre-prepared food market only began to develop rapidly around 2020, and the level of technological research and development is still in its infancy, and it will take time to explore the improvement of taste.

Secondly, the cold chain logistics infrastructure to ensure the freshness of pre-prepared meals is not yet perfect - compared with China's huge population base, China's per capita possession of resources such as cold storage and refrigerated trucks is relatively low.

Taking refrigerated trucks as an example, data from the China Federation of Logistics and Purchasing shows that in 2023, China's refrigerated truck ownership will be about 432,000 vehicles, with approximately one refrigerated truck for every 3,000 people. However, a research report by Guolian Securities shows that in Japan, approximately one refrigerated truck for every 500 people in 2021, which is a huge gap.

Therefore, if the pre-prepared food industry wants to gain wider popularity and acceptance, it still has a lot of basic work to do.

3. Hot-selling products tend to be homogenized, and innovation needs to be improved

At present, there are many popular items emerging in the pre-prepared food industry, such as crayfish, pickled fish, Buddha Jumps Over the Wall, pork belly and chicken, braised pork with preserved vegetables, and crispy pork.

When searching for “pre-prepared meals” on Taobao and JD.com, the top-selling products include Buddha Jumps Over the Wall, Pork Stomach and Chicken, and Braised Pork with Preserved Vegetables.

The same is true on Douyin. Data from Cicada Cube shows that in the first half of 2023, sauerkraut fish, pork tripe and chicken, Buddha Jumps Over the Wall, and Maoxuewang were all among the top 10 pre-prepared dishes on Douyin.

In fact, focusing on the strategy of large single products is a consensus among many pre-prepared food companies.

For example, Anjing Foods, a leading frozen food company, has established several sub-brands of pre-prepared dishes, each focusing on a different product track. Among them, Mr. Frozen Foods focuses on pickled fish and grilled fish, Anjing Kitchen focuses on crispy pork and lotus-flavored glutinous rice chicken, and the acquired Xinhongye and Xinliuwu mainly focus on crayfish.

For example, New Hope Liuhe Food also regards star products as the key point of its development, and Crispy Pork is the big product it incubated in 2019.

Brands are all adopting the strategy of big single products because in the early stages of development, big single products can help shape the user's mind, while a big and comprehensive strategy may backfire.

Northwest Kung Fu Cuisine has fallen into a pit before. In an interview with "21st Century Business Herald", Northwest founder Jia Guolong said that Northwest Kung Fu Cuisine's initial strategy was to sell everything. As a result, sales in 2023 remained unchanged at more than 300 million yuan, but the company will adjust its strategy and focus on the grain staple food track in order to achieve better development.

However, at present, there is a clear trend of following the trends among major pre-prepared meal products, which tend towards homogenization, and product innovation is particularly weak.

For example, after New Hope incubated the popular crispy pork, companies such as Shuanghui, Jinluo, Anjing, Maizima, and Haidilao all entered the market one after another; it can also be seen from the New Year’s Eve dinner packages of various brands that lion’s head, pork belly and chicken, fish-flavored shredded pork, and pickled fish appear frequently.

The result of homogenization may be price wars or sluggish sales. Crayfish and pickled fish are typical examples. After the popularity of pre-prepared crayfish dishes, many brands entered the market. Under fierce competition, the price of crayfish once fell. According to data from JD.com, the overall price of crayfish-related products fell in June last year compared with the same period last year, with the decline reaching more than 50%.

The sauerkraut fish industry is facing a sluggish sales. According to a report by Jiemian News in August last year, a fishery person in Foshan, Guangdong revealed that from March to August 2023, many local pre-prepared food merchants were unable to sell the sauerkraut fish and black fish fillets they supplied to restaurants, and the stockpile reached 2 million kilograms.

At this stage, the phenomenon of homogenization of pre-prepared meals may be difficult to avoid. The reason is that, on the one hand, the pre-prepared meal market is still in the development stage, and the products that can be accepted by the public may be limited.

Pu Wenming, founder and CEO of Zhenwei Xiaomeiyuan, said in a public interview in April last year, "It's not that everyone is unwilling to invest. The key is that these are the products that sell well. Products that have been made with a lot of investment in research and development are imitated by others, or you imitate others when you see that they have good products. This is what everyone in the industry is doing."

On the other hand, the cost of innovation in pre-prepared meals is very high and the probability of failure is quite high. For many companies, it is safer to adopt a follow-up strategy.

Taking the crispy pork incubated by New Hope as an example, New Hope officials once revealed that during the testing phase of this crispy pork, they tried 34 meat combinations alone, modified the egg liquid 28 times, and conducted hundreds of tests on the frying time, accurate to the second. They also held more than 300 offline consumer tests.

According to Blue Shark Consumption, long before the Crispy Pork became a hit, New Hope had explored pre-prepared food products such as the currently popular "Buddha Jumps Over the Wall", but all failed, which shows how difficult it is to innovate hit products.

4. The industry may accelerate reshuffle

Although there are considerable challenges in product innovation and consumer awareness penetration, the prospects for the pre-prepared meal industry are very bright.

According to iMedia Consulting data, the scale of China's pre-prepared food market will reach 419.6 billion yuan in 2022, a year-on-year increase of 21.3%, and will reach 1.072 trillion yuan in 2026.

According to the "Five-Year Work Plan (2021-2025) of the China Cuisine Association", the current penetration rate of China's pre-prepared food industry is only 10%-15%. Compared with the penetration rate of more than 60% in the United States and Japan, there is still huge room for growth.

In addition, policies are also encouraging the development of the industry. In February last year, pre-prepared meals were written into the Central Government’s Document No. 1 for the first time. Guangdong, Shandong, Fujian and other places have also successively introduced relevant encouraging policies and are planning to build pre-prepared meal industrial parks.

The bright prospects have attracted many companies to join the market. According to Qichacha data, there are currently more than 61,900 pre-prepared food-related companies in China. As of December 6, 2023, 4,026 new pre-prepared food-related companies were registered in China, a year-on-year increase of 114.83%.

Among them, some players come from upstream agriculture, forestry, animal husbandry and fishery enterprises, such as Guolian Aquatic Products; some come from traditional frozen food companies, such as Anjing, Longda, Chunxue, etc.; and some are catering and new retail companies, such as Quanjude, Hema, Meituan, Guoquan, JD Supermarket, etc.; in addition, there are also some cross-border players, such as Gree, Panpan, Haier, Nongfu Spring, Babi Mantou, etc.

The massive influx of players has, to a certain extent, led to fierce competition.

Liu Huaiwei, president of New Hope Liuhe Food Holdings Co., Ltd., said in September last year that the pre-prepared food industry used to be an incremental market, but now it has developed to a stage of market oversupply.

Amid fierce competition, some companies began to show signs of fatigue - revenue growth slowed down, and some even went bankrupt.

Among them are leading pre-prepared food companies, such as Weizhishan, Anjing, Huifa, etc. The financial reports show that in the first three quarters of 2023, the revenue growth of these companies' pre-prepared food has slowed down to varying degrees. Anjing's pre-prepared food business revenue growth rate was 47.46%, a sharp drop from the 129.57% growth rate in the same period last year; Huifa Foods increased by 11.41% year-on-year, while the year-on-year growth rate in the same period last year was 33.59%; Weizhishan's revenue growth rate was 1.92%, which was also down from 6.47% in the same period last year.

According to Qichacha data, as of December 6, 2023, as many as 3,102 pre-prepared food-related companies have been deregistered or revoked this year, an increase of 11.14% year-on-year.

It can be seen that the industry reshuffle has been ongoing.

This may be related to the highly fragmented competitive structure of the current pre-prepared food industry. The pre-prepared food industry is currently restricted by cold chains, channels and funds, is dominated by small and medium-sized enterprises, has a very low degree of concentration, has not yet formed a strong leading brand, and the structure has been changing dynamically.

According to data from the Forward-looking Industry Research Institute, the CR10 (market share of the top 10 companies in terms of business scale) of the pre-prepared food industry in 2020 was only 14%, and no company had a market share of more than 5%.

A similar phenomenon is also seen online. According to data from Cicada Cube, the brand concentration of Douyin e-commerce's pre-prepared food track (referring to the sales share of the TOP5 brands in this category) reached 47.88% in 2023, a decrease of 11.53% compared with the second half of 2022, which means that the competitive landscape is not stable.

With the release of the draft national standard for pre-prepared meals, the industry reshuffle may further intensify.

According to a recent report by China Newsweek, the biggest highlight of the draft national standard is the prohibition of adding preservatives and the requirement of cold chain transportation. This places higher demands on the research and development of pre-prepared food technology and the supply chain. Some small and medium-sized pre-prepared food companies may be eliminated for failing to meet the entry threshold.

However, this reshuffle is benign and is also the only way for the wildly growing pre-prepared food industry to move towards standardized development.

In general, pre-prepared meals are an inevitable trend, but they are still in their infancy and face multiple challenges. There are deficiencies in user acceptance, product innovation, and industry infrastructure, and the industry still needs more patience to develop. (An Ran is a pseudonym in the article)

Author: Wang Shuran WeChat public account: Financial Story Collection